Question

'Uptodate Ltd.' processes a patent material shows the following cost records for manufacturing 400 units of Product A in a process :

Material	(Rs.) 8,000
Labour	(Rs.) 3,000
Overheads	(Rs.) 1,000

The standard normal wastage in production is 10%, and it can be sold in the market at Rs. 30 per unit. The actual production is 300 Units due to gross carelessness of the workers.
Show : (a) Process A/c; (b) Abnormal Wastage A/c.

Answer 1

Books of 'Uptodate Ltd.'

Dr.

Process A/c

Cr.

Particulars	Units	(Rs.)	Particulars	Units	(Rs.)
To Material	400	8,000	By Normal Wastage	40	600
To Direct Labour	-	3,000	By Abnormal Wastage A/c	60	1,900
To Other Expenses	-	1,000	By Cost of Production of 300 Units to Process No......	300	9,500
Total (Rs.)	400	12,000	Total (Rs.)	400	12,000

Dr.

Abnormal Wastage A/c

Cr.

Particulars	Units	(Rs.)	Particulars	Units	(Rs.)
To Process A/c	60	1,900	By Sale of Scrap @ Rs. 30 each	60	900
			By Costing Profit and Loss A/c	-	1,000
Total (Rs.)	60	1,900	Total (Rs.)	60	1,900

Working Note :
Calculation of Actual Output :

Particulars	Units	(Rs.)
Units Processed	400	12,000
Less : Norrnal Wastages ( 10%)	40	600
Expected Cost of Production of Expected Output @ Rs. 31.67 (11,400/360 = 31.67)	360	11,400
Less: Abnormal Wastages Valued at Expected Cost	60	1,900
∴ Actual Output	300	9,500