Question

A product passes through two distinct processes X and Y. From the following information, you are required to prepare the Process Accounts, Abnormal Loss and Abnormal Gain Accounts. Units issued Process X - 10,000 units at Rs. 10 each

	Process X	Process Y
Materials added (Rs.)	40,000	30,000
Direct labour (Rs.)	20,000	24,000
Overhead (Rs.)	13,500	22,610
Nonnal wastage (Rs.)	5%	5%

Scrap value of normal loss Rs. 5 per unit Rs. 10 per unit

Answer 1

Books of ..............

Dr.

Process X Account

Cr.

Partlcular	Quantity (Units)	Amount (Rs.)	Partlcular	Quantity (Units)	Amount (Rs.)
To Units Introduced (at' 10 each)	10,000	10,0000	By Normal Loss (Scrap value at' 5 per unit)	500	2,500
To Raw Materials		40,000	By Abnormal Loss A/c	100	1,800
To Direct Wages		20,000	By Process Y Alc (Transferred at' 18 per unit)	9,400	1,69,200
To Overheads		13,500
	10,000	1,73,500		10,000	1,73,500

Dr.

Process Y Account

Cr.

Partlcular	Quantity (Units)	Amount (Rs.)	Partlcular	Quantity (Units)	Amount (Rs.)
To process X Account	9,400	1,69,200	By Normal Loss (at ' 10 per unit)	470	4,700
To Raw Materials		30,000	By Finished Stock Alc (Transferred at ' 27 per unit)	9,000	2,43,000
To Direct Wages		24,000
To Overheads		22,610
To Abnormal Gain Alc (W. N. 2)	70	1,890
	9,470	2,47,700		9,470	2,47,700

Dr.

Abnormal Loss Account

Cr.

Particulars	Quantity (Units)	Amount (Rs.)	Particulars	Quantity (Units)	Amount (Rs.)
To Process X Account	100	1,800	By Cash Alc (Sale of Scrap)	100	500
			B Costin P & L Alc	-	1,300
	100	1800		100	1800

Dr.

Abnormal Gain Account

Cr.

Particulars	Quantity (Units)	Amount (Rs.)	Particulars	Quantity (Units)	Amount (Rs.)
To Process Y Account	70	1,300	By Process Y Alc	70	1,890
To Costin P & L Alc	-	590
	70	1,890		70	1,890

Working Notes:
(1) Process 'X' Account - Cost of Abnormal Loss:

`="Normal Cost of Normal Output"/"Normal Output"xx"Units of Abnormal Gain"`

`=("Rs." 1,71,000)/(9500  "Units")xx`100 Units = Rs. 1,800

Normal Cost - Total Cost(-) Scrap Value = Rs. 1,73,500 - Rs. 2,500.

= Rs. 1,71,000

Normal Output - 10,000 - 500 = 9,500 Units

(2) Process 'Y' Account- Cost of Abnormal Gain:

`="Normal Cost of Normal Output"/"Normal Output"xx"Units of Abnormal Gain"`

`= (2,41,110)/(8,930)xx70="Rs." 1,890`

Normal Cost - Total Cost(-) Scrap Value= Rs. 2,45,810 - Rs. 4,700

= Rs. 2,41,110

Normal Output = 9,000 - 70 = 8,930 Units