Question

A product is finally obtained after it passes through three distinct processes.
The following information is available from the cost records :

	Process A (Rs.)	Process B (Rs.)	Process C (Rs.)	Total (Rs.)
Materials	2,600	2,000	1,025	5,625
Direct wages	2,250	3,680	1,400	7,330
Production				7,330
Overheads

500 units @ Rs. 4 per unit were introduced in Process A. Production overheads are, absorbed as a percentage of direct wages. The actual output and normal loss of the
respective processes are given below.

	Output (units)	Normal Loss as a Percentage of Input	Value of Scrap per Unit
Process A	450	10%	Rs. 2
Process B	340	20%	Rs. 4
Process C	270	25%	Rs. 5

Prepare Process Accounts and Abnormal Loss and Abnonnal Gain Account.

Answer 1

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

Dr.

Process A Account

Cr.

Particulars	Quantity (Units)	Amount (Rs.)	Particulars	Quantity (Units)	Amount (Rs.)
To Units Introduced	500	2,000	By Normal Loss`500   "Units"xx10/100`-(50 x 2)	50	100
To Materials	-	2,600
To Wages	-	2,250
To Production Overheads	-	2,250	By Process B Alc	450	9,000
	500	9,100		500	9,100

Dr.

Process B Account

Cr.

Particulars	Quantity (Units)	Amount (Rs.)	Particulars	Quantity (Units)	Amount (Rs.)
To Process A Alc	450	9,000	By Normal Loss`450   "Units"xx20/100`-(90 x 4)	90	360
To Materials	-	2,000
To Wages	-	3,680	By Abnormal Loss Alc (20 x Rs. 18,000 + 360)	20	1,000
To Production Overheads	-	3,680	By Process C Alc	340	17,000
	450	18,360		450	18,360

Dr.

Process C Account

Cr.

Particulars	Quantity (Units)	Amount (Rs.)	Particulars	Quantity (Units)	Amount (Rs.)
To Process B Alc	340	17,000	By Normal Loss`340   "Units"xx25/100`-(85 x 5)	85	425
To Materials	-	1,025
To Wages	-	1,400
To Production Overheads	-	1,400	By Finished Stock Alc	270	21,600
To Abnormal Gain Alc `(20,400/255xx15)`	15	1,200
	355	22,025		355	22,025

Dr.

Abnormal Loss A/c

Cr.

Particulars	Quantity (Units)	Amount (Rs.)	Particulars	Quantity (Units)	Amount (Rs.)
To Process - B A/c	20	1,000	By Bank Alc (Sale of Scrap)	20	80
			By Costing P and L Alc	-	920
	20	1,000		20	1,000

Dr.

Abnormal Gain A/c

Cr.

Particulars	Quantity (Units)	Amount (Rs.)	Particulars	Quantity (Units)	Amount (Rs.)
To Normal Loss A/c	15	75	By Process C Alc	15	1,200
To Costing P and L A/c	-	1,125
	15	1,200		15	1,200