Advertisement Remove all ads

A Product Passes Through Two Distinct Processes X and Y. from the Following Information, You Are Required to Prepare - Cost Accounting(Financial Accounting and Auditing 10)

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

Advertisement Remove all ads

Solution

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

Concept: Process Loss - Abnormal Loss and Abnormal Gain
  Is there an error in this question or solution?
Advertisement Remove all ads
Advertisement Remove all ads
Share
Notifications

View all notifications


      Forgot password?
View in app×