# In a Factory the Product Passes Through Two Processes, a and B. a Loss of 5% is Etlowed in Process a and 2% in - Cost Accounting(Financial Accounting and Auditing 10)

In a factory the product passes through two processes, A and B. A loss of 5% is etlowed in Process A and 2% in Process B, nothing being realised by disposal of wastage.
During April 2018, 10,000 units of material costing~ 6/- per unit were introduced in process A. The other costs are as follows.

 Process A (Rs.) Process B (Rs.) Materials - 6,140 Labour 10,000 6,000 Overheads 6,000 4,600

The output was 9,300 units from Process A. 9,200 units were produced by Process B, which were transferred to the finished stock.
8,000 units of the finished product was sold at Rs 15/- per unit the selling and distribution expenses were Rs. 2/- per unit.
Prepare (a) Process  Accounts, (b) Statement of Profit and Loss for the month April, 2018; assuming there were no opening stock of any type.

#### Solution

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

 Dr. Process - A Account Cr.
 Particulars Quantity (Units) Amount (Rs.) Particulars Quantity (Units) Amount (Rs.) To Units Introduced (10,000 x Rs. 6) 10,000 60,000 By Normal Loss (10,000 x 5/100) 500 - To Labour - 10,000 By Abnormal Loss-(Working Note-1) 200 1,600 To Overheads - 6,ooo By Process-B Alc 9,300 74,400 10,000 76,000 10,000 76,000
 Dr. Process - B Account Cr.
 Particulars Quantity (Units) Amount (Rs.) Particulars Quantity (Units) Amount (Rs.) To Process - A Alc 9,300 74,400 By Normal Loss (9,300 x 2/100) 186 - To Materials - 6,140 By Finished Stock A/c 9,200 92,000 To Labour - 6,000 To Overheads - 4,600 To Abnormal Gain - (Working Note - 2) 86 860 9,386 92,000 9,386 92,000
 Particulars Units (Rs.) Production during the Month 9,200 92,000 Less: Closing Stock of Finished Goods 1,200 12,000 8,000 80,000 Add : Selling and Distribution Overheads (8,000 x Rs.2) - 16,000 Cost of Sales 8,000 96,000 Add : Profit (8,000 x Rs. 3) - 24,000 Sales Value (8,000 x ~ 15) 8,000 1,20,000

Working Notes:
(1) Abnormal Loss - (Process A): =(76,000(-) "Nil")/(10,000(-)500)xx200 = Rs. 1,600
(2) Abnormal Gain - (Process B) : (91,140)/(9,114)xx86 = Rs. 860

Concept: Process Loss - Abnormal Loss and Abnormal Gain
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