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Product 'X' is Obtained After It is Processed Through Process A, B and C. the Following Cost Information is Available for the Month Ended 31.03.2018 : - Cost Accounting(Financial Accounting and Auditing 10)

Product 'X' is obtained after it is processed through Process A, B and C. The following cost information is available for the month ended 31.03.2018 :

Particulars A B C
No. of Units introduced in the Process 500 - -
Rate per Unit of Units Introduced (Rs.) 04 - -
Cost of Material 2,600 2,000 1,025
Direct Wages 2,250 3,680 1,400
Production Overheads 2,250 3,680 1,400
Normal Loss 10% 20% 25%
Value of Scrap per Unit 02 04 05
Output in Units 450 340 270

There is no Stock in any Process.
You are required to prepare (1) Process B A/c, (2) Abnormal Loss A/c, (3) Abnormal Gain A/c.

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Solution

Dr. Process B A/c Cr.
particulars Units (Rs.) particulars Units (Rs.)
To process A A/c 450 9,000 By Normal Loss 90 360
To Material   2,000 By Abnormal Loss 20 1,000
To Direct Wages   3,680 By Process C A/c (Cost per Unit Rs.50) (Working Note No. 1) 340 17,000
To Production Overheads   3,680      
Total(Rs.) 450 18,360 Total(Rs.) 450 18,360
Dr. Abnormal Loss A/c Cr.
Particulars Units (Rs.) Particulars Units (Rs.)
To Process Y A/c 20 1,000 By Bank A/c 20 80
      By Profit and Loss A/c - 920
Total(Rs.) 20 1,000 Total(Rs.) 20 1,000
Dr. Abnormal Gain A/c Cr.
Particulars Units (Rs.) Particulars Units (Rs.)
To Normal Loss 15 75 By Process C A/c 15 1,200
To Profit and Loss Ale - 1,125      
Total(Rs.) 15 1,200 Total(Rs.) 15 1,200

Working Note No. 1 :

`"Cost per Unit"="Cost Incurred(-) Scrap Value of Normal Loss"/"Input(-) Normal -Loss"`

`=(18,360(-)360)/(450(-)90)`

`=(18,000)/(360)=` Rs. 50

Concept: Process Loss - Abnormal Loss and Abnormal Gain
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