Process Accounts : Normal/Abnormal Loss, Abnormal Gain : Problems

No. Problems & Solutions [Click Hide/Show to display the solutions below the question]
01.
A Product passes through two distinct processes, A and B. From the following information you are required to write the process accounts, abnormal loss/gain accounts.

Units Issued---Process A 10,000 units at Rs. 10each.

Process A
Rs.
Process B
Rs.
Material added
Direct Labour
Overheads
Normal wastage (% of input)
(Scrap value of normal loss)
Output (units)
40,000
20,000
13,500
5%
Rs. 5 per unit
9,400
30,000
24,000
22,610
5%
Rs. 10 per unit
9,000

Solution
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02.
In a factory the product passes through two processes A and B. A loss of 5% is allowed in Process A and 2% in Process B, nothing being realized by disposal of wastage.

During April, 2005, 10,000 units of material costing Rs. 6 per unit were introduced in Process A. The other costs are :

Process A
Rs.
Process B
Rs.
Materials
Labour
Overheads

10,000
6,000
6,140
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 warehouse.

8,000 units of the finished product was sold @ Rs. 15 per unit. The selling and distribution expenses were Rs. 2 per unit.

Prepare (i) Process Accounts; and (ii) A statement of profit or loss of the firm for April 2005, assuming there were no opening stocks of any type.

Solution
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03.
The product of a manufacturing concern passes through two processes A and B and then to finished stock. It is ascertained that in each process normally 5% of the total weight is lost and 10% is scrap which from Processes A and B realizes Rs. 80 per ton and Rs. 200 per ton respectively.

The following are the figures relating to both the processes:
Process A Process B
Material in tons
Cost of materials per ton in rupees
Wages in rupees
Manufacturing expenses in rupees
Output to tons
1,000
125
28,000
8,000
830
70
200
10,000
5,250
780

Prepare Process Cost Accounts showing cost per ton of each process. There was no stock or work-in-progress in any process

Solution
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04.
Make out the necessary accounts from the following details:

Process A
Rs.
Process B
Rs.
Materials
Labour
Overheads
Input (units)
Normal loss
Sales value of wastage per unit
30,000
10,000
7,000
20,000
10%
3,000
12,000
8,600
17,500
4%

There was no opening or closing stock or work-in-progress. Final output from Process B was 17,000 units.

Solution
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05.
Product 'Z' is obtained after it passes through three distinct processes. The following information is obtained from the accounts for the month ending March 31, 2005:

Processes
ItemsTotal
Rs.
I
Rs.
II
Rs.
III
Rs.
Direct Materials
Direct Wages
Production Overhead
7,542
9,000
9,000
2,600
2,000
1,980
3,000
2,962
4,000

1,000 units at Rs. 3 each were introduced to Process I. There was no stock of material or work-in-progress at the beginning or end of the period. The output of each process passes direct to the next process and finally to finished stores. Production overhead is recovered on 100 percent of direct wages. The following additional data are obtained:
Process Output during
the month
Percentage of normal
loss to input
Value of scrap
per unit Rs.
I
II
III
950
840
750
5%
10%
15%
2
4
5

Prepare process cost accounts and abnormal gain or loss accounts.

Solution
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06.
A product passes through three processes to completion in January, 1988, the cost of production was as given below:

Processes
I II III
Direct Material
Wages
Production Overheads
2,000
3,500
1,500
3,020
4,226
2,000
3,462
5,000
2,500

1,000 units were issued to Process I @ Rs. 5 each.

Normal Loss
Wastage realised
Actual Production (units)
I
10%
Rs. 3 per unit
920
II
5%
Rs. 5 per unit
870
III
10%
Rs. 6 per unit
800

Prepare the necessary accounts.

Solution
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07.
A product passes through three process viz., Process I. Process II. and Process III. The normal wastage of each process is:

Process I: 3%; Process II: 6%; and Process III: 10%.

The percentage of normal wastage in each case is computed on the basis of the number of units entering the process concerned. The wastage of Process I is sold @ 25 paise per unit, that of Process II is sold @ 50 paise per unit and that of Process III is sold @ Re. 1 per unit, The other expenses are:

Process I Process II Process III
Material Consumed
Direct Labour
Manufacturing expenses
1,500
7,500
1,575
2,250
12,000
1,425
750
9,750
3,015

The output of each process has been as follows:
Process
Process
Process
I
II
III


14,250
13,650
12,012

Prepare process cost accounts and abnormal wastage and abnormal effective accounts.

Solution
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08.
The product of company passes through three distinct processes to completion. They are known as A, B and C. From past experience it is ascertained that loss is incurred in each process as Process A : 2%, Process B: 5% Process C : 10%

In each case the percentage of loss is computed on the number of units entering the process concerned.

The loss of each process possesses a scrap value. The loss of processes A and B is sold at Rs. 5 per 100 units and that of process C at Rs. 20 per 100 units. The output of each process passes immediately to the next process and the finished units are passed from process C into stock

Process A
Rs.
Process B
Rs.
Process C
Rs.
Materials consumed
Direct Labour
Manufacturing Expenses
6,000
8,000
1,000
4,000
6,000
1,000
2,000
3,000
1,500

20,000 units have been issued to process A at a cost of Rs. 10,000. The output of each process has been as under:

Process A : 19,500; Process B: 18,800; Process C : 16,000

There is no work-in-progress in any process. Prepare Process accounts, Calculations should be made to the nearest rupee.

Solution
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