Process Accounts - Normal Loss, Abnormal Loss, Abnormal Gain - Income statement
Problem 1
| Items | Total | Processes | ||
|---|---|---|---|---|
| I | II | III | ||
| 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 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 |
|---|---|---|---|
| I II III | 950 840 750 | 5% 10% 15% | 2 4 5 |
Prepare process cost accounts and abnormal gain or loss accounts.
Solution Will update soon
Problem 2
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 @ 0.25 per unit, that of Process II is sold @ 0.50 per unit and that of Process III is sold @ 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 Will update soon
Problem 3
Product ZENU is made by three sequential process, I,IIand llI. In process IIIa by-product arises and after further processing in process XY, at a cost of Rs. 2 per unit, by-product 'XYZ' is produced. Selling and distribution expenses of Re. 1 per unit are incurred in marketing 'XYZ' at a selling price o( Rs. 9 per unit.
| Process I | Process II | Process III | |
|---|---|---|---|
| Standards provided for Normal loss in process of input, of Loss in process, having a scrap value, per unit, | 10% 3 | 5% 3 | 10% 5 |
For the month of April _2 the following data are given
| Process I | Process II | Process III | Process XY | |
|---|---|---|---|---|
| Output, in units Costs Direct Materials-introduced (10,000 units) Direct materials added Direct wages Direct expenses | 8,800 20,000 6,000 5,000 4,000 | 8,400 12,640 6,000 6,200 | 7,000 of ZENU 23,200 10,000 4,080 | 420 of XYZ Total 20,000 41,840 21,000 14,280 |
Budgeted production overhead for the month was 84,000.
Absorption is based on a percentage of direct wages.
There are no stocks at the beginning or end of the month.
You are required, using the information given to prepare accounts for:
(a) Each process I,II and III;
(b) Process XY
Problem 4
The details of expenses incurred on the three processes during the year 2005 were as under:
| P | Q | R | |
|---|---|---|---|
| Units Issued Cost per Unit Sundry Materials Labour Direct Expenses Sale Price of Output (per unit) | 10,000 100 10,000 30,000 6,000 120 | 15,000 80,000 18,150 165 | 5,000 65,000 27,200 250 |
Management expenses during the year were 80,000 and selling expenses were 50,000. These are not allocable to the processes.
Actual output of the three processes was : Process P-9,300 units; Process Q-8,400 units; process R-6,100 units.
Two-thirds of the output of Process P and one-half of the output of Process Q was passes on to the next process and the balance was sold. The entire output of Process R was sold.
The normal loss of the three processes, calculated on the input of every process, was: Process P-5%; Process Q-15%; and process R-20%.
The loss of Process P was sold at 2 per unit, that of Process Q at 5 per unit and that of Process R at 10 per unit.
Prepare the three process accounts and the Profit & Loss a/c.
Solution Will update soon