Page 249 - DCOM202_COST_ACCOUNTING_I

Unit 12: Process Costing and its Applications

process A (`) process B (`) process C (`) Notes
Materials 2,000 3,000 2,000

Labour 5,000 4,000 3,000
Direct expenses 800 900 1,000
Indirect expenses amounted at all to 6,000. These are to be allocated on the basis of direct wages.
Raw materials worth ` 6,000 were issued to process A. prepare process cost accounts showing
cost per article produced.
Solution:

Process Account A
(Output: 1,000 units)

Cost per Cost per
Particulars Total (`) Particulars Total (`)
unit (`) unit (`)
To Raw materials 6.00 6,000 By Transfer to process 16.30 16,300
“ Materials 2.00 2,000 B a/c
“ Direct wages 5.00 5,000
“ Direct expenses 0.80 800
“ Indirect expenses 2.50 2,500
16.30 16,300 16.30 16,300

Process Account B

Cost per Cost per
Particulars Total (`) Particulars Total (`)
unit (`) unit (`)
To Transfer from process A 16.30 16,300 By Transfer to process B 26.20 26,200
a/c a/c
“ Materials 3.00 3,000
“ Direct wages 4.00 4,000
“ Direct expenses 0.90 900
“ Indirect expenses 2.00 2,000
26.20 26,200 26.20 26,200
Process Account C

Cost per Cost per
Particulars Total (`) Particulars Total (`)
unit (`) unit (`)
To Transfer from 26.20 26,200 By Transfer to Finished 33.70 33,700
process B a/c stock a/c
“ Materials 2.00 2,000
“ Direct wages 3.00 3,000
“ Direct expenses 1.00 1,000
“ Indirect expenses 1.50 1,500
33.70 33,700 33.70 33,700

Example: product A requires three distinct processes and after the third process, the
product is transferred to finished stock. You are required to prepare related process accounts
from the following informations:

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