Page 250 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes Total (`) X (`) X (`) X (`)
1 2 3
Direct material 5,000 4,000 500 500

Direct labour 4,000 1,500 1,600 900
Direct expense 800 400 400 —
production overheads 6,000 — — —
production overhead is to be allocated to different processes on the basis of 150% of direct wages.
Production during the period was 200 units. Assume there is no opening and closing stock.
Solution:

Process Account X 1
(Output: 200 units)
Cost per Cost per
Particulars Total (`) Particulars Total (`)
unit (`) unit (`)
To Direct materials 20.00 4,000 By Output transferred to 40.75 8,150
“ Direct labour 7.50 1,500 process X 2
“ Direct expenses 2.00 400
“ Production overheads 11.25 2,250
40.75 8,150 40.75 8,150
Process Account X
2
Cost per Cost per
Particulars Total (`) Particulars Total (`)
unit (`) unit (`)
To Output transferred from 40.75 8,150 By Output transferred to 65.25 13,050
process X1 process X
3
“ Direct materials 2.50 500
“ Direct labour 8.00 1,600
“ Direct expenses 2.00 400
“ Production overheads 12.00 2,400
65.25 13,050 65.25 13,050

Process Account X
3
Cost per Cost per
Particulars Total (`) Particulars Total (`)
unit (`) unit (`)
To Output transferred from 65.25 13,050 By Output transferred to 79.00 15,800
process X finished stock a/c
2
“ Direct materials 2.50 500
“ Direct wages 4.50 900
“ Production overheads 6.75 1,350
79.00 15,800 79.00 15,800

12.3 Wastage, Scrap, defectives and Spoilage

Wastage represents the portion of a basic raw material lost in processing, having no recovery
value. Wastage may be visible, e.g. remnants of basic raw materials, or invisible, disappearance
of basic raw material through evaporation, smoke, etc. In process type of industry, wastage may
have lower reusable value.

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