Page 254 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes
Example: The product of a manufacturing company passes through two processes A
and B, and then to finished stock. It is ascertained that in each process 5% of the total weight put
in is lost and 10% is scrap which from processes A and B realises ` 80 per ton and ` 200 per ton
respectively. The process figures are as follows:
process A (`) process B (`)
Materials consumed in tons 1,000 70

Cost per ton 125 200
Wages 18,000 12,000
Manufacturing expenses 6,000 5,000
prepare process cost accounts showing the cost of the output of each process and the cost per
ton.
Solution:

Process Account A
Amount Amount
Particulars Tons Particulars Tons
(`) (`)
To Material consumed 1,000 1,25,000 By Loss in weight 5% 50 --
To Wages 18,000 By Sale of scrap (10%) 100 8,000
To Manufacturing expenses 6,000 By process B (cost ` 165.88 850 1,41,000
per ton)
1,000 1,49,000 1,000 1,49,000

Process Account B
Amount Amount
Particulars Tons Particulars Tons
(`) (`)
To process A a/c 850 1,41,000 By Loss in weight 5% 46 --
To Material consumed 70 14,000 By Sale of Scrap 10% 92 18,400
To Wages 12,000 By Finished stock (cost 782 1,53,600
To Manufacturing expenses 5,000 ` 196.42 per ton)
920 1,72,000 920 1,72,000

Example: The information given below is extracted from the cost accounts of a industry
production a commodity in the manufacture of which three processes are involved. prepare cost
accounts showing the cost of the output and the cost per unit at each stage of manufacture:
(a) The operations in each separate process are completed daily.
(b) The value at which units are to be charged to process B and C is the cost per unit of process
A and A plus B respectively.
process A (`) process B (`) process C (`)
Direct wages 640 1,200 2,925

Manufacturing expenses 360 300 360
Factory on cost 200 225 240
Raw materials consumed 2,400 — —

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