Page 255 - DCOM202_COST_ACCOUNTING_I

Unit 12: Process Costing and its Applications

production (Gross) 37,000 Units — — Notes
Wastage 1,000 Units 1,500 Units 500 Units

Stock 1st July, 2006 — 4,000 Units 16,500 Units
Stock 31st July, 2006 — 1,000 Units 5,500 Units
Solution:

Process Account A
Amount Amount
Particulars Units (`) Particulars Units (`)
(`) (`)
To Materials 37,000 2,400 By Transfer to process B 36,000 3,600
To Wages 640 (Cost per unit ` 0.10)
To Manufacturing expenses 360 By Wastage 1,000 --
To Factory on cost 200
37,000 3,600 37,000 3,600

Process Account B

Amount Amount
Particulars Units (`) Particulars Units (`)
(`) (`)
To Stock 4,000 By process C a/c (transfer 37,500 5,625
To process A a/c 36,000 at ` 0.15 per unit)
40,000
Less : Closing stock 1,000 By Wastage 1,500 --
39,000 3,900
To Wages 1,200
To Manufacturing expenses 300
To Factory on cost 225
39,000 5,625 39,000 5,625
Process Account C

Particulars Units (`) Amount (`) Particulars Units (`) Amount (`)
To Stock 16,500 By Cost of Finished 48,000 10,800
To process B a/c 37,500 goods (cost of per
unit ` 0.21)
54,000
Less : Closing stock 5,500 By Wastage 500 --
48,500 7,275
To Wages 2,925
To Manufacturing expenses 360
To Factory on cost 240
48,500 10,800 48,500 10,800

Example: The finished goods of an industry pass through three processes known as M,
N and O. The production of each process being passed on the next process. From the following
figures show the cost of each process.

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