Page 258 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes process A process B
Materials consumed (Tons) 1,000 70
Cost of materials per ton ` 200 ` 300
Manufacturing wages ` 20,000 ` 15,000
Manufacturing expenses ` 6,000 ` 4,000
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 Materials @ `200/- 1,000 2,00,000 By Loss in weight (2% 20 —
“ Manufacturing wages 20,000 of 1,000 tons)
“ Manufacturing expenses 6,000 “ Sale of Scrap (5% of 1,000 50 5,000
tons and sold @
` 100 a ton)
“ Transfer to Process B 930 2,21,000
(Cost per ton ` 237.63)
1,000 2,26,000 1,000 2,26,000

Process Account B
Amount Amount
Particulars Tons Particulars Tons
(`) (`)
To Transferred from process 930 2,21,000 By Loss in weight (2% of 20 —
A 1,000 tons)
“ Materials @ `300/- 70 21,000
“ Manufacturing wages 15,000 “ Sale of scrap (5% of 1,000 50 10,000
“ Manufacturing expenses 4,000 tons and sold @
` 200 a ton)
“ Transfer to Finished 930 2,51,000
stock (Cost per ton
`269.89)
1,000 2,61,000 1,000 2,61,000

Task A company manufactures and sells three chemicals produced by consecutive
process. In each case, 2 per cent of the total weight put in is lost and 10% is scrap which
from process A and B realises ` 100 a ton and from process C ` 20 a ton. The product of
three processes are as follows:
process A process B process C
Sent to warehouse for sale 25% 50% —
passed on to next process 75% 50% —
The following particulars relate to the month of August, 2007:
process A (`) process B (`) process C (`)
Raw materials used (Tons) 1,000 140 1,348
Cost per ton 120 200 80
Direct wages and expenses 30,800 25,760 18,100
prepare an account for each process, showing the cost per ton of each product.

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