Page 267 - DCOM202_COST_ACCOUNTING_I

Unit 13: Normal Wastage, Abnormal Loss and Abnormal Gain

20,000 units of crude material were introduced in process I at the cost of ` 8,000. Notes
Process I Process II Process III

Materials consumed 4,000 1,500 1,000
Direct labour 6,000 4,000 3,000
Expenses 1,000 500 1,500
Output (in unit) 10,500 10,250 15,000
Prepare process Accounts.

Solution:

Process Account I
Amount Amount
Particulars Units Particulars Units
(`) (`)
To Materials 20,000 8,000 By Normal wastage 400 20
“ Introduced materials 4,000 “ Abnormal wastage 100 97
“ Direct labour 6,000 “ Output transferred to 19,500 18,883
“ Expenses 1,000 process II @ ` 0.97 per
unit
20,000 19,000 20,000 19,000

Process Account II
Amount Amount
Particulars Units Particulars Units
(`) (`)
To Process II a/c 19,500 18,883 By Normal wastage 975 48
“ Materials 1,500 “ Output transferred to 19,250 25,807
“ Direct labour 4,000 process III @ ` 1.34 per
unit.
“ Expenses 500
“ Abnormal gain 725 972
20,225 25,855 20,225 25,855
Process Account III

Amount Amount
Particulars Units Particulars Units
(`) (`)
To Process II a/c 19,250 25,807 By Normal wastage 1,925 385
“ Materials 1,000 “ Abnormal wastage 1,425 2,543
“ Direct labour 3,000 “ Output transferred to 15,900 28,379
“ Expenses 1,500 Finished stock Account
@ ` 1.78 per unit.
19,250 31,307 19,250 31,307

Example: The product of a factory passes through three processes of manufacture. The
output of each process is transferred to the next process at cost on completion. The stocks which
consist of raw materials are to be valued at cost per unit of the preceding process.
From the following particulars prepare process cost account showing the cost of the output and
the cost per unit at each stage of production.

LOVELY PROFESSIONAL UNIVERSITY 261