Page 270 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes Process Account III

Particulars Tons Amount (`) Particulars Tons Amount (`)
To Transferred from 540 10,800 By Loss in weight 72 --
process II a/c “ Sale of scrap 108 648
“ Materials 1,260 8,820 “ Cost of production 1,620 21,867
“ Wages 2,895 transfer to warehouse
(cost per ton ` 13.19)
1,800 22,515 1,800 22,515

Task pramod Limited produce a patent materials used in building in the manufacture of
which three processes are involved. The material is produced in three consecutive grades,
namely, soft, medium and hard. Figures relating to production for the first six months of
2007 are as follows:
process I process II process III
Raw materials used tons 1,000 — —
Cost of per ton 200 — —
Manufacturing wages and expenses 72,500 40,800 10,710
Weight lost 5% 10% 20%
Scrap (sold at ` 50 per ton) 50 tons 30 tons 51 tons
Two-third of process I and one-half of process II are passed to the next process and the
balance are sent to the warehouse for sale.
You are required to prepare an account for each process, showing the cost per ton of each
process.

13.4 Oil Refinery Processes

Oil refineries have normally three processes:
(a) Crushing Process: In crushing process raw material i.e., oil seeds or coconut or copra etc.
are used. Other expenses of the process are debited. Sale of bags or sacks is credited. Oil
cakes or oil residue are sold as a by-product. The output is crude oil transferred as input in
the next process. There may be loss in weight in the process.
(b) Refining Process: Crude oil from Crushing process is debited. Other materials, wages and
overheads of the process are debited. Loss-in-weight if any in this process is credited. The
output of process is refined oil. Fats and residual oil may be obtained as by-products which
are credited. The output being refined oil is transferred to the Finishing Process.
(c) Finishing Process: Refined oil obtained from Refining Process is debited. Other materials,
wages and overheads of the process are also debited. Sale of by-product and loss-in-weight
are credited. The balance of this process is credited as cost of production of refined oil. Cost of
drums or tins for storage of refined oil is also debited to find out cost of stored finished oil.

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