Page 271 - DCOM202_COST_ACCOUNTING_I

Unit 13: Normal Wastage, Abnormal Loss and Abnormal Gain

Notes
Example: The following details are extracted from the costing records of an oil mill for
the year ended 31st March, 2007:
purchases of 500 tons of copra ` 2,00,000

Crushing (`) Refining (`) Finishing (`)
Cost of labour 2,500 1,000 1,500
Electric power 600 360 240
Sundry materials 100 2,000 —
Repairs to machinery 280 330 140

Steam 600 450 450
Factory expenses 1,320 660 220
Cost of casks ` 7,500.
300 tons of crude oil was produced.
250 tons of oil was produced from the refining process.

248 tons of refined oil was finished for delivery.
Copra sacks sold ` 400.
175 tons of copra residue sold ` 11,000.
Loss-in-weight in crushing 25 tons.

45 tons of by products obtained from refining process ` 6,750.
You are required to show the account in respect of each of the following stages of manufacture
for the purpose of arriving at the cost per ton of each process and the total cost per ton of finished
oil:
(a) Copra crushing process,
(b) Refining process, and
(c) Finishing process including casking.

Solution:
Copra Crushing Process

Amount Amount
Particulars Tons Particulars Tons
(`) (`)
To Copra used 500 2,00,000 By Sale of copra stocks -- 400
“ Labour 2,500 “ Sale of copra residue 175 11,000
“ Electric power 600
“ Sundry materials 100 “ Loss in weight 25 --
“ Repairs to machinery 280 “ Cost of crude oil (cost 300 1,94,000
“ Steam 600 per ton ` 646.66)
“ Factory expenses 1,320
500 2,05,400 500 2,05,400

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