Page 278 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes Process Output during Percentage of normal Value of scrap per
the month loss to input unit (`)
A 950 5% 2
B 840 10% 4
C 750 15% 5
Prepare the process accounts and abnormal gain or loss accounts.

6. A product is obtained after passing it through three processes. The following information
is collected for August, 2005:
Process A Process B Process C
Materials ` 5,200 ` 3,960 ` 5,924

Wages ` 4,000 ` 6,000 ` 8,000
Output in units during the month 950 840 750
Normal loss 5% 10% 15%
Value of scrap per unit ` 4 ` 8 ` 10
Additional information are given below:
1,000 units @ ` 6 each were introduced in Process A. There was no stock of materials or WIP
at the beginning or at the end of that month. The production overhead was ` 18,000 for that
month.

Prepare the necessary process accounts indicating normal loss, abnormal loss and abnormal
gain.
7. 600 kg of a material was charged to Process A at the rate of ` 4 per kg. The direct wages
accounted for ` 200 and other expenses amounted to ` 760. The normal loss is 10% of input and
the net production was 500 kg. Assuming that process scrap is saleable at ` 2 per kg. Prepare
a ledger account of Process A clearly showing the values of normal or abnormal loss.
8. The product of a soap factory has to pass through three stages before the article comes out
in a finished form. These processes are known as I, II and III. The wastage in each of these
processes is as follows:
Process I 2%; Process II 5% and Process III 10%.
In each case, the percentage of wastage is computed on the number of units entering the
process concerned. The wastage of each process possesses a scrap value. The wastage of
Process I and II is sold at ` 5 per 100 units and that of Process III at ` 20 per 100 units. The
output of each process passes immediately to the next process and the finished units are
passed from Process III into stock. The following other information is obtained:
Process I (`) Process II (`) Process III (`)

Materials 8,000 4,000 2,000
Direct wages 12,000 8,000 6,000
Other expenses 2,000 2,000 3,000
40,000 units have been issued to Process I at a cost of ` 16,000. The output of each process
has been as under: Process I 39,000, Process II 37,600 and Process III 32,000. There is no
stock or work-in-progress in any process. Prepare the Process Accounts.

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