Page 286 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes Solution:

Joint Expenses Account
Amount Amount
Particulars Particulars
(`) (`)
To Materials 9,000 By X’s production a/c 13,900
“ Labour 4,000 “ Y’s Production a/c 1,100
“ Other expenses 2,000
15,000 15,000

X’s Production Account
Amount Amount
Particulars Particulars
(`) (`)
To Joint expenses a/c 13,900 By Cost of production 17,700
“ Materials 2,000
“ Labour 800
“ Other expenses 1,000
17,700 17,700

Y’s Production Account
Amount Amount
Particulars Particulars
(`) (`)
To Joint expenses a/c 1,100 By Cost of production 2,800
“ Materials 1,000
“ Labour 300
“ Other expenses 400
2,800

Example: A XYZ chemical process yields 70 per cent of the materials introduced as main
product and 20 per cent as a by-product, 10 per cent being lost. Technical information reveals
that of the materials 75 percent is absorbed by the main product and 25% by the by-product. One
unit of main product needs double the time needed for one unit of by-product and overheads are
absorbed in the ratio of 3:1.
During a week, 1,000 units of raw materials at a cost of ` 5,000 were introduced. Labour totaled
` 3,200 and overheads came to ` 2,000. Wastage realised ` 200. Ascertain the cost of two
products.
Solution:

Total number of units produced:
Units
Main product 70% 700
By-product 20% 200
Wastage 10% 100

Materials introduced 1,000

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