Page 293 - DCOM202_COST_ACCOUNTING_I

Unit 14: Equivalent Production in Process Costing

Transferred from process 2 – 20,000 units @ ` 6 per unit. Transferred to process 4 – 17,000 units Notes
Expenditure incurred in process – 3
`
Direct Material 30,000

Direct Labour 60,000
Overheads 60,000
Scrap:1,000 units-Direct Materials 100%,Direct Labour 60%, Overheads 40%.
Normal Loss 10 % of production.

Scrapped units realized ` 4/- per unit
Closing stock : 4,000 units – Degree of completion. Direct Materials 80 %, Direct Labour 60 % and
Overheads 40 %.
prepare process 3 Account using average price method along with necessary supporting
statements.
Solution:

Statement of Equivalent Production (Weighted Average Cost Material)
Particulars Total Material – I Material – II Labour Overheads
Units % Units % Units % Units

Units
Completely
processed 17000 100 17000 100 17000 100 17000 100 17000
Normal Loss 1800 -
10% of (2000 +
20000 – 4000)
Abnormal Gain 800 100 800 100 800 100 800 100 800
Closing Stock 4000 100 4000 80 3200 60 2400 40 1600
22000 20200 19400 18600 17800

Statement of Cost
Particulars Cost Equivalent Rate/Equivalent
(`) Units Units (`)
Material – I :
Opening balance 2000 units 12,350
Cost of 20000 units @ ` 6
per unit 1,20,000
1,25,150 20,200 6.1955
Material – II :
Opening Stock 13,200
In process II 30,000
43,200 19,400 2.2268

Contd…

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