Page 295 - DCOM202_COST_ACCOUNTING_I

Unit 14: Equivalent Production in Process Costing

Solution: Notes

Statement of Equivalent Production
Input Output Equivalent Production
Materials direct labour Overheads
Items Units Items Units
% Units % Units % Units
Units 1,900 Units 1,500 100 1,500 100 1,500 100 1,500
Introduced completed
Work-in- 400 80 320 70 280 70 780
progress
1,900 1,900 1,820 1,780 1,780
Statement of Cost

Element of Cost or Items Cost (`) Equivalent Production (units) Cost per units (`)
Materials 3,640 1,820 2.00
Direct labour 5,340 1,780 3.00
Overheads 3,560 1,780 2.00

Statement of Evaluation (Cost of per unit)

Element of Equivalent Cost per Total Cost
Production Cost (`)
Cost Production (units) unit (`)
Finished Materials 1,500 2 3,000
Direct labour 1,500 3 4,500
Overheads 1,500 2 3,000 10,500
Work-in-progress Materials 320 2 640
Direct labour 280 3 840
Overheads 280 2 560 2,040

Process Account
Amount Amount
Items Units Items Units
(`) (`)
To Materials 1,900 3,640 By Finished stock a/c 1,500 10,500
To Direct labour 5,340 By Work-in-progress 400 2,040
To Overheads 3,560
1,900 12,540 1,900 12,540

Example: From the following information’s calculate: (i) Statement of Equivalent
Production, and (ii) Cost per unit of finished production.
Units introduced in the process 4,000
Units completed and transferred to next process 3,000
Units in process at the end 800
Stage of completion: Materials 80%; Labour and Overheads 70%
Normal process loss (units) 200
Value of scrap per unit ` 10
Cost of Raw materials ` 80,000

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