Page 296 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes Direct wages ` 1,10,000
Overheads ` 75,000

Solution:
Statement of Equivalent Production

Input Output Equivalent Production in Units
As regards direct
As regards materials
Total wages and overheads
Particulars Units Particulars
Units Stage of No. of Stage of No. of
completion units completion Units
Units 4,000 Completed and transferred 3,000 100% 3,000 100% 3,000
Introduced to next process
in the Closing stock 800 80% 640 70% 560
process
Normal loss 200 -- -- --
Total 4,000 Total 4,000
Total equivalent 3,640 3,560
completed units

Statement of Cost
Cost per
Elements of cost Cost (`) Equivalent Production in Units
Unit (`)
Materials 80,000
Less: Value of scrap 200 units @` 10 2,000
78,000 3,640 21.43
Direct wages 1,10,000 3,540 30.90
Overheads 75,000 3,560 21.07
Total 2,63,000 — 73.40

Example: The following data is available in respect of process Z for the month of June,
2006:

Opening Stock 100 units
Value: Materials (A) ` 4,000; Material (B) ` 2,000.
Labour ` 350, production Overheads ` 800
Transfer from process 1:16,000 units of ` 81,000
Transfer to process 3: 14,500 units

Labour added to process 2 ` 43,750
Labour amounted to ` 14,300
production overhead absorbed ` 28,500
Units scrapped: 500
Degree of completion: Materials 100%

Labour 60%
production overhead 20%
Normal loss was estimated at 5% of production units realised ` 5 per unit

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