Page 301 - DCOM202_COST_ACCOUNTING_I

Unit 14: Equivalent Production in Process Costing

12. A work order passes through two distinct processes. The product of the first process, Notes
less wastage and by-product becomes the raw materials for the second process. All
by-products are sold off direct from the factory. The following information is obtained
from the industry records:
process I process II
Raw materials 1,000 tons at ` 30 a ton
Wages ` 25,000 ` 20,000
Factory overheads 80% of wages 75% of wages

Wastages 10 tons 15 tons
Sale of by-products 190 tons at cost plus 20% 85 tons at cost plus 25%
Give the necessary accounts for I and II processes, showing at each stage the cost of the
production and the profit on the sale of the by-products.

13. The following details are available from the books of a industry in which two processes are
employed. prepare necessary accounts.
process I process II
Materials 1,000 tons @

` 50 per ton
Wages ` 30,000 ` 20,000
Factory overheads 50% of wages 30% of wages
Wastage 100 tons 200 tons

By-products 100 tons sold at cost plus 20% 200 tons sold at cost plus 25%
Answers: Self Assessment

1. True 2. True
3. True 4. True
5. False 6. False
7. True 8. False

9. False 10. True
11. True 12. joint costs
13. By-products 14. Credited, deducted
15. Profit 16. Equivalent production

14.8 Further Readings

Books Arora M. N., Cost and Management Accounting, Himalaya publishing House,
2010.
pandey, IM, Management Accounting, Excel Book, New Delhi, 2007.

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