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CAS 1-Classification of Cost
The Cost Accounting Standard 1 (CAS 1) issued by the Council of the Institut...
From Vivekanand
Collin, Chapter # 5, Example # 5.1, Page # 156Case Particular Input Output Normal AbnormalLoss LossLtrs Ltrs Ltrs Ltrs
1 No losses 12,000 12,000 - -2 Normal loss- no S.V 12,000 10,000 2,000 (1/6) -3 Abnormal loss - no S.V. 12,000 9,000 2,000 (1/6) 1,0004 Normal loss - with SV 12,000 10,000 2,000 (1/6) -5 Abnormal loss - with SV 12,000 9,000 2,000 (1/6) 1,0006 Abnormal gain - no SV 12,000 11,000 2,000 (1/6) -7 Abnormal gain - with SV 12,000 11,000 2,000 (1/6) -
Required no.1 When No losses in the process
Process Cost AccountUnits Rate CostInput 12,000 10 120,000 Output12,000 120,000Cost per unit = Cost of input / Nos. of output units (Expected output units)= Rs. 120,000 / 12,000 units= Rs. 10 per unit.
Input cost includes cost of direct material and cost of conversion. In this theunits, therefore the cost of output is equal to cost of input.
Required no.2: When Normal loss in the process (With NO salvage value)
Process Cost AccountUnits Rate CostInput 12,000 10 120,000 OutputNormal loss12,000 120,000
Cost per unit = Cost of input / Nos. of Expected output units (excluding norm
= Rs. 120,000 / 10,000 units= Rs. 12 per unit.The normal loss is inherient in nature, and it occur under efficient operating conditiunavoidable.
Cost is not assigned to nos. of units lost.The cost of material loss (Normal) is transferred to nos. of expected goods oincreases the per unit cost of finished goods.F
or Input: For Output
Work in process Debit Finished goodsRaw material Credit Work in processAccured payrol CreditFOH (Applied) Credit
No entry for normal loss bnormal loss units.Required no.3: When Abnormal loss in the process (With NO salvage value)
Process Cost Accountunits Rate CostInput 12,000 10 120,000 OutputNormal loss
Abnormal Lo12,000 120,000
Cost per unit = Cost of input / Nos. of Expected output units (including abno
= Rs. 120,000 / 10,000 units= Rs. 12 per unit.Abnormal loss AccountUnits Rate CostProcess cost account 1,000 12 12,000 Profit and los1,000 12,0001 These losses are not an inherent in nature and that is why it is called abnormal or 23 It is treated as a periodic cost and written off in the profit statement at the end of a4 Cost of abnormal loss in not included in cost of ending inventory, if any.
For Input For Abnormal Loss:
Same entry
a) Transferred from Process account to Abnormal
For Output
Abnormal loss accountSame entry Process cost account
b) Transferred to Profit and loss account:
Profit and loss accountAbnormal loss account
For normal loss:
No entry will be made
Required no.4: When Normal loss in the process (With salvage value)
Process Cost AccountUnits Rate CostIt will be excluded from the process account
having a value equal to the value of
of 00
Process Costing Examples-vuguide.tk
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