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Process Costing

Process Costing

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Published by Pritam Jena

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Published by: Pritam Jena on May 14, 2011
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08/02/2013

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Presented by Badal Chandra Paul (068) Pritam Pritiman jena (092

)

€ In

many industries, for manufacturing a product, the raw material has to pass through several distinct stage of manufacture in a pre-determined sequence. Each such stage of manufacturing is called a ´Processµ and the cost incur in these process is called as Process costing.

mills € Sugar industry € Chemical industry € Oil Refining € Cement industry € Paper industry € Steel industry € Food Processing.
€ Textiles

production is continuous and the final product is the result. € Costs are accumulated by processes. € The products are standardized & homogeneous € Process costing is used mass production. € Process flow is pre-determined or sequence is specified.
€ The

1)

2)

3) 4)

The factory is divided into a no. of processes and an account is maintained for each process. Each process account is debited with material cost, labour cost, direct expenses and overheads allocated or apportioned to the process. The output of a process is transferred to the next process in the sequence. The finished output of the last process is transferred to the finished goods account.

€A

product pass through three process A, B and C. Normal wastage is 3%, 5% and 8% respectively. This wastage can be sold .25 p, .50 p and Rs 1.00 .10000 units were introduced of process A in Rs 1
particulars Sundry Mt. Labour Dt. expenses Actual output Process A 1000 5000 1050 9500 Process B 1500 8000 1188 9100 Process C 500 6500 2009 8100

Particular

unit

amount

Particular

Unit

amount

To material To sundry material To labour To direct exp. Total

10000

10000 1000 5000 1050

By normal loss By abnormal loss By actual output (tr to process B)

300 200 9500

75 350 16625

10000

17050

Total

10000

17050

Particular To tr from process A To sundry mt. To labour To direct exp.

Unit 9500

Amount 16625 1500 8000 1188 225 27538

Particular By normal loss By actual output (tr. To process C)

Unit 475 9100

Amount 238 27300

To abnormal gain 75 Total 9575

Total

9575

27538

27313- 237.5 9500-475

= 3.00

Particular To tr. Process B To sundry mt. To direct exp. To labour Total

Unit 9100

amount Particular 27300 500 2009 6500 By normal loss By abnormal loss By finished goods

Unit 728 272 8100

amount 728 1156 34425

9100

36309

Total

9100

36309

36309.5-728 9100-728

=4.25

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