PROCESS COSTING PRACTICE EXAMPLES Sliuiple Protess Account — Withont losses and Closing WIP. ample 1.1 Input (o Process I during a period was 1,000 units of raw materials cost Rs. 40,000. Other costs were: labour ~ Rs, 50,000, overheads ~ Rs. 20,000, All output was transferred to Process II. In process.II no further material was added but labour cost of Rs. 20,000 and overhead cost of Rs. 5,000 was incurred, Output of process II was transferred to finished product storeroom: Required: Complete the Process | account and Process II account SMR STL PTE Rd Example 2.1 Process 1 Input to Process I during a period was 1,000 units of raw materials, cost Rs. 40,200, Other costs were: labour ~ Rs, 30,000, overheads ~ Rs.20,000. All output was transferred to Process Ul. In process 1, lasses normally account for 10% of input which have scrap value of Rs. 2 per unit. Actual ‘output was 900 units in Process 1. Process II In process IL, further material cost of Rs. 40,000, labour cost of Rs. 60,000 and overheads cost of Rs. 27,890 added on 900 units received from process 1. In process II, normal loss account from 5% of input and have disposal cost of Rs. 3 per unit, Actual Loss was 45 units and output was 855 units. Required: Prepare the Process I and Process II account Example 2.2 (4) Process I Input to Process I during a period was 1,000 units of raw materials, cost Rs. 40,500. Other costs were: labour ~ Rs. 30,000, overheads ~ Rs.20,000, All output was transferred to Process II. In process [, losses normally account for 10% of input and losses have scrap value of Rs. 5 per unit. 1al output was 880 units in Process I Process LL In process UI, further material cost of Rs. 20.440, labour cost of Rs. 30,000 and overheads cost of Rs. 8,300 added on 880 units received from process I. In process Il, normal loss account from 5% of input and losses have scrap value of Rs. 10 per unit. Actual output was 850 units in Process 1 Required: Prepare the Process I and Process Il account, Abnormal loss account, Abnormal gain account, Normal loss account, scrap account, ye Input to Process 1 during a period was 1,000 units of raw materials cost Rs.48,000. Other costs were: labour ~ Rs.45,000, overheads — Rs.34,000. Actual output of 800 units was transferred to Process If and remaining 200 units were still in process at the end of period. Incomplete 200 units were 50% complete with respect (o labour and 25% complete with respect to overheads. Material is added at the beginning of the process and there was no loss during the processing, Process I In process II, further material cost of Rs. 37.500 labour cost of Rs.29,750 and overheads cost of Rs. 29,750 ded! on 800 units received from process I. In process II; Actual output of 700 units was tuansterved t finished goods warchouse. Closing WIP were ‘s0% complete with respect to conversion cost, Material is added at the end of process and there was no loss during processing, Required: Prepare the Process I and Process II account, ‘Accountancy Page 1Example 3.2 The F Co. manufactures a product that passes through two processes. The following information relates to the two processes: Process A Process B Units input 14,000 units 10,000 units Units completed and transfer to next process 10,000 units 9,000 units Closing work in process 4,000 units 1,000 units Material cost added Rs, 210,000 Rs, 108,000 Conversion cost Rs. 144,000 Rs. 171,000 Materials are added at the start of process A and at the end of process B and conversion costs are added uniformly throughout both processes. The closing work in process is estimated to be 50% complete for both processes. Required: Prepare process A and process B account with relevant calculations. Example 4.1 Department 1 Input in department! during a period was 10,000 units of raw materials cost Rs. 38,000. Other costs were; labour ~ Rs. 15,000, overheads ~ Rs. 7,500. Actual output of 6,000 units was transferred to department 2, 3,000 units were still in process at the end of period and remaining units are lost, In department 1, losses normally account for 10% of input and losses have scrap value of Rs. 2 per unit Closing WIP units were 50% complete with respect to conversion cost. Material is added at the beginning of the process. Department 2 In department 2, further material cost of Rs. 28,500 labour cost of Rs. 14,700 and overheads cost of Rs, 4,900 added on units received from department 1. In department 2, actual output of 3,700 units ‘was transferred to finished goods warehouse. Closing WIP 2000 units were 60% complete with respect to conversion cost, Material is added at the beginning of process and there was normal loss of 5% of units received during processing. Required: Prepare Process account for department | and department 2. Example 4.2 Process A Input to Process A during a period was 10,000 units of raw materials cost Rs. 39,000. Other costs were: labour ~ Rs. 15,000, overheads ~ Rs. 7,500. Actual output of 5,000 units was transferred to Process A and remaining 3,000 units were still in process at the end of period. Incomplete 3,000 units were 50% complete with respect to conversion cost. Normal loss was 10% of inspected units, Material is added at the start of process and losses are recognized when units are 60% complete. Actual loss in process A was 2,000 units and has scrap value for Rs. 3 per unit, Process B In process B, further material cost of Rs. 29,000 labour cost of Rs. 14,700 and overheads cost of Rs. 4,900 added on units received from process A. In process B, Actual output of 3,000 units was transferred to finished goods warchouse. Closing WIP units were 30% complete with respect to conversion cost. Material is added at the beginning of process. Normal loss was 5% of units received from preceding process and losses have scrap value of Rs. 2 per unit Required: Prepare the Process A and Process B account, Abnormal loss account, ———— ABDUL AZEEM-SKANS School of Accountancy Page 2Example 4.3, Process 1 Tut to Process I during a period was 10,000 units of raw materials cost Rs. 51,000. Other cosis eee vou RS, 27,000, ovetheads ~ Rs. 18,000. Actual output of 6,000 units was transferred to aeeeesety and remaining 2000 units were still in process atthe end of period. Incomplete 2000 units aaeesove complete with respect to labour and overheads. Material is added at the beginning of she process and there was expected loss of 5% of input. Losses are recognized when units are 90% complete and have scrap value of Rs. 2 per unit. Process IT Fae tuess I, further material cost of Rs. 23,000 labour cost of Rs. 17,850 and overheads cows of I's 10.900 added on 6,000 units received from process I. In process 11, Actual loss was 250 units Ciicing WIP of 1000 units was 40% complete with respect to conversion cost. Material is added at cae er process and there was expected loss of 5% of input. Remaining units were transferred to finished goods Warehouse. Loss units can be sold at a scrap value of Rs. 1 per unit, Required: Prepare the Process I account, Process II account, abnormal loss account and abnormal Suen COINS ERAS Example 5.1 Particulars DepartmentA Department B Opening Work in Process (100%Material,30% conversion) 3000 units 3000 units* Units Started/Received 10000 units 7000 units Units completed and transferred out 7000 units 6000 units Closing Work in Process (100%Material,50% conversion) 3000 units 2000 units** Normal Loss 2000 units 500 units Abnormal Loss 3000 units 1500 units, Cost of Opening Work in Process: ‘Transferred in Cost _ Rs. 15000 Material Cost Rs.2500 Rs.6000 Labor Cost Rs.1500 Rs.3600 Factory overhead cost Rs.750 Rs.2400 Cost Added during Current month; Material Cost Rs.52000 Rs,25500 Labour Cost Rs.23000 Rs.16000 Factory overhead cost Rs.11500 Rs.8000 * (100%Material Cost, 40% Conversion Cost) +* (50%Material Cost, 25% Conversion Cost) Required: Prepare process accounts under weighted average method of inventory valuation. Example 5.2 Particulars Processl Process 2 Opening Work in Process 1000 units* 3000 units** Units started 19,000 units 12000 units Units completed and transferred out 12000 units 8000 units Closing Work in process 7500 units*** 5000 units**#* Normal Loss ~Fnd of Process 10% of Input 10% of Input Abnormal Loss 1 2 ‘ost of Opening work in Process: Transferred in Cost - Rs.10000 Material Cost, Rs.5000 Rs.5000 sbor Cost Rs.1800 Rs.2100 — — — — — — —_— — — — — — —— ABDUL AZEEM-SKANS School of Accountancy Page 3Factory overheads cost Rs.1800 Rs.2100 Cost Added in current month: Material Cost Rs.35000 Rs.25000 Labor Cost Rs.12500 Rs. 10000 Factory overheads cost Rs.12500 Rss. 10000 Rs.ip.t Rs.Ip.u Scrap of loss units * (50%Material, 25%Conversion) w¥ (75%Material, 50%Conversion) #8 (100%Material, 50%Conversion) 44 (100%Material, 75%Conversion) Required: Prepare process accounts using Weighted Average method Ler pan Example 6.1 Particulars Department A Department B Opening Work in Process (100%Material,30% conversion) '5000 units 3000 units* Units Started/Received 10000 units 7000 units Units completed and transferred out 7000 units 6000 units Closing Work in Process (100%Material,50% conversion) 3000 units 2000 units** Normal Loss 2000 units 500 units Abnormal Loss 3000 units 1500 units ing Work in Process: Transferred in Cost _ Rs.15000 Material Cost Rs.2500 Rs.6000 Labor Cost Rs. 1500 Rs.3600 Factory overhead cost Rs.750 Rs.2400 Cost Added during Current month: ‘Material Cost Rs.52000 Rs.25500 Labour Cost Rs.23000 Rs.16000 tory overhead cost Rs.11500 Rs.8000 + (100%Material Cost, 40% Conversion Cost) 4 (50%Material Cost, 25% Conversion Cost) Required: Prepare process accounts under FIFO method of inventory valuation. Example 5.2 Particulars Process! Process 2 Opening Work in Process 1000 units* 3000 units** Units started 19,000 units 12000 units Units completed and transferred out 12000 units 8000 units Closing Work in process 7500 units*** 5000 units**** Normal Loss -End of Process 10% of Input 10% of Input ‘Abnormal Loss 2 1 Cost of Opening work in Process: Transferred in Cost = Rs. 10000 Material Cost Rs.5000 Rs.5000 Labor Cost Rs. 1800 Rs.2100 Factory overheads cost Rs, 1800 Rs.2100 Cost Added in current month: Material Cost Rs,35000 R.25000 Labor Cost Rs. 12500 Rss. 10000 Factory overheads cost Rs.12500 Rs.10000 Scrap of loss units Rs.Ip.t Rs.ip.t * (50%Material, 25%Conversion) +## (75%Material, 50%Conversion) ++ (100%Material, 50%Conversion) + (100%Material, 75%Conversion) Required: Prepare process accounts using FIFO method. — oo ABDUL AZEEM-SKANS School of Accountancy Page 4