8/20/2019 process costing of sugar industry

A PROJECT REPORT ON

“COST ACCOUNTING- PROCESS COSTING IN SUGAR INDUSTRY”

SUBMITTED BY
MISS. MEERA HARESH BHANUSHALI 

ROLL NO: 6202

M.Com. SEM- I
(ADVANCE ACCOUNTANCY)
ACADEMIC YEAR: 20!-"

U#$%& '% *+$,#% o PROJECT GUIDE

PRO/. M. S.GANAGI

SUBMITTED TO UNIVERSITY O/ MUMBAI

MULUND COLLEGE O/ COMMERCE

S N ROAD MULUND (1EST)

MUMBAI - 00030

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Declaration from the Student

I MEERA HARESH BHANUSHALI  R. No. 6202  S'*$%#' o M*4*#$ Co44%% O 

Comm%&% S. N. Ro,$ M*4*#$ (1%5') 00030 5'*$6+# +# M.Com P,&'- I %&%76 $%4,&% ','

I ,8% om94%'%$ '% 9&o%' o# “COST ACCOUNTING PROCESS COSTING IN

SUGAR INDUSTRY” *#$%& '% *+$,#% o 9&o%' *+$% P&o. M. S. G,#,+ $*&+# '%

,,$%m+ 6%,& 20!-". T% +#o&m,'+o# 5*7m+''%$ +5 '&*% 'o '% 7%5' o m6 ;#o<4%$%.

D,'%: S+#,'*&%

P4,%:

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CERI!ICAE

I P&o. M. S. GANAGI %&%76 %&'+6 ',' M&=M+55 MEERA HARESH BHANUSHALI

R.No 6202 of  M*4*#$ Co44%% o Comm%&% S. N. Ro,$ M*4*#$ (1%5') M*m7,+ -00030 o 

M.om P,&' I (A$8,#%$ Ao*#',#6) ,5 om94%'%$ %& 9&o%' o# “COST

ACCOUNTING PROCESS COSTING IN SUGAR INDUSTRY” $*&+# '%

,,$%m+ 6%,& 20!-". T% +#o&m,'+o# 5*7m+''%$ +5 '&*% ,#$ o&++#,4 'o '% 7%5' o m6
;#o<4%$%.

 >>>>>>>>>>>>>>>>>>>> >>>>>>>>>>>>>>>>>>>

P&o%' G*+$% E?'%&#,4 *+$%

 >>>>>>>>>>>>>>>>>>>>> >>>>>>>>>>>>>>>>>>>

Co-oo&$+#,'o& P&+#+9,4

D,'%:

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AC"N#$LED%EMEN

  I <o*4$ 4+;% 'o %?9&%55 m6 5+#%&% &,'+'*$% 'o P&+#+9,4 o M*4*#$ Co44%% o 

Comm%&% DR. (M&5.) P,&8,'+ V%#;,'%5 Co*&5% - Coo&$+#,'o& P&o. R,#% ,#$ o*& 

 9&o%' *+$% P&o. M.S. G,#,+ o& 9&o8+$+# m% ,# o99o&'*#+'6 'o $o m6 9&o%' <o&; 

o# ““COST ACCOUNTING PROCESS COSTING IN SUGAR INDUSTRY” ”. I

,45o <+5 'o %?9&%55 m6 5+#%&% &,'+'*$% 'o '% #o# - '%,+# 5', o o*& o44%%. I

5+#%&%46 ',#; 'o ,44 o '%m +# %49+# m% 'o ,&&6+# o*' '+5 9&o%' <o&;. L,5' 7*'

#o' '% 4%,5' I <+5 'o ,8,+4 m65%4 o '+5 o99o&'*#+'6 'o %?9&%55 , 5%#5% o &,'+'*$%

,#$ 4o8% 'o m6 &+%#$5 ,#$ m6 7%4o8%$ 9,&%#'5 o& '%+& m*'*,4 5*99o&' 5'&%#' %49

,#$ o& %8%&6'+#.

PLACE: S+#,'*&%

DATE:

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INTRODUCTION:

  P&o%55 o5'+# +5 , o&m o o9%&,'+o#5 o5'+# <+ +5 *5%$ <%&% 5',#$,&$+@%$

omo%#%o*5 oo$5 ,&% 9&o$*%$. T+5 o5'+# m%'o$ +5 *5%$ +# +#$*5'&+%5 4+;% %m+,45
'%?'+4%5 5'%%4 &*77%& 5*,& 5o%5 9%'&o4 %'. P&o%55 o5'+# +5 ,45o *5%$ +# '% ,55%m746 '69%
o +#$*5'&+%5 ,45o. I' +5 ,55*m%$ +# 9&o%55 o5'+# ',' '% ,8%&,% o5' 9&%5%#'5 '% o5' 9%& 
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$*&+# ',' 9%&+o$ 'o ,&&+8% ,' '% o5' 9%& *#+'.

 9&o%55 o5'+#

  A 9&o%55 o5'+# 565'%m +5 , '%#+*% *5%$ <+'+# '% m,#*,'*&+# +#$*5'&6

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o5'+# 565'%m om%5 <+' m,#6 ,$8,#',%5.

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M%'o$ o& $%'%&m+#+# '% 'o',4 *#+' o5' o '% o*'9*' o , o#'+#*o*5 9&o$*'+o# &*# (5* ,5
+# oo$ 9&o%55+# 9%'&o4%*m   ,#$ '%?'+4% +#$*5'&+%5) +# <+ , 9&o$*' 9,55%5 '&o*

5%8%&,4 9&o%55%5 (o& o5' %#'%&5).

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 9&o$*'5 9,55+#
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o *#+'5 9,55+# '&o* '% 9&o%55 +# '% +8%# 9%&+o$

 () '% *#+' o5' 9%& 9&o%55 +5 ,&%$ 'o %, *#+' ,5 +' 9,55%5 '&o* %, 9&o%55 5o ','
,' '% %#$ o '% 9&o$*'+o# 64% %, 9&o$*' <+44 ,8% &%%+8%$ ,# ,99&o9&+,'% ,&% o& 
%, 9&o%55 '&o* <+ +' ,5 9,55%$.

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'o $%'%&m+#% '% 'o',4 9&o$*'+o# o5' o , *#+' o m%&,#$+5%. I' +5 9,&'+*4,&46 *5%$ +#
%#8+&o#m%#'5 <%&% 9&o$*'+o# 9,55%5 '&o* m*4'+94% o5' %#'%&5. /o& %?,m94% 9&o$*'+o#
<+'+# , 4,&% o&9o&,'+o# m,6 &%*+&% ',' 9&o$*' mo8% '&o* mo&% ',# o#% $%9,&'m%#'
5* ,5 9&o*&%m%#' m,#*,'*&+# *,4+'6 ,55*&,#% ,#$ $+5'&+7*'+o#. E, o '%5%
$%9,&'m%#'5 ,5 +'5 o<# 7*$%'. A5 , &%5*4' , 9&o%55 o5'+# 565'%m m*5' 7% +# 94,% 'o
om9+4% '% &%59%'+8% o5'5 *#$%&',;%# 76 %, &o*9. T% +m94%m%#','+o# o , 9&o%55
o5'+# 565'%m om%5 <+' m,#6 ,$8,#',%5.

Definition
P&o%55 o5'+# 565'%m ,994+%5 <%# 5',#$,&$+5%$ oo$5 ,&% 9&o$*%$ 'om , 5%&+%5 o +#'%&-
Co##%'%$ o9%&,'+o#5.

I# 5om% +#$*5'&+%5 '% o*'9*' 9&o$*%$ %m%&%5 &om , o#'+#*o*5 9&o%55. A# %?,m94% m+'
 7% ,# o+4 &%+#%&6 O+4 +# , &,< 5','% +5 +#9*' ,#$ 5*7%'%$ 'o
, 9&o%55 o 9*&++,'+o#. R%+#%$ o+4 %m%&%5 ,' '% %#$ o '% 9&o%55.
P&o74%m5 ',' ,&+5% +# 5* 5+'*,'+o#5 +#4*$% '% ,''&+7*'+o# o m,'%&+,45 o5'5 ,#$ o#8%&5+o#

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o5'5 'o *#+'5 o +#+5%$ o*'9*' ,#$ '% o*&&%#% o 4o55%5 $*&+# '% 9&o%55 (59o+4' o& 4o5'
 9&o$*'+o#).

he characteri&tic& and a''lication of 'roce&& co&tin(

  P&o%55 o5'+# +5 *5%$ <%# +$%#'+,4 +'%m5 ,&% o#'+#*o*546 m,55

 9&o$*%$ ,#$ m,#*,'*&+# +#8o48%5 o#% o& mo&% 9&o%55%5.
E?,m94%5 o 9&o$*'5 &%*+&+# 9&o%55 o5'+# +#4*$% 9,+#' oo$ %m+,45 ,#$ 7%%&.
P&o%55 o5'+# 565'%m5 '69+,446 ,8% '% o44o<+# ,&,'%&+5'+5

- Co5'5 ,&% ,*m*4,'%$ 76 o5' %#'&% <+' #o ,''%m9' m,$% 'o ,55+# o5'5 'o 59%++ 7,'%5.
- Co5'5 ,&% ,*m*4,'%$ 7,5%$ o# , '+m% 9%&+o$ &,'%& ',# , 9,&'+*4,& o7.
 - P&o%55 ,o*#'5 ,&% m,+#',+#%$ o& %, $%9,&'m%#' o& o5' %#'&%.
 - Com94%'%$ o5'5 &om %, $%9,&'m%#' o& o5' %#'&% 7%om% '% &,< m,'%&+,45 o& '%
5*75%*%#' $%9,&'m%#' o& o5' %#'&%.

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o8%&%,$ o5'5 (o#8%&5+o# o5'5) +#*&&%$ 'o o#8%&' '% m,'%&+,45 +#'o o*'9*'5 o*& *#+o&m46
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T% o*'9*'5 &om '% 9&o%55 m,6 om9&+5% om94%'%$ ,#$ *#om94%'%$ *#+'5 ,#$ '%&% m,6
,45o 7% 59o+4%$ *#+'5 5om% o <+ ,&% %?9%'%$ 'o ,&+5% &om '% 9&o%55 (#o&m,4 4o55) ,#$

o'%&5 <+ ,&% #o' ,#'++9,'%$ (,7#o&m,4 4o55)

Som%'+m%5 +' +5 9o55+74% 'o 5%44 59o+4%$ *#+'5 o 9&o$*'+o# 'o %#%&,'% , 5m,44 +#om% o& 5&,9
8,4*%.

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o*'9*'5 o7',+#%$.
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<,5 om94%'%$ $*&+# '% 9%&+o$. o< %, o '%5% o*'9*'5 +5 ,o*#'%$ o& *5+# 9&o%55
Co5'+#

Continuou& 'roduction
  I# '% o7 o&$%& o5'+# o5'5 <%&% $+&%'46 ,44o,'%$ 'o , 9,&'+*4,& o7
 1%# 5',#$,&$+5%$ oo$5 o& 5%&8+%5 &%5*4' &om , 5%*%#% o 
&%9%'+'+8% ,#$ o#'+#*o*5 o9%&,'+o#5 +' +5 *5%*4 'o <o&; o*' '% o5' o %, o9%&,'+o#.

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'% 5,m% ,mo*#' o <o&; o5'5 o& , 9%&+o$ ,&% ,&%$ 'o 9&o%55%5 o& 
o9%&,'+o#5 ,#$ *#+' o5'5,&% ,5%&',+#%$ 76 $+8+$+# 9&o%55 o5'5 76 '% *,#'+'6 o o*'9*'
*#+'5 9&o$*%$ T+5 +5 ;#o<# ,5 9&o%55 o5'+#.

Serie& of interconnected o'eration&

P&o%55 o5'+# ,994+%5 <%# 5',#$,&$+5%$ oo$5 ,&% 9&o$*%$ &om , 5%&+%5 o +#'%&o##%'%$

o9%&,'+o#5.
)roce&& co&tin( &*&tem i& em'lo*ed +* indu&trie& 'o&&e&&in( follo,in( characteri&tic&

. T%&% +5 m,55 9&o$*'+o# o , 5+#4% 9&o$*' o& '<o o& mo&% 9&o$*'5 +# 5*%55+8% &*#5
o 5%$*4%$ $*&,'+o# %.. 8%%',74% ,##+# o& &*+' *+% 7o''4+#.

2. A44 *#+'5 o o*'9*' ,&% %?,'46 5+m+4,& ,#$ ,&% 9&o$*%$ 76 '% 5,m% m,#*,'*&+#

 9&o%55.

. E#'+&% m,#*,'*&+# 9&o%55 +5 $+8+$%$ +#'o $%9,&'m%#'5 o& 9&o%55%5 %, 9%&o&m+# ,
59%++ 5%' o o9%&,'+o#5.

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. Com94%'%$ o*'9*' o %, $%9,&'m%#' %?%9' '% 4,5' o#% +5 '% &,< m,'%&+,45 o& '% #%?'

$%9,&'m%#'.

!. M,#*,'*&+# o9%&,'+o#5 m,6 &%5*4' +# 9&o$*'+o# o o+#' 9&o$*'5 o& 76 9&o$*'5.

". P&o$*'+o# +5 #o' +# &%59o#5% 'o *5'om%&5 o&$%&5 7*' +# ,#'++9,'+o# o $%m,#$.

E-am'le& of indu&trie& *5+# P&o%55 Co5'+# +#4*$%:

Bo''4+#P,&m,%*'+,45C%m%#'P,+#' Co,4 D+5'+44%&+%5 E4%'&++'6 I% So,9 S*,& C,##+#

C%m+,45 Coo;+# o+4 E4%'&+ ,994+,#%5 /4o*& N,'*&,4 ,5 P%'&o4%*m P&o$*'5
R*77%& S'%%4 T%?'+4%.

U#$%& 9&o%55 o5'+# o& '% 9*&9o5% o o5' o#'&o4 %, $%9,&'m%#' +#8o48%$ +#
m,#*,'*&+# 9&o%55 +5 &%,&$%$ ,5 , o5' %#'&% ,#$ 9&o$*' o5'5 ,&% ,*m*4,'%$ 5%9,&,'%46

o& %, $%9,&'m%#'.

Co&t Centre means a division or segment for which an individual is made responsible
.for the incurrence of cost 
  D%9,&'m%#',4 o5'5 ,&% 9,55%$ '&o* $%9,&'m%#' <o&; +# 9&o%55 ,o*#'5 ,#$ #o' '
&o* ,
5+#4% <o&; +# 9&o%55 o#'&o4 ,o*#' ,5 +# o7 o5'+#.
A5 ,44 *#+'5 ,&% 9&o$*%$ &om '% 5,m%
&,< m,'%&+,45 ,#$ 76 5,m% m,#*,'*&+# o9%&,'+o#5 '%&%o&% +' +5 ,55*m%$ ',' 5,m% o5' +5
,&%,74% 'o %, *#+'. I#5'%,$ o ,*m*4,'+# o5' o +#$+8+$*,4 *#+'5 ,# ,8%&,% *#+' o5' +5
om9*'%$ 76 $+8+$+# 'o',4 o5' 76 'o',4 o*'9*' o '% 9%&+o$. Co5' +5 ,55o+,'%$ o#46 <+'
$%9,&'m%#'5 ,#$ #o'<+'o75.

I' &%$*%5 4%&+,4 %o&'5 o& ,*m*4,'+o# ,#$ ,#,465+5 o o5'. I#

'+5 <,6 9&o%55 o5'+# +5 less expensive, ,5 om9,&%$ <+' o7 o5'+#.

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PROCESS COSTING +5 ,# ,o*#'+# m%'o$o4o6 ',' '&,%5 ,#$ ,*m*4,'%5 $+&%'

o5'5 ,#$ ,44o,'%5 +#$+&%' o5'5 o , m,#*,'*&+# 9&o%55. Co5'5 ,&% ,55+#%$ 'o 9&o$*'5
*5*,446 +# , 4,&% 7,' <+ m+' +#4*$% ,# %#'+&% mo#'5 9&o$*'+o#.

 E8%#'*,446 o5'5 ,8% 'o 7% ,44o,'%$ 'o +#$+8+$*,4 *#+'5 o 9&o$*'. I' ,55+#5 ,8%&,% o5'5 'o
%, *#+' ,#$ +5 '% o99o5+'% %?'&%m% o Jo7 o5'+# <+ ,''%m9'5 'o m%,5*&% +#$+8+$*,4 o5'5
o 9&o$*'+o# o %, *#+'. P&o%55 o5'+# +5 *5*,446 , 5+#++,#' ,9'%&. +' +5 , m%'o$ o 
,55+#+# o5'5 'o *#+'5 o 9&o$*'+o# +# om9,#+%5 9&o$*+# 4,&% *,#'+'+%5 o omo%#%o*5
 9&o$*'5.

P&o%55 o5'+# +5 , '69% o o9%&,'+o# o5'+# <+ +5 *5%$ 'o ,5%&',+# '% o5' o , 9&o$*' ,'
%, 9&o%55 o& 5',% o m,#*,'*&%. CIMA $%+#%5 9&o%55 o5'+# ,5 FT% o5'+# m%'o$
,994+,74% <%&% oo$5 o& 5%&8+%5 &%5*4' &om , 5%*%#% o o#'+#*o*5 o& &%9%'+'+8%
o9%&,'+o#5 o& 9&o%55%5. Co5'5 ,&% ,8%&,%$ o8%& '% *#+'5 9&o$*%$ $*&+# '% 9%&+o$F.

  P&o%55 o5'+# +5 5*+',74% o& +#$*5'&+%5 9&o$*+# omo%#%o*5 9&o$*'5 ,#$ <%&%
 9&o$*'+o# +5 , o#'+#*o*5 4o<. A 9&o%55 ,# 7% &%%&&%$ 'o ,5 '% 5*7-*#+' o ,# o&,#+@,'+o#

59%++,446 $%+#%$ o& o5' o44%'+o# 9*&9o5%.

*'e& of )roce&& Co&tin(

here are three t*'e& of 'roce&& co&tin(. <+ ,&%:

. $ei(hted a/era(e co&t&.

  T+5 8%&5+o# ,55*m%5 ',' ,44 o5'5 <%'%& &om , 9&%%$+# 9%&+o$ o& '% *&&%#'
o#% ,&% 4*m9%$ 'o%'%& ,#$ ,55+#%$ 'o 9&o$*%$ *#+'5. I' +5 '% 5+m94%5' 8%&5+o# 'o
,4*4,'%.

2. Standard co&t&    .

T+5 8%&5+o# +5 7,5%$ o# 5',#$,&$ o5'5. I'5 ,4*4,'+o# +5 5+m+4,& 'o <%+'%$
,8%&,% o5'+# 7*' 5',#$,&$ o5'5 ,&% ,55+#%$ 'o 9&o$*'+o# *#+'5 &,'%& ',# ,'*,4
o5'5 ,'%& 'o',4 o5'5 ,&% ,*m*4,'%$ 7,5%$ o# 5',#$,&$ o5'5 '%5% 'o',45 ,&%

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om9,&%$ 'o ,'*,4 ,*m*4,'%$ o5'5 ,#$ '% $+%&%#% +5 ,&%$ 'o , 8,&+,#%
,o*#'.

. !ir&tin fir&tout co&tin( 1!I!#    .

/I/O +5 , mo&% om94%? ,4*4,'+o# ',' &%,'%5 4,6%&5 o o5'5 o#%

o& ,#6 *#+'5 o 9&o$*'+o# ',' <%&% 5',&'%$ +# '% 9&%8+o*5 9&o$*'+o# 9%&+o$ 7*' #o'
om94%'%$ ,#$ ,#o'%& 4,6%& o& ,#6 9&o$*'+o# ',' +5 5',&'%$ +# '% *&&%#' 9%&+o$.

T%&% +5 #o 4,5' +# +&5' o*' (LI/O) o5'+# m%'o$ *5%$ +# 9&o%55 o5'+# 5+#% '% *#$%&46+#
,55*m9'+o# o 9&o%55 o5'+# +5 ',' '% +&5' *#+' 9&o$*%$ +5 +# ,' '% +&5' *#+' *5%$ <+
+5 '% /I/O o#%9'.

16 ,8% '&%% $+%&%#' o5' ,4*4,'+o# m%'o$5 o& 9&o%55 o5'+# ,#$ <6
*5% o#% 8%&5+o# +#5'%,$ o ,#o'%&

T% $+%&%#' ,4*4,'+o#5 ,&% &%*+&%$ o& $+%&%#' o5' ,o*#'+# #%%$5. T%
<%+'%$ ,8%&,% m%'o$ +5 *5%$ +# 5+'*,'+o#5 <%&% '%&% +5 #o 5',#$,&$ o5'+# 565'%m o& 
<%&% '% 4*'*,'+o#5 +# o5'5 &om 9%&+o$ 'o 9%&+o$ ,&% 5o 54+' ',' '% m,#,%m%#' '%,m ,5
#o #%%$ o& '% 54+' +m9&o8%m%#' +# o5'+# ,*&,6 ',' ,# 7% o7',+#%$ <+' '% /I/O
o5'+# m%'o$.

A4'%&#,'+8%46 9&o%55 o5'+# ',' +5 7,5%$ o# 5',#$,&$ o5'5 +5 &%*+&%$ o& o5'+# 565'%m5
',' use 5',#$,&$ o5'5. I' +5 ,45o *5%*4 +# 5+'*,'+o#5 <%&% om9,#+%5 m,#*,'*&% 5* ,
 7&o,$ m+? o 9&o$*'5 ',' '%6 ,8% $++*4'6 ,*&,'%46 ,55+#+# ,'*,4 o5'5 'o %, '69% o 
 9&o$*' *#$%& '% o'%& 9&o%55 o5'+# m%'o$o4o+%5 <+ 7o' *5% ,'*,4 o5'5 '%&% +5 ,
5'&o# ,#% ',' o5'5 o& $+%&%#' 9&o$*'5 <+44 7%om% m+?%$ 'o%'%&.

/+#,446 /I/O o5'+# +5 *5%$ <%# '%&% ,&% o#o+# ,#$ 5+#++,#' ,#%5 +#
 9&o$*' o5'5 &om 9%&+o$ 'o 9%&+o$ H 'o 5* ,# %?'%#' ',' '% m,#,%m%#' '%,m #%%$5 'o
;#o< '% #%< o5'+# 4%8%45 5o ',' +' ,# &%-9&+% 9&o$*'5 ,99&o9&+,'%46 $%'%&m+#% + '%&% ,&%

+#'%&#,4 o5'+# 9&o74%m5 &%*+&+# &%5o4*'+o# o& 9%&,95 'o ,#% m,#,%& 9%&o&m,#%-
 7,5%$ om9%#5,'+o#. I# %#%&,4 '% 5+m94%5' o5'+# ,99&o, +5 '% <%+'%$ ,8%&,% m%'o$
<+' /I/O o5'+# 7%+# '% mo5' $++*4'

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#B3ECI4ES

 '% m%,#+# o P&o%55 Co5'+# ,#$ +'5 +m9o&',#%

  '% $+5'+#'+o# 7%'<%%# o7 o5'+# ,#$ 9&o%55 o5'+#

  '% ,o*#'+# 9&o%$*&% o 9&o%55 o5'+# +#4*$+# #o&m,4 4o55 ,7#o&m,4 4o55 (o&) ,+#

  '% 8,4*,'+o# o <o&;-+#-9&o&%55 *5+# /I/O LI/O ,8%&,% ,#$ <%+'%$ ,8%&,% m%'o$5
 '% 5'%95 +#8o48%$ +# +#'%& 9&o%55 '&,#5%& 

HE IM)#RANCE #! )R#CESS C#SIN%

  Co5'+# +5 ,# +m9o&',#' 9&o%55 ',' m,#6 om9,#+%5 %#,% +# 'o ;%%9 '&,; o 
<%&% '%+& mo#%6 +5 7%+# 59%#' +# '% 9&o$*'+o# ,#$ $+5'&+7*'+o# 9&o%55%5.

U#$%&5',#$+# '%5% o5'5 +5 '% +&5' 5'%9 +# 7%+# ,74% 'o o#'&o4 '%m. I' +5 8%&6 +m9o&',#' ','
, om9,#6 oo5%5 '% ,99&o9&+,'% '69% o o5'+# 565'%m o& '%+& 9&o$*' '69% ,#$ +#$*5'&6.
O#% '69% o o5'+# 565'%m ',' +5 *5%$ +# %&',+# +#$*5'&+%5 +5 'roce&& co&tin( ',' 8,&+%5 &om
o'%& '69%5 o o5'+# (5* ,5 o7 o5'+#) +# 5om% <,65.

 I# 9&o%55 o5'+# *#+' o5'5 ,&% mo&% 4+;% ,8%&,%5 '% 9&o%55-o5'+# 565'%m &%*+&%5 4%55
 7oo;;%%9+# ',# $o%5 , o7-o&$%& o5'+# 565'%m. T*5 5om% om9,#+%5 o'%# 9&%%& 'o *5%
'% 9&o%55-o5'+# 565'%m.

$HEN )R#CESS C#SIN% IS A))LIED5

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  P&o%55 o5'+# +5 ,99&o9&+,'% o& om9,#+%5 ',' 9&o$*% , o#'+#*o*5 m,55

o 4+;% *#+'5 '&o* 5%&+%5 o o9%&,'+o#5 o& 9&o%55. A45o <%# o#% o&$%& $o%5 #o' ,%' '%

 9&o$*'+o# 9&o%55 ,#$ , 5',#$,&$+@,'+o# o '% 9&o%55 ,#$ 9&o$*' %?+5'5.

 o<%8%& + '%&% ,&% 5+#++,#' $+%&%#%5 ,mo# '% o5'5 o 8,&+o*5  9&o$*'5 , 9&o%55
o5'+# 565'%m <o*4$ #o' 9&o8+$% ,$%*,'% 9&o$*'-o5' +#o&m,'+o#. Co5'+# +5 %#%&,446 *5%$
+# 5* +#$*5'&+%5 5* ,5 9%'&o4%*m o,4 m+#+# %m+,45 '%?'+4%5 9,9%& 94,5'+ 4,55 ,#$
oo$.

Com'anie& need to allocate total 'roduct co&t& to unit& of 'roduct for the
follo,in( rea&on&

• A om9,#6 m,6 m,#*,'*&% 'o*5,#$5 o& m+44+o#5 o *#+'5 o 9&o$*' +# , +8%# 9%&+o$
o '+m%.

• P&o$*'5 ,&% m,#*,'*&%$ +# 4,&% *,#'+'+%5 7*' 9&o$*'5 m,6 7% 5o4$ +# 5m,44
*,#'+'+%5 5om%'+m%5 o#% ,' , '+m% (,*'omo7+4%5 4o,8%5 o 7&%,$) , $o@%# o& '<o ,' , '+m%
(%5 oo;+%5) %'.

• P&o$*' o5'5 m*5' 7% '&,#5%&&%$ &om /+#+5%$ Goo$5 'o Co5' o Goo$5 So4$ ,5 5,4%5
,&% m,$%. T+5 &%*+&%5 , o&&%' ,#$ ,*&,'% ,o*#'+# o 9&o$*' o5'5 9%& *#+' 'o ,8%
, 9&o9%& m,'+# o 9&o$*' o5'5 ,,+#5' &%4,'%$ 5,4%5 &%8%#*%.

• M,#,%&5 #%%$ 'o m,+#',+# o5' o#'&o4 o8%& '% m,#*,'*&+# 9&o%55. P&o%55 o5'+#

 9&o8+$%5 m,#,%&5 <+' %%$7,; ',' ,# 7% *5%$ 'o om9,&% 5+m+4,& 9&o$*' o5'5 &om
o#% mo#' 'o '% #%?' ;%%9+# o5'5 +# 4+#% <+' 9&o%'%$ m,#*,'*&+# 7*$%'5.

• A &,'+o#-o-,-%#' o5' ,#% ,# &%9&%5%#' , 4,&% $o44,& ,#% +#

o8%&,44  9&o+',7+4+'6 <%# 5%44+# m+44+o#5 o *#+'5 o 9&o$*' , mo#'. M,#,%&5 m*5'
,&%*446 <,' 9%& *#+' o5'5 o# , $,+46 7,5+5 '&o* '% 9&o$*'+o# 9&o%55 <+4% ,' '%
5,m% '+m% $%,4+# <+' m,'%&+,45 ,#$ o*'9*' +# *% *,#'+'+%5.

• M,'%&+,45 9,&' <,6 '&o* , 9&o%55 (%.. %m+,45) m+' #%%$ 'o 7% +8%# , 8,4*%
 9&o%55 o5'+# ,44o<5 o& '+5. B6 $%'%&m+#+# <,' o5' '% 9,&' 9&o%55%$ m,'%&+,4 ,5
+#*&&%$ 5* ,5 4,7o& o& o8%&%,$ ,# F%*+8,4%#' *#+'F &%4,'+8% 'o '% 8,4*% o , +#+5%$
 9&o%55 ,# 7% ,4*4,'%$.
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)R#CESS C#S )R#CEDURES

here are four +a&ic &te'& in accountin( for )roce&& co&t

• S*mm,&+@% '% 4o< o 965+,4 *#+'5 o o*'9*'.

• Com9*'% o*'9*' +# '%&m5 o %*+8,4%#' *#+'5.

• S*mm,&+@% 'o',4 o5'5 'o ,o*#' o& ,#$ Com9*'% %*+8,4%#' *#+' o5'5.

• A55+# 'o',4 o5'5 'o *#+'5 om94%'%$ ,#$ 'o *#+'5 +# %#$+# <o&; +# 9&o%55 +#8%#'o&6.

  T% o*&#,4 %#'&+%5 o& 9&o%55 o5'+# ,&% '% 5,m% ,5 'o5% o& o7-o&$%& o5'+#
<+' o#% %?%9'+o#.

 T% %#'&6 'o '&,#5%& o5' &om o#% <o&;-+#-9&o%55 ,o*#' 'o ,#o'%& +5:

1o&;-+#-9&o%55 +#8%#'o&6-5%o#$ $%9,&'m%#' D%7+' (L%')

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1o&;-+#-9&o%55-+&5' $%9,&'m%#' C&%$+' (R+')

!EAURES

  P&o%55 o5'+# ,# 7% $%+#%$ ,5 o5'+# m%'o$ <+ ,5%&',+#5 '% o5' o ,
 9&o$*' ,' '% 5',% o m,#*,'*&+#. I# 5+m94% <o&$5 *#$%& 9&o%55 o5'+# '% 9&o$*' o o#%
 9&o%55 7%om%5 '% +#9*' o #%?' 9&o%55. %&% +5 '% 4+5' o '% %,'*&%5 o 9&o%55 o5'+# H 

. P&o$*'+o# *#$%& 9&o%55 o5'+# +5 $o#% '&o* o#'+#*o*5 4o< o 9&o$*'5 <+ ,&%
+$%#'+,4 o& omo%#%o*5.

2. Co5'5 ,&% om9*'%$ 9%&+o$+,446 ,#$ ,45o ,8%&,% o5' ,# 7% %,5+46 om9*'%$ *#$%& '+5
m%'o$ o o5'+#.

. U#$%& '+5 o5' $,', +5 ,8,+4,74% 9&o%55 ,5 <%44 ,5 $%9,&'m%#'5 '*5 %#,74+# , 7%''%& o#'&o4
o8%& o5'5 76 '% m,#,%m%#'.

. I# 9&o%55 o5'+# 5om%'+m%5 76-9&o$*'5 m,6 %m%&% <+ ,8% 'o 7% *&'%& 9&o%55%$ +#
o&$%& 'o m,;% '%m m,&;%',74% ,#$ %#% ,o&$+#46 ,o*#'+# ,$*5'm%#' #%%$5 'o 7% m,$%
o& 5* 76- 9&o$*'5.

!. T%&% +5 ,4<,65 5om% <o&; +# 9&o&%55 *#$%& 9&o8%5 o5'+# 7o' ,' '% 7%+##+# ,#$ ,' '%
%#$ o '% ,o*#'+# 9%&+o$ 7%,*5% +' +5 , o#'+#*o*5 9&o%55.

AD4ANA%ES

Co5' Co#',+#m%#'

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  A 7*5+#%55 ',' +m94%m%#'5 , 9&o%55 o5'+# 565'%m ,# 7%''%& o#',+#

m,#*,'*&+# %?9%#5%5. U#$%& '+5 565'%m %, $%9,&'m%#' +5 ,55+#%$ , o5' %#'%&.

 A o5' %#'%& +5 , #*m7%& o& o$% ',' +$%#'++%5 '% 9*&,5%5 m,$% 76 , 5+#4% $%9,&'m%#'. A5
+#,#+,4 %?9%#$+'*&%5 5* ,5 '% ,*+5+'+o# o 5*994+%5 ,#$ %m94o6%% 5,4,&+%5 ,&% m,$%
'&o*o*' '% 9&o$*'+o# 9&o%55 %, &o*9 &%,'%5 , &%9o&' +4+'+# 9*&,5%5 ',' ,8%
 7%%# m,$% *#$%& +'5 &%59%'+8% o5' %#'%&.

T%5% &%9o&'5 ,&% om9+4%$ ,#$ &%8+%<%$ 76 5%#+o& m,#,%m%#'. T+5 $,', ,44o<5 '%m 'o
+$%#'+6 +#%++%#+%5 <+'+# '% 5*9946 ,+#.

 /o& %?,m94% , o5' %#'%& &%9o&' m,6 +#$+,'% ',' !0 9%&%#' o 9&o$*'+o# o5'5 om% &om
'% 9&o*&%m%#' $%9,&'m%#'. M,#,%m%#' ,# '%# $+','% 5'%95 ',' '% 9&o*&%m%#' '%,m
m*5' ',;% 'o m+#+m+@% o5'5.

I#8%#'o&6 Co#'&o4

  T% I#'%&#,4 R%8%#*% S%&8+% &%*+&%5 ,44 7*5+#%55%5 ',' m,+#',+# ,#

+#8%#'o&6 'o m%'+*4o*546 '&,; ,#$ &%9o&' +'5 5*9946. T% IRS *5%5 '+5 +#o&m,'+o# 'o
,*&,'%46 8,4*% '% 7*5+#%55 5o ',' ',? %5'+m,'%5 ,# 7% m,$%. T&,;+# +#8%#'o&6 ,# 7% ,
*m7%&5om% ',5; o& 8%&6 4,&% o&9o&,'+o#5. T+5 9&o%55 ,# 7% 5+m94++%$ o<%8%& '&o*
'% +m94%m%#','+o# o , 9&o%55 o5'+# 565'%m.

T&o*o*' '% m,#*,'*&+# 9&o%55 %, $%9,&'m%#' $o*m%#'5 ,#6 m,'%&+,45 9*&,5%$. I#
,$$+'+o# %, oo$ +5 8,4*%$ ,#$ ,$$%$ 'o '% o5' %#'%& &%9o&'. M,#,%m%#' +#4*$%5 '+5
+#o&m,'+o# o# '% om9,#65 +#om% ',? &%'*&#5.

M,#6 o&,#+@,'+o#5 ,44o< %, o '%+& $%9,&'m%#'5 'o o9%&,'% ,*'o#omo*546.

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 /o& %?,m94% '% 9&o*&%m%#' $%9,&'m%#' <+44 ,8% 9o4++%5 ,#$ 9&o%$*&% ',' ,&% om94%'%46
*#+*% ,#$ +#$%9%#$%#' o 'o5% o '% 5*9946 ,+# &o*9. T+5 ,# 7% ,# +#&%$+746

+#%%'+8% <,6 o& , 7*5+#%55 'o o9%&,'%.

E, $%9,&'m%#' +# '+5 5%#,&+o m,6 ,8% +'5 o<# ,&o# m,;+# +#'%&$%9,&'m%#',4
omm*#+,'+o# $++*4'. /*&'%&mo&% m,+#',+#+# 5%9,&,'% 565'%m5 ,#$ 9o4++%5 m%,#5 ','
,$$+'+o#,4 mo#%6 ,#$ '+m% m*5' 7% 59%#' 'o &o55-'&,+# %m94o6%%5. T&o* '% +m94%m%#','+o#
o , 9&o%55 o5'+# 565'%m , om9,#6 <+44 %#5*&% ',' %8%&6 $%9,&'m%#' &%,&$4%55 o 
*#'+o# o9%&,'%5 +# , *#+o&m m,##%&. T+5 <+44 ,44o< m%m7%&5 o '% m,#*,'*&+# 5*9946
,+# 'o 7% +# 56# <+' o#% ,#o'%&.

LIMIAI#NS

. Co5' o7',+#%$ ,' %, 9&o%55 +5 o#46 +5'o&+,4 o5' ,#$ ,&% #o' 8%&6 *5%*4 o& %%'+8%
o#'&o4.

 2. P&o%55 o5'+# +5 7,5%$ o# ,8%&,% o5' m%'o$ <+ +5 #o' ',' 5*+',74% o& 9%&o&m,#%
,#,465+5 %8,4*,'+o# ,#$ m,#,%&+,4 o#'&o4.

 . 1o&;-+#-9&o&%55 +5 %#%&,446 $o#% o# %5'+m,'%$ 7,5+5 <+ 4%,$5 'o +#,*&,6 +# 'o',4
o5' ,4*4,'+o#5.

. T% om9*','+o# o ,8%&,% o5' +5 mo&% $++*4' +# 'o5% ,5%5 <%&% mo&% ',# o#% '69% o 
 9&o$*'5 +5 m,#*,'*&%$ ,#$ , $+8+5+o# o '% o5' %4%m%#' +5 #%%55,&6.

 !. 1%&% $+%&%#' 9&o$*'5 ,&+5% +# '% 5,m% 9&o%55 ,#$ ommo# o5'5 ,&% 9&o&,'%$ 'o 8,&+o*5
o5'5 *#+'5. S* +#$+8+$*,4 9&o$*'5 o5'5 m,6 7% ',;%# ,5 o#46 ,99&o?+m,'+o#

)R#CESS C#SIN%

  P&o%55 o5'+# +5 , m%'o$ o o5'+# *5%$ m,+#46 +# m,#*,'*&+# <%&% *#+'5

,&% o#'+#*o*546 m,55-9&o$*%$ '&o* o#% o& mo&% 9&o%55%5. E?,m94%5 o '+5 +#4*$% '%
m,#*,'*&% o %&,5%&5 %m+,45 o& 9&o%55%$ oo$. I# 9&o%55 o5'+# +' +5 '% 9&o%55 ',' +5
o5'%$ (*#4+;% o7 o5'+# <%&% %, o7 +5 o5'%$ 5%9,&,'%46).

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T% m%'o$ *5%$ +5 'o ',;% '% 'o',4 o5' o '% 9&o%55 ,#$ ,8%&,% +' o8%& '% *#+'5 o 
 9&o$*'+o#

  I# , m,#*,'*&+# 9&o%55 '% #*m7%& o *#+'5 o o*'9*' m,6 #o' #%%55,&+46 7% '%
5,m% ,5 '% #*m7%& o *#+'5 o +#9*'5. T%&% m,6 7% , 4o55.

 Normal lo&&

  T+5 +5 '% '%&m *5%$ 'o $%5&+7% #o&m,4 %?9%'%$ <,5',% *#$%& *5*,4 o9%&,'+#
o#$+'+o#5. T+5 m,6 7% $*% 'o &%,5o#5 5* ,5 %8,9o&,'+o# '%5'+# o& &%%'5.

 A+normal lo&&

T+5 +5 <%# , 4o55 o*&5 o8%& ,#$ ,7o8% '% #o&m,4 %?9%'%$ 4o55. T+5 m,6 7% $*%
'o &%,5o#5 5* ,5 ,*4'6 m,+#%&6 o& %&&o&5 76 4,7o*&%&5.

 A+normal (ain

  T+5 o*&5 <%# '% ,'*,4 4o55 +5 4o<%& ',# '% #o&m,4 4o55. T+5 o*4$ o& 
%?,m94% 7% $*% 'o &%,'%& %++%#6 &om #%<46-9*&,5%$ m,+#%&6.

 $or7 in 'ro(re&& 1$I)

  T+5 +5 '% '%&m *5%$ 'o $%5&+7% *#+'5 ',' ,&% #o' 6%' om94%'% ,' '% %#$ o '%
 9%&+o$. O9%#+# 1IP +5 '% #*m7%& o +#om94%'% *#+'5 ,' '% 5',&' o , 9&o%55 ,#$ 4o5+#
1IP +5 '% #*m7%& ,' '% %#$ o '% 9&o%55.

 Scra' /alue

  Som%'+m%5 '% o*'om% o , 4o55 ,# 7% 5o4$ o& , 5m,44 8,4*%. /o& %?,m94% +#
'% 9&o$*'+o# o 5&%<5 '%&% m,6 7% , 4o55 5* ,5 m%',4 <,5',%. T+5 m,6 7% 5o4$ 'o , 5&,9
m%&,#' o& , %%.

C#SIN% )R#CEDURE

  /o& %, 9&o%55 ,# +#$+8+$*,4 9&o%55 ,o*#' +5 9&%9,&%$. E, 9&o%55 o 9&o$*'+o# +5
'&%,'%$ ,5 , $+5'+#' o5' %#'&%.

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I'%m5 o# '% D%7+' 5+$% o P&o%55 A=.

 E, 9&o%55 ,o*#' +5 $%7+'%$ <+' H 

 ,) Co5' o m,'%&+,45 *5%$ +# ',' 9&o%55.

 7) Co5' o 4,7o*& +#*&&%$ +# ',' 9&o%55.

 ) D+&%' %?9%#5%5 +#*&&%$ +# ',' 9&o%55

. $) O8%&%,$5 ,&%$ 'o ',' 9&o%55 o# 5om% 9&% $%'%&m+#%$.

 %) Co5' o &,'++,'+o# o #o&m,4 $%%'+8%5.

 ) Co5' o ,7#o&m,4 ,+# (+ ,#6 ,&+5%5 +# ',' 9&o%55)

  Item& on the Credit &ide

 E, 9&o%55 ,o*#' +5 &%$+'%$ <+'

,) S&,9 8,4*% o No&m,4 Lo55 (+ ,#6) o*&5 +# ',' 9&o%55

 7) . 7) Co5' o A7#o&m,4 Lo55 (+ ,#6 o*&5 +# ',' 9&o%55)

Co&t of )roce&&:

  T% o5' o '% o*'9*' o '% 9&o%55 (To',4 Co5' 4%55 S,4%5 8,4*% o 5&,9) +5
'&,#5%&&%$ 'o '% #%?' 9&o%55. T% o5' o %, 9&o%55 +5 '*5 m,$% *9 'o o5' 7&o*'
o&<,&$ &om '% 9&%8+o*5 9&o%55 ,#$ #%' o5' o m,'%&+,4 4,7o*& ,#$ o8%&%,$ ,$$%$ +# ','

 9&o%55 ,'%& &%$*+# '% 5,4%5 8,4*% o 5&,9. T% #%' o5' o '% +#+5%$ 9&o%55 +5
'&,#5%&&%$ 'o '% +#+5%$ oo$5 ,o*#'. T% #%' o5' +5 $+8+$%$ 76 '% #*m7%& o *#+'5
 9&o$*%$ 'o $%'%&m+#% '% ,8%&,% o5' 9%& *#+' +# ',' 9&o%55. S9%+m%# o P&o%55 Ao*#'
<%# '%&% ,&% #o&m,4 4o55 ,#$ ,7#o&m,4 4o55%5.

TABLE

 )roce&& Lo&&e&

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: I# m,#6 9&o%55 5om% 4o55 +5 +#%8+',74%. C%&',+# 9&o$*'+o# '%#+*%5 ,&% o 5* , #,'*&%
',' 5om% 4o55 +5 +#%&%#' 'o '% 9&o$*'+o#. 1,5',%5 o m,'%&+,4 %8,9o&,'+o# o m,'%&+,4 +5 *#

,8o+$,74% +# 5om% 9&o%55. B*' 5om%'+m%5 '% Lo55%5 ,&% ,45o o*&&+# $*% 'o #%4+%#% o 
L,7o*&%& 9oo& *,4+'6 &,< m,'%&+,4 9oo& '%#o4o6 %'. T%5% ,&% #o&m,446 ,44%$ ,5
,8o+$,74% 4o55%5.

 B,5+,446 9&o%55 4o55%5 ,&% 4,55++%$ +#'o '<o ,'%o&+%5

 (,) No&m,4 Lo55

(7) A7#o&m,4 Lo55

Normal Lo&&

 No&m,4 4o55 +5 ,# *#,8o+$,74% 4o55 <+ o*&5 $*% 'o '% +#%&%#' #,'*&% o '% m,'%&+,45 ,#$
 9&o$*'+o# 9&o%55 *#$%& #o&m,4 o#$+'+o#5. I' +5 #o&m,446 %5'+m,'%$ o# '% 7,5+5 o 9,5'
%?9%&+%#% o '% +#$*5'&6. I' m,6 7% +# '% o&m o #o&m,4 <,5',% #o&m,4 5&,9 #o&m,4
59o+4,% ,#$ #o&m,4 $%%'+8%#%55

. I' m,6 o*& ,' ,#6 '+m% o '% 9&o%55. No o *#+'5 o #o&m,4 4o55: I#9*' ? E?9%'%$
 9%&%#',% o No&m,4 Lo55. T% o5' o #o&m,4 4o55 +5 , 9&o%55. I '% #o&m,4 4o55 *#+'5 ,# 7%
5o4$ ,5 , &,9 '%# '% 5,4% 8,4*% +5 &%$+'%$ <+' 9&o%55 ,o*#'. I 5om% &%'++,'+o# +5
&%*+&%$ 7%o&% '% 5,4% o '% #o&m,4 4o55 '%# $%7+' ',' o5' +# '% 9&o%55 ,o*#'. A'%& 
,$*5'+# '% #o&m,4 4o55 '% o5' 9%& *#+' +5 ,4*4,'%5 <+' '% %49 o '% o44o<+#

/ORMULA:

Co5' o oo$ *#+': To',4 o5' +#&%,5%$ H S,4% V,4*% o S&,9 I#9*' H No&m,4 Lo55 *#+'5

A+normal Lo&&

  A#6 4o55 ,*5%$ 76 *#%?9%'%$ ,7#o&m,4 o#$+'+o#5 5* ,5 94,#'

 7&%,;$o<# 5*75',#$,&$ m,'%&+,4 ,&%4%55#%55 ,+$%#' %'. 5* 4o55%5 ,&% +# %?%55 o 9&%-
$%'%&m+#%$ #o&m,4 4o55%5. T+5 4o55 +5 7,5+,446 ,8o+$,74%. T*5 ,7#o&m,4 4o55%5 ,&&+8% <%#
,'*,4 4o55%5 ,&% mo&% ',# %?9%'%$ 4o55%5. T% *#+'5 o ,7#o&m,4 4o55%5 +# ,4*4,'%$ ,5 *#$%&:

A7#o&m,4 Lo55%5 K A'*,4 Lo55 H No&m,4 Lo55 T% 8,4*% o ,7#o&m,4 4o55 +5 $o#% <+' '%
%49 o o44o<+# o&m*4,

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V,4*% o A7#o&m,4 Lo55: To',4 Co5' +#&%,5% H S&,9 V,4*% o #o&m,4 Lo55 ? U#+'5 o ,7#o&m,4
4o55 I#9*' *#+'5 H No&m,4 Lo55 U#+'5

A7#o&m,4 P&o%55 4o55 5o*4$ #o' 7% ,44o<%$ 'o ,%' '% o5' o 9&o$*'+o# ,5 +' +5 ,*5%$ 76
,7#o&m,4 (o&) *#%?9%'%$ o#$+'+o#5. S* 4o55 &%9&%5%#'+# '% o5' o m,'%&+,45 4,7o*& ,#$
o8%&%,$ ,&%5 ,44%$ ,7#o&m,4 4o55 ,o*#'. T% 5,4%5 8,4*% o '% ,7#o&m,4 4o55 +5 &%$+'%$
'o A7#o&m,4 Lo55 Ao*#' ,#$ '% 7,4,#% +5 <&+''%# o 'o o5'+# P  L A=.

TABLE

8 A+normal %ain&

 T% m,&+# ,44o<%$ o& #o&m,4 4o55 +5 ,# %5'+m,'% (+.%. o# '% 7,5+5 o %?9%','+o# +# 9&o%55
+#$*5'&+%5 +# #o&m,4 o#$+'+o#5) ,#$ 54+' $+%&%#%5 ,&% 7o*#$ 'o o*& 7%'<%%# '% ,'*,4
o*'9*' o , 9&o%55 ,#$ ',' ,#'++9,'%5. T+5 $+%&%#% m,6 7% 9o5+'+8% o& #%,'+8%.

 I +' +5 #%,'+8% +' +5 ,44%$ ,$ ,7#o&m,4 Lo55 ,#$ + +' +5 9o5+'+8% +' +5 A7#o&m,4 ,+# +.%. + '%
,'*,4 4o55 +5 4%55 ',# '% #o&m,4 4o55 '%# +' +5 ,44%$ ,5 ,7#o&m,4 ,+#. T% 8,4*% o '%
,7#o&m,4 ,+# ,4*4,'%$ +# '% 5+m+4,& m,##%& o ,7#o&m,4 4o55

. T% o&m*4, *5%$ o& ,7#o&m,4 ,+# +5:

 A7#o&m,4 G,+# To',4 Co5' +#*&&%$ H S&,9 V,4*% o No&m,4 Lo55 ? A7#o&m,4 G,+# U#+'%5
I#9*' *#+'5 H No&m,4 Lo55 U#+'5

T% 5,4%5 8,4*%5 o ,7#o&m,4 ,+# *#+'5 ,&% '&,#5%&&%$ 'o No&m,4 Lo55 Ao*#'
5+#% +' ,&&+8% o*' o '% 5,8+#5 o No&m,4 Lo55. T% $+%&%#% +5 '&,#5%&&%$ 'o Co5'+# P  L
A=. ,5 , R%,

TABLE

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How to approach process accounting questions

Step 1 Draw up a T account for the process account. (There

may be more than one process, but start with the first
one initially.) Fill in the information given in the
question.
Process account 
nits ! nits !
"pening
#$%   & & 'ormal loss   & &
aterials & Transfer to
%rocess  or    & &
Finishe*
goo*s
 bnormal
+abour & loss   & &
"verhea*s & -losing #$%   & &
 bnormal
gain   & &

Step  -alculate the normal loss in units an* enter on to the

%rocess account. (The value will be ero unless there
is a scrap value / see Step 0).

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Step  -alculate the abnormal loss or gain (there won2t be

both). 3nter the figure on to the %rocess account an*
open a T account for the abnormal loss or gain.
Step 0 -alculate the scrap value (if any) an* enter it on to the
%rocess account. "pen a T account for the scrap an*
*ebit it with the scrap value.

)R#CESS #! MANU!ACURIN% SU%AR IN SU%AR 

INDUSR9

8 SAM)LIN%

  O# ,&&+8,4 , 5,m94% o '% 5*,& 7%%' +5 ',;%# &om '% 4o,$ ,#$ '%5'%$ 'o
m%,5*&% '% 5*,& o#'%#' ,#$ 'o $%'%&m+#% '% ,mo*#' o 5o+4 'o95 o& 4%,8%5 9&%5%#' +# '%
4o,$ .T%5% ,#,465%5 om7+#%$ <+' '% <%+' o '% 8%+4% %#'%&+# ,#$ 4%,8+# '% ,'o&6
%#,74%5 '% ,4*4,'+o# o '% *,#'+'6 o 5*,& $%4+8%&%$ ,#$ %#% '% 9,6m%#' $*%.

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  CLEANIN%
  /4o,'5 +# <,'%& ,#$ +# '% 4%,#+# 5',% o '% 9&o%55 +' +5 mo8%$ ,&o*#$ +# 4,&%
*,#'+'+%5 o <,'%& ,44o<+# '% S*,& 7%%' 'o 9,55 '&o* m,+#%&6 <+ ,'%5 5'o#%5
 7*' ,44o<5 '% 7%%' 'o 4o,' o8%& '% 'o9. 1%%$5 ,#$ o'%& '&,5 ,&% ,45o &%mo8%$ 7%o&% '% 7%%'
%#'%&5 '% ,'o&6 <%&% +' +5 54+%$ +#'o '+# 54+%5 ,44%$ Co55%''%5

 
SLICIN%
T% 54++# m,+#%5 <o&; +# , 5+m+4,& m,##%& 'o , ;+'%# &,'%& ,#$ '% o55%''%5
'%6 9&o$*% ,8% , V &o55 5%'+o#. T+5 %#5*&%5 '% 4,&%5' 9o55+74% 5*&,% ,&%, +5 9&%5%#'%$
'o m,?+m+5% '% 5*,& %?'&,'+o# 5',%.

DI!!USI#N 
S*,& +5 %?'&,'%$ &om '% 7%%' 76 $+*5+o#. T+5 9&o%55 ',;%5 94,% +# , 4,&% 8%55%4 ,#$ +#
5+m94% '%&m5 +5 ,;+# 'o 7&%<+# '%, T% o55%''%5 ,&% m+?%$ <+' o' <,'%& ,' ,&o*#$ 0C o& ,
 9%&+o$ o '+m% ,#$ '% 5*,& 5+m946 9,55%5 &om '% 94,#' %445 +#'o '% 5*&&o*#$+# <,'%& 76
'% $+*5+o# 9&o%55

.T% 8%%',74% m,'%&+,4 4%' 7%+#$ &om '+5 5',% +5 m%,#+,446 9&%55%$ 'o %?'&,' ,5 m*
&%m,+#+# 5*,& ,#$ <,'%& ,5 9o55+74% ,#$ ,'%& '% ,$$+'+o# o mo4,55%5 +5 $&+%$ 'o 9&o$*%

,#+m,4 %%$ 9&o$*'5. I'+5 '+5 $&6+# 9&o%55 <+ +8%5 &+5% 'o '% ,m+4+,& 94*m% o 5'%,m
&+5+# &om '% ,'o&6. T% 4+*+$ &%5*4'+# &om '% $+*5+o# 9&o%55 +5 $,&; +# o4o*& ,#$ +5
,44%$ &,< *+%.
 

)URI!ICAI#N 
  T+5 *+% +5 9,55%$ '&o* ,# +m9o&',#' 9*&++,'+o# 5',% ,44%$ ,&7o# ,','+o#. T+5

+#8o48%5 m+?+# '% *+% <+' m+4; o ,5. D*&+# 4+m% ,#$ ,$$+# ,&7o# $+o?+$% '+5 9&o%55
'% ,&7o# $+o?+$% ,#$ '% m+4; o 4+m% &%-om7+#% 'o 9&o$*% ,4+*m ,&7o#,'% <+
 9&%+9+','%5 o*' ',;+# mo5' o '% +m9*&+'+%5 &om '% *+% <+' +'

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E4A)#RAI#N
  T% 9,4% 6%44o< *+% <+ &%m,+#5 +5 ,44%$ '+# *+% ,#$ <+4% m* 9*&%& +' +5
5'+44 &%4,'+8%46 4o< +# 5*,& o#'%#'. I' 9,55%5 'o '% #%?' 5',% o '% 9&o%55 - %8,9o&,'+o# -
<%&% '% <,'%& +5 7o+4%$ o +# , 5%&+%5 o %8,9o&,'o& 8%55%45 'o +#&%,5% '% 5o4+$5

T% o#%#'&,'%$ *+% 9,55%5 '&o* +4'%&5 ,'%& <+ +' +5 &%,$6 o& '% +#,4 5',% o '%
 9&o%55 o& +' ,# 7% 5'o&%$ ,#$ 7&o*' 7,; +#'o '% ,'o&6 $*&+# '% 5*mm%& 'o 9&o$*%
&65',4 5*,&. M,55% *+'% - +5 59*# +# $ 'o 5'o&,% 5+4o5. Som% 5*,& &%m,+#5 +# '% 5%9,&,'%$
4+*+$ 5o +' +5 7o+4%$ ,,+# +# , *&'%& 5%' o 8,**m 9,#5 'o 9&o$*% &,< 5*,&.

T+5 9&o%55 +5 &%9%,'%$ , '+&$ '+m% &%5*4'+# +# +#,4 9&o$*' 5*,& ,#$ mo4,55%5.
R,< ,#$ +#,4 9&o$*' 5*,&5 ,&% &%-$+55o48%$ +#'o '% '+; *+%. o#'%#' o '% *+% &om
'% 9&%8+o*5 " 9%& %#' +# '+# *+% 'o "! 9%& %#' +# '% '+; *+%.

T% o#%#'&,'%$ *+% 9,55%5 '&o* +4'%&5 ,'%& <+ +' +5 &%,$6 o& '% +#,4 5',% o '%

 9&o%55 o& +' ,# 7% 5'o&%$ ,#$ 7&o*' 7,; +#'o '% ,'o&6 $*&+# '% 5*mm%& 'o 9&o$*%
&65',4 5*,&.

CR9SALLI:AI#N
  T% &65',44+@,'+o# 9&o%55 ',;%5 94,% +# 8,**m 9,#5 <+ 7o+4 '% *+% ,' 4o<%& 
'%m9%&,'*&%5 *#$%& 8,**m. 1%# '% *+% &%o#%#'&,'+o# +' +5 5%%$%$ <+' '+#6 5*,& 
&65',45 <+ 9&o8+$% '% #*4%*5 o& 4,&%& &65',45 'o o&m ,#$ &o<

.1%# '% &65',45 &%, '% $%5+&%$ 5+@% '% 9&o%55 +5 5'o99%$ ,#$ '% &%5*4',#' m+?'*&% o 
&65',4 5*,& ,#$ 56&*9 - ;#o<# ,5 %#'&+*%5 'o 5%9,&,'% '% 5*,& &om '% mo'%& 4+*o& .

T% 5*,& &65',45 ,&% <,5%$ ,#$ ,'%& $&6+# ,#$ oo4+# ,&% o#8%6%$'o 5'o&,% 5+4o5. Som%
5*,& &%m,+#5 +# '% 5%9,&,'%$ 4+*+$ 5o +' +5 7o+4%$,,+# +# , *&'%& 5%' o 8,**m 9,#5 'o
 9&o$*% &,< 5*,&. T+5 9&o%55+5 &%9%,'%$ , '+&$ '+m% &%5*4'+# +# +#,4 9&o$*' 5*,& ,#$

mo4,55%5. R,<,#$ +#,4 9&o$*' 5*,&5 ,&% &%-$+55o48%$ +#'o '% '+; *+%.

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he *ield of (ur from &u(ar cane de'end& mo&tl* on the ;ualit* of the cane and the
efficienc* of the e-traction of <uice8 he ta+le +elo, (i/e& &ome e-treme /alue&8

+ *,4+'6 ,#% Poo& *,4+'6 ,#%

J*+% 9%& 00; o ,#% !0; 0;

 5*,& +# *+% 22 

G*& 9%& 00; o ,#% 0; ;

+ *,4+'6 ,#% ,5 , oo$ *+% o#'%#' <+' + 5*,& 4%8%45 (20). Poo& 
*,4+'6 ,#% o& ,#% ',' ,5 7%%# ,&8%5'%$ %,&46 m,6 ,8% 5+m+4,& *+% o#'%#' 7*' '% 5*,& 
4%8%45 <+44 7% &%$*%$.

T% %++%#6 <+' <+ *+% ,# 7% %?'&,'%$ &om '% ,#% +5 4+m+'%$ 76 '% '%#o4o6
*5%$. T% 5+m94% '&%% &o44%& &*5%&5 *5%$ 76 mo5' ,&'+5,#,4 9&o$*%&5 <+44 #%8%& %?'&,' mo&%
',# !0; o *+% &om %, 00; o ,#%.

Y+%4$5 ,&% ,45o +m9&o8%$ 76 ,&%*4 o#'&o4 o '% 7o+4+# 9&o%55. Bo+4+# 5o*4$ 7% om94%'%$
,5 &,9+$46 ,5 9o55+74% ,#$ '% o#$+'+o#5 ;%9' ,5 4%,# ,5 9o55+74%.

Ma&& Balance

1%+' o *&   = Weight of cane x (weight of juice/weight of cane) x (sugar in juice/sugar in

 gur)

/o& '% '%#+,446 m+#$%$ '% <%+'5 o '% *& *+% ,#$ ,#% ,# 7% &%4,'%$ ,5 o44o<5:

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1!g gur = 1!g cane x ("!g juice/1!g cane) x (1#$ sugar in juice/#"$ sugar in gur)

=edit>S,4% o 9&o$*'+o#

C,#%
S,4% T69% o %#'%&9&+5%
 9&o%55%$=$,6

Co'',% ,#$ 5m,44 8+44,% +#$*5'&6 *5+# '&,$+'+o#,4 OP

Sm,44 *9 'o !0 'o##%5
'%#o4o6.

Sm,44 'o m%$+*m %#'%&9&+5% *5+# mo$++%$ '&,$+'+o#,4 OPS o& 

M%$+*m !0 'o !00 'o##%5
5m,44-5,4% VP '%#o4o6.

!00 'o##%5
L,&% L,&% +#$*5'&6 *5+# mo$%&# VP '%#o4o6.
*9<,&$5

CONCLUSION

P&o%55 o5'+# m,6 7% *5%$ <%# +$%#'+,4 +'%m5 ,&% m,55 9&o$*%$ ,#$
m,#*,'*&+# m,6 +#8o48% mo&% ',# o#% 9&o%55. I# ,#5<%&+# 9&o%55 o5'+# *%5'+o#5 +' +5
+m9o&',#' 'o *#$%&5',#$ ;%6 '%&m5 ,#$ %5',74+5 <%'%& 1A o& /I/O +5 7%+# *5%$ ,5 '+5 ,5
+m94+,'+o#5 o& '% ,44o,'+o# o o5'5 'o o*'9*'5 &om '% 9&o%55. ,8+# &%,$ '+5 ,&'+4% ,#$

<o&;%$ '&o* '% %?,m94% o9%*446 6o* 5o*4$ ,8% , 7%''%& *#$%&5',#$+# o o< 9&o%55
o5'+# <o&;5 <%'%& 1A o& /I/O +5 *5%$.

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