Q-1 Aut-17

Platinum Chemicals
Part (a)
Cost of sales: Rs.
J-101
Allocated joint cost (W-1.4) 4,345,300
Packing cost [120 x 5,000] 600,000
4,945,300

J-Plus
[3,400 x 1,204.69(W-2.3)] 4,095,946

Since there is no FG inventory, therefore, entire cost of production is cost of sales.

W-1 Process - I

W-1.1 Quantity schedule

Liters
Opening WIP -
Input 12,000
Closing WIP -
NL [12,000 x 10%] (1,200)
AL (balancing) (300)
By-product BP-01 (1,000)
Output [5,000 + 4,500] 9,500

W-1.2 Equivalent production

Material Conversion
Output 9,500 100% 9,500 9,500
AL: 300
- Material 100% 300
- Conversion 0% - -
9,800 9,500

W-1.3 Joint-cost of completed units Material Conversion

----------- Rs. ------------
Current period cost 5,748,000 2,610,000
Sale of BP-01 [1,000 x 500] (500,000)
Scrap value of NL [1,200 x 0.8kg x Rs. 100] (96,000)
5,152,000 2,610,000

Eq. units 9,800 9,500

Cost per unit (Rs.) 525.71 274.74 800.45

Rs.
Joint cost of completed units [9,500 x 800.45] 7,604,275
W-1.4 Allocation of joint cost

Product Units Total NRV Cost allocation

------------- Rs. -------------
J101 5,000 [5,000 x (1,200 - 120)] 5,400,000 4,345,300
[7,604,275 x 5,400,000/9,450,000]

J202 4,500 [4,500 x 0.9* x (1,400 - 400(W-2.3))] 4,050,000 3,258,975

[7,604,275 x 4,050,000/9,450,000]

9,450,000 7,604,275

* Since 1 Liter of J202 is only converted into 0.9 liter of J-Plus due to 10% normal loss, therefore,
units of J202 are multiplied by 0.9

W-2 Process - II

W-2.1 Quantity schedule

Liters
Opening WIP -
Transfer in 4,500
Closing WIP (650)
NL [4,500 x 10%] (450)
Output 3,400

W-2.2 Equivalent production

Material Conversion
Output 3,400 100% 3,400 3,400
Closing WIP 650
- Material 100% 650
- Conversion 70% 455
4,050 3,855

W-2.3 Cost per unit P-1 costs Conversion

----------- Rs. ------------
Current period cost (W-1.4) 3,258,975 1,542,000

Eq. units 4,050 3,855

Cost per unit (Rs.) 804.69 400.00 1,204.69

Part (b) Debit Credit
------------ Rs. ------------
Scrap inventory 96,000
WIP-I 96,000
Abnormal Loss [300 x Rs. 525.71 (W-2)] 157,713
WIP-I 157,713
Scrap inventory [300 x 0.8 x Rs. 100] 24,000
P&L 133,713
Abnormal loss 157,713
Bank 120,000
Scrap inventory 120,000