PROCESS COSTING: PART B

QUESTIONS

Dr Manisha Bhavsar
Associate Professor in Accountancy
H L College of Commerce
Question 1
A fertilizer company produces four products – Urea, Ammonia, Phosphate and Nitrogen –
using one common material Sulphur. During December, 30,000 tons of sulphur at Rs 190
per ton was consumed. Other joint costs amounted to Rs 24,00,000. Details of the
products are given below.

Product Output (tons) Selling Price (Rs per ton)

Urea 8,000 250
Ammonia 6,000 450
Phosphate 7,000 600
Nitrogen 4,000 200

Apportion the joint costs on the basis of

(1) output (2) selling price (3) sales value

Dr Manisha Bhavsar, HLCC 2

Question 2
An oil company processes crude oil into different products. The company incurs a cost of
Rs 50,000 to process 1000 litres of crude oil into different products. The details of the
products are given below.
Product Std yield per 1000 litres (litres) Market Price (Rs per litre)
Oil 50 200
Petrol 320 80
Diesel 460 75
Kerosene 80 25
Paraffin 40 100
Gas 30 30
Loss 20 -
Total 1000
Compute the unit cost of each product apportioning the joint costs on the basis of
(1) output and (2) sales value.
Dr Manisha Bhavsar, HLCC 3
Question 3 Eg 34 Pg 74
Products A, B and C are produced after processing in a particular process, joint costs of
which amount to Rs 16,00,000. The products are then sent to separate processes, details
of which are given below.

Product Output (units) Selling Price (Rs per unit) Separate Costs (Rs)
A 60,000 50 10,00,000
B 40,000 25 2,50,000
C 50,000 40 7,50,000

Calculate the profit of each product after apportioning the joint costs on the basis of
(1) Relative sales value minus further processing cost and
(2) Weighted units method allotting weights of 4, 4 and 2 to products A, B and C.

Dr Manisha Bhavsar, HLCC 4

Question 4 Eg 30 Pg 72
In a process, manufacture of Product A yields by-products B and C. All the three products
A, B and C are then separately processed, and later sold off. The related details are given
below.
Joint Separate Separate Separate
Particulars
Expenses (Rs) Exps of A (Rs) Exps of B (Rs) Exps of C (Rs)
Material 10,000 2,500 1,200 1,400
Labour 11,500 1,900 1,600 2,000
Overheads 7,700 1,500 900 1,050
Total Exps 29,200 5,900 3,700 4,450
Sales Value 30,000 20,000 15,000
Profit on sale 40% 30% 25%

Prepare a statement showing the apportionment of initial joint expenses among A, B and C.

Dr Manisha Bhavsar, HLCC 5

Question 5
A factory manufactures 3 joint products X, Y and Z. After processing in a common process,
the products are sent to separate processes for further processing. Then they are sold off.
During June, initial joint expenses amounted to Rs.99,000. Other details are given below.

Particulars X Y Z
Subsequent Separate
20,000 30,000 20,000
Expenses (Rs)
Sales (Rs) 1,00,000 1,20,000 80,000
Profit 20% on sales 20% on cost 25% on cost

Prepare a statement showing the apportionment of initial joint expenses among X, Y and Z.

Dr Manisha Bhavsar, HLCC 6

Question 6 Eg 33 Pg 73
While manufacturing the main product A, a company processes the resulting waste
material into two by-products B and C. The joint expenses amounted to Rs 68,000. From
the following information, show the allocation of joint expenses and calculate the profit of
Product A.

Particulars A B C
Sales Value (Rs) 1,64,000 16,000 24,000
Separate Expenses (Rs) - 4,800 7,200
Selling Expenses (% of sales) 20% 20% 20%
Net Profit (% of sales) ? 20% 30%

Dr Manisha Bhavsar, HLCC 7