Process Costing, RAMAN ROY

ACCOUNTING MANAGEMENT - II
PROCESS COSTING
Presented By:
DR.N.K.GUPTA
Introduction
• In many industries, products are mass
produced, that is, relatively homogeneous
products are processed in a very similar
manner.
• Companies in these industries use process

costing.
Determining as to when
process-costing systems are
appropriate
Process Costing
• In businesses where a product passes through
different stages of production, each well
defined, process costing is employed.
• A separate account for each process is opened
and all expenditures pertaining to that process
is charged to that process account. Thus, the
cost of the product at each stage of
manufacture is found out.
• Process costing is the method that applies cost
to alike products that are usually mass
produced in continuous fashion through series
of production steps or processes.
• Process costing is suitable for industries
involving continuous production of the same
product through the same process or a set of
processes.
• In a process-costing system, the unit cost of a
product or service is obtained by assigning
total costs to many identical or similar units.
Describing five key steps
in process costing
1. Summarize the flow of physical units of
output.
2. Compute output in terms of equivalent
units.
3. Compute equivalent unit costs.
4. Summarize total costs to account for.
5. Assign total costs to units completed and
to units in ending work-in-process
inventory.
Process account
• It is an account that shows the
allocation of different costs associated
in the production for different
processes associated in the production
of the final product in continuous
production.
• It shows the segregation of the different
costs of production to a process.
Sample Process Account
Factory Process Account
Particulars Product A Particulars Product A

Cost
Cost Per Total Per
Total cost Unit Cost Unit
Materials
Consumed Wastage
Direct Wages Units Damaged

Factory
Overheads Sale
Transfer To
Profit Finishing Process
Process Loss and Wastages
• NORMAL PROCESS LOSS
1. The usual percentage of wastage arising in a
particular process or operation.
2. It is unavoidable because of nature of material or
process. It also includes units withdrawn from the
process for test or sampling.
3. The loss due to normal wastage should be charged
to the effectives arising out of the process.
Thus, cost of spoiled and lost units is absorbed as
an additional cost of good units produced by the
process.
Illustration
The following data are available pertaining to a product after
passing through two processes A and B:
Output transferred to process C from process B 9120 units
for Rs. 49263.
Expenses incurred in process C:
Sundry materials Rs. 1,480
Direct labor Rs. 6,500
Direct Expenses Rs. 1,605
The wastage of process C is sold at Re.1.00 per unit. The
overhead charges were 168% of direct labor. The final
product was sold at Rs. 10.00 per unit fetching a profit of 20%
on sales. Find the percentage of wastage in process C and
prepare process C account.
Solution:
Let the total finished output of process C be x units.
Total sales = 10x
Wastage in units = (9120-x)
Salvage value = 1*(9120-x)
Profit = 2x
Total sales = Total cost + Profit
10x = 69,768 - (9120-x) + 2x
7x = 69,768 - 9120
X = 8664 units
Wastage = 9120 - 8664 = 456 units
Percentage to input = 456 / 9120 * 100 = 5%
Process C account
Particulars Particulars
Total Total
Units Cost Units Cost
Transfer
from Normal
Process B 9120 49263 Loss 456 456
Transfer to
Sundry finished
Materials 1480 goods 8664 69312
Stock A/C
Direct (@Rs.8 per
Labor 6300 unit)
Direct
Expenses 1605
Overheads 10,920
9120 69768 9120 69678
Process Loss and Wastage
• ABNORMAL PROCESS LOSS
It consists of loss in excess of the normal
process loss.
This loss is due carelessness, bad plant design
or operation, sabotage etc.
Abnormal wastage should not be allowed to
affect the cost of goods units otherwise cost of
production per unit will unnecessary fluctuate
and costing itself will give misleading results.
Abnormal Effectiveness
• In case, the actual production of a process is more than
the expected production, the excess is known as
abnormal effectiveness.
• The presence of abnormal effectiveness should not
affect the cost of good units in normal circumstances.
They, therefore, shall be valued at the rate at which
the good units would have been valued had there been
wastage at the normal rate.
• The amount shall be debited to the relevant process
account and credited to “Abnormal Effectiveness
Account” which will be closed by transferring to
Costing Profit and Loss Account.
Illustration
1000 units of raw material were introduced in a process
at a cost of Rs. 4000, 10% wastage is allowed, each unit
of wastage realizes Rs. 2.50. The actual production was
850 units (with an abnormal wastage of 50 units). The
expenses being as follows:
Direct wages Rs. 6,500

Indirect expenses Rs. 3,250
Prepare the process account to bring out the effect of

wastage.
Solution:
Working notes:
1,000 units introduced – total cost = Rs. 13,750
100 units normal wastage – cost = Rs. 250
900 units normal output - cost = Rs. 13,500
Per unit cost of normal output = 13,500 = Rs. 15
900
Cost of Abnormal wastage = Rs. 15x 50 = Rs. 750

Note: Abnormal Wastage Account can be prepared as
follows:
Process Account
Particulars Process Particulars Process

Total Total
Raw Normal
materials 1,000 4000 Wastage 100 250
Direct Abnormal
Wages 6,500 Wastage 50 69312
Transfer
Indirect to next
Expenses 3,250 process 850 12,750
1,000 13,750 1,000 13,750
Abnormal Wastage Account

Total Total
Process Sale
A/c 50 750 Proceeds 50 125
Profit and
Loss A/c 625
50 750 50 750
Illustration
The product of a manufacturing concern passes through two processes
A and B and then to finished stock. It is ascertained that in each
process normally 5% of total weight is lost and 10% scrap which
processes A and B realizes Rs. 80 per tonne and Rs. 200 per tonne
respectively.
The following are the figures relating to both the processes:
Process A Process B
Materials in tones 1,000 70
Cost of materials in rupees per tonne 125 200
Wages in rupees 28,000 10,000
Manufacturing expenses in rupees 8,000 5,250
Output in tones 830 780
Prepare Cost account showing cost per tones of each process. There
was no stock or work-in-progress in any process.
Soln:
Process A Account

Tonnes Amount Tonnes Amount
Loss in
Materials 1,000 1,25,000 Weight 50 -
Manufacturing Normal
Expenses 8,000 Loss 100 8,000
Abnormal
Wages 28,000 Loss 20 3,600
Transfer to
process B
@ Rs. 180
per tonne 830 1,49,400
1,000 1,61,000 1,000 1,61,000
Cost of Abnormal Loss = 1,61,000 – 8,000 = Rs. 180 per tonne

850
Process B Account

Tonnes Amount Tonnes Amount
Transfer from Loss in
Process A 830 1,49,400 Weight 45 -
Materials 70 14,000 Normal Loss 90 18,000
Transfer to
Finished
Stock @ Rs.
Manufacturing 210 per
Expenses 5,250 tonnne 780 1,63,800
Wages 10,000
Abnormal
Effectiveness
(or Gain A/C) 15 3,150
915 1,81,800 915 1,81,800
Value of Abnormal Effectiveness = Rs. 1,78,650 – Rs. 18,000 = Rs. 210

per tonne
765
Calculate and use
equivalent units
Equivalent Units
• Equivalent units is a derived amount of
output units that takes the quantity of each
input in units completed or in work in
process and converts it into the amount of
completed output units that could be made
with that quantity of input.
• Equivalent unit calculations are necessary
when all physical units of output are not
uniformly completed during the period.
Equivalent Units
• The following information relates to Aspen

Inc., a manufacturer of skiing accessories.
• Ending work-in-process inventory is 100%
complete for materials and 20% complete
for conversion.
Physical Units (Step 1)
Physical
Flow of Production units
Work-in-process, beginning 0
Started during current period 35,000
To account for 35,000
Completed and transferred out
during current period 30,000
Work-in-process, ending (100%/20%) 5,000
Accounted for 35,000
Compute Equivalent
Units (Step 2)
Equivalent units
Direct Conversion
Flow of Production Materials Costs
Completed and
transferred out 30,000 30,000
Work-in-process,
ending 5,000 (100%) 1,000 (20%)
Current period work 35,000 31,000
Compute Equivalent Unit Costs (Step 3)
• Total production costs are $146,050.

Direct Conversion
Materials Costs
$84,050
$62,000 Equivalent units 35,000
31,000 Cost per equivalent unit
$2.4014 $2.00
Summarize and Assign Total Costs
(Steps 4 and 5)
• Step 4: Total costs to account for: $146,050

• Step 5: Assign total costs: Completed and
transferred out 30,000 x $4.4014 = $132,043
• Work-in-process ending (5,000 units)
• Direct materials 5,000 x $2.4014 = 12,007
Conversion costs 1,000 x $2.00 = 2,000
Total $146,050
Prepare journal entries for
process-costing systems
Journal Entries
• Journal entries in process-costing systems
are basically like those made in job-costing
systems with respect to direct materials and
conversions costs.
• The main difference is that in a process-
costing system, there is a separate work-in-
process account for each department rather
than for each job.
Journal Entries
• Assume that Aspen Inc. has two processing
departments – Assembly and Finishing.
• Aspen Inc. purchases direct materials as
needed.
• What is the journal entry for materials?
• Work-in-Process, Assembly 84,050
Accounts Payable Control 84,050
To record direct materials purchased and
used
Journal Entries
• What is the journal entry for conversion
costs?
• Work-in-Process, Assembly 62,000
Various accounts 62,000
To record Assembly Department conversion
costs
• What is the journal entry to transfer
completed goods from Assembly to Finishing?
Journal Entries
Work-in-Process, Finishing 132,043
Work-in-Process, Assembly 132,043
To record cost of goods completed and transferred
from Assembly to Finishing during the period
Flow of Costs
Accounts Payable WIP Assembly
84,050 84,050 132,043
62,000
Various Accounts 14,007
62,000
WIP Finishing
132,043
Finished Goods Cost of Goods Sold

Demonstrate the weighted-
average method of process
costing
Weighted-Average Method
• The weighted-average process-costing method
calculates the average equivalent unit cost of
the work done to date (regardless of the period
in which it was done).
• It assigns this cost to equivalent units
completed and transferred out and to
equivalent units in ending work-in-process
inventory.
• The weighted-average cost is the total of all
costs entering the Work-in-Process account
(regardless of whether it is from beginning
work in process or from work started during
the period) divided by total equivalent units
of work done to date.
• Assume that Aspen Inc. had 1,000 units in
the Assembly Department beginning work-
in- process inventory.
• These units were 100% complete for
materials ($2,350) and 60% complete for
conversion ($5,200).
• Ending work-in-process inventory consisted
of 5,000 units (100% materials) and (20%
conversion).
• Work-in-process, beginning:
100% material 60%
conversion costs 1,000
• Units started in process 35,000 36,000
• Units transferred out: 31,000
Units in ending inventory: 100%
material 20%
conversion costs 5,000
36,000
Compute Equivalent
Units (Step 2)
• Partially completed units are converted into
equivalent units.
• Ending inventory is only 20% complete for
conversion which equals 1,000 equivalent
units (5,000 x 20%).
Compute Equivalent
Units (Step 2)
Materials
Conversion
Completed and
transferred 31,000 31,000
Ending inventory 5,000 1,000
Equivalent units 36,000 32,000
100% 20%
Compute Equivalent
Unit Costs (Step 3)
• Materials Conversion
• Beginning
inventory $ 2,350 $ 5,200
• Current costs 84,050 62,000
• Total $86,400 $67,200
• Equivalent units 36,000 32,000
• Cost per unit $2.40 $2.10
Summarize and Assign Total
Costs (Steps 4 and 5)
• Work-in-process beginning inventory:
Materials $ 2,350
Conversion 5,200
Total beginning inventory $ 7,550
+ Current costs in Assembly Department: Materials
$ 84,050 Conversion
62,000
= Costs to account for $153,600
• This step distributes the department’s costs to
units transferred out:
31,000 units × $4.50 = $139,500
• And to units in ending work-in-process
inventory: $12,000 + $2,100 = $14,100
• Costs transferred out:
31,000 × ($2.40 + $2.10) $139,500
• Costs in ending inventory:
Materials 5,000 × $2.40 12,000
Conversion 1,000 × $2.10 2,100
• Total costs accounted for: $153,600
Journalizing: Weighted-Average
• What are the journal entries in the Assembly
Department?
• To record direct materials purchased and used
Various accounts 62,000
• To record Assembly Department conversion costs
Journalizing: Weighted-Average
Work-in-Process, Finishing 139,500

To record cost of goods completed and
transferred from Assembly to Finishing
during the period
Key T-Account:
Weighted-Average
Work-in-Process Inventory, Assembly
Beg. Inv. 7,550 Transferred to
Materials 84,050 Finishing
Conversion 62,000 139,500
Balance 14,100
Demonstrate the first-in,
first-out (FIFO) method
of process costing
First-In, First-Out Method
• FIFO process-costing method assigns the

cost of the prior accounting period‟s
equivalent units in beginning work-in-
process inventory to the first units
completed and transferred out.
• FIFO assigns the cost of equivalent units
worked on during the current period first to
complete beginning inventory, then to start
and complete new units, and finally to units
in ending work-in-process inventory.
• This method assumes that the earliest
equivalent units in the Work-in-Process,
Assembly account are completed first.
• A distinctive feature of the FIFO process-

costing method is that work done on beginning
inventory before the current period is kept
separate from work done in the current period.
• Assume that Aspen Inc. uses FIFO.

• How many units will be in the quantity
schedule (Step 1)?
• 36,000 (same as weighted-average method)
• What are the equivalent units (Step 2)?
Compute Equivalent
Units (Step 2)
Materials Conversion
Completed and
transferred:
From beginning
inventory 0 400
Started and completed 30,000 30,000
35,000 31,400
Compute Equivalent
Units (Step 2)
Completed and
transferred 31,000 31,000
Ending inventory 5,000 (100%) 1,000 (20%)
36,000 32,000
Beginning
inventory 1,000 (100%) 600 (60%)
Compute Equivalent
Unit Costs (Step 3)
Current costs $84,050 $62,000
Cost per unit $2.40 $1.975
• Work-in-process beg. inventory $ 7,550
• Current costs:
• Material 84,050
Conversion 62,000
Total $153,600
• Same as using weighted-average
• From beginning inventory: $7,550
Conversion costs added:
1,000 x 40% x $1.975 790 $8,340
• From current production:
30,000 x $4.375 131,250
• Total $139,590
• Work-in-process ending inventory:

• Materials: 5,000 × $2.40 $12,000
• Conversion:
5,000 × 20% × $1.975 1,975
Total $13,975
• Costs transferred out $139,590
+ Costs in ending inventory $13,975
= $153,565 ($35 rounding error)
• An alternative approach:
• Costs to account for $153,600
– Cost in ending inventory $13,975
= Costs transferred out $139,625
Key T-Account: FIFO
Work-in-Process Inventory, Assembly
Materials 84,050 Finishing
Conversion 62,000 139,625
Balance 13,975
Comparison of Weighted-Average and
FIFO Methods
Weighted
Average FIFO Difference
Costs of units
completed and
transferred out $139,500 $139,625 +$125
Work-in-process,
ending 14,100 13,975 -$125
Total costs
accounted for $153,600 $153,600 0
Comparison of Weighted-
Average and FIFO Methods
• The weighted-average ending inventory is
higher than the FIFO ending inventory by
$125.
• This results in a lower cost of goods sold and
hence higher operating income and higher
income taxes than does the FIFO method.
Comparison of Weighted-Average
and FIFO Methods
• Differences in equivalent unit costs of beginning
inventory and work done during the current
period account for the differences in weighted-
average and FIFO costs.
W-A
FIFO
Incorporate standard costs
into a process-costing system
Standard-Costing Method
of Process Costing
• Setting standards for quantities of inputs
needed to produce output in companies that
use process-costing is often relatively
straightforward.
• Standard costs per input unit may then be
assigned to these physical standards to
develop standard costs per output unit.
of Process Costing
• Assume that Aspen Inc. uses the standard-
costing method of process costing.
• Steps 1 and 2 are identical to the steps
described for the FIFO method.
• Step 3 is easier than under weighted-average
and FIFO methods.
• Why?
of Process Costing
• Because the cost per equivalent unit does not
have to be computed, as was done for the
weighted-average and FIFO methods.
• The cost per equivalent unit are the standard
costs.
• The entries to the Work-in-Process account
are at standard costs rather than actual.
of Process Costing
• Process-costing systems using standard costs
usually accumulate actual costs incurred
separately from the inventory accounts.
• Assume that actual materials cost is $84,050
and standard materials cost is $84,250
• What are the journal entries in the Assembly
Department?
Standard-Costing Method of Process
Costing
Direct Materials Control 84,050
Work-in-Process 84,250
Direct material
variances 200
Direct Materials Control 84,050
To record direct materials purchased and used in
production during the period and variances
Apply process-costing methods to
cases with transferred-in costs
Transferred-In Costs
Weighted Average
• Assume that the Finishing Department of Aspen
Inc. had 4,000 units in beginning work-in-
process inventory and 2,000 in ending work-in-
process inventory.
• 31,000 units were transferred from the Assembly
Department to the Finishing Department during
this period.
Weighted Average
• The beginning work-in-process inventory
was 60% complete for materials and 25%
for conversion.
• The ending work-in-process inventory was
100% complete for materials and 40% for
conversion.
Weighted Average
• There are three equivalent unit computations
for the Finishing Department.
1 Transferred-in
2 Direct materials
3 Conversion
• Beginning inventory 4,000
Units started in process 31,000
35,000
• Units completed and
transferred to
finished goods 33,000
Compute Equivalent
Units (Step 2)
• Equivalent units for transferred-in costs:
• Transferred to finished goods 33,000
Ending inventory 2,000
35,000
• Inventory is 100% complete for the work
performed in the Assembly Department.
Compute Equivalent
Units (Step 2)
Equivalent units for direct materials costs:
Transferred to finished goods 33,000
Ending inventory (100%) 2,000
35,000
Compute Equivalent
Units (Step 2)
• Equivalent units for conversion costs
(ending inventory 2,000):
Ending inventory (40%) 800
33,800
Compute Equivalent
Unit Costs (Step 3)
• Assume the following costs in the Finishing
Department:
• Work-in-process beginning inventory from:
Assembly Department $30,200
Direct materials 9,400
Conversion costs 8,000
Total cost in beginning inventory $47,600
Compute Equivalent
Unit Costs (Step 3)
Current costs in Finishing Department are as
follows:
Costs received from the
Assembly Department $139,500
Direct materials 9,780
Conversion 42,640
Total $191,920
Compute Equivalent
Unit Costs (Step 3)
• (Transferred-in costs $30,200 + Costs
transferred-in from the Assembly Department
$139,500) ÷ 35,000 units = $4.85
• (Direct materials $9,400 + $9,780) ÷ 35,000
= $0.55
• (Conversion costs $8,000 + $42,640) ÷ 33,800
= $1.50
• Total unit cost = $6.90
Summarize and AssignTotal
• Total costs in beginning
inventory $ 47,600
Current costs in
Finishing Department 191,920
$239,520
• Costs to account for:
$47,600 + $ 191,920 = $239,520
Summarize and AssignTotal
• Costs in work-in-process ending inventory:
• Transferred-in costs:
2,000 × $4.85 $ 9,700
• Direct materials: 2,000 × $0.55 1,100
• Conversion: 2,000 × 40% × $1.50 1,200
• Total cost in ending inventory $12,000
Summarize and AssignTotal Costs
(Steps 4 and 5)
• Costs to account for: $239,520
• Costs transferred to
finished goods inventory:
33,000 × $6.90 $227,700
• Costs in ending work-in-
process inventory:
$12,000 – $180 rounding error 11,820
• Total $239,520
T-Account Finishing Department
Work-in-Process Inventory, Finishing

Transferred-in 139,500 Finished Goods
Materials 9,780 227,700
Conversion 42,640
Balance 11,820
FIFO Method
• The physical units (Step 1) is the same as in
weighted-average.
• Beginning inventory 4,000
Units started in process 31,000 35,000
• Units transferred to
finished goods 33,000
Compute Equivalent Units
FIFO (Step 2)

From beginning work-in-process 0
Started and completed 29,000
Work-in-process, ending (100%) 2,000
Total equivalent units 31,000
FIFO (Step 2)
Ending work-in-process inventory 2,000
Total 35,000
• Beg. work-in-process inventory 4,000
• Equivalent units 31,000
• Inventories are 100% complete for the work
performed in the Assembly Department.
FIFO (Step 2)
Equivalent units for materials costs:

From beginning work-in-process 1,600
Work-in-process, ending (100%) 2,000
FIFO (Step 2)
• Equivalent units for material costs
(beginning inventory 4,000):
• Ending inventory (100%) 2,000
Total 35,000
• Beginning inventory (60%) 2,400
FIFO (Step 2)
Equivalent units for conversion costs:
From beginning work-in-process 3,000
Work-in-process, ending (40%) 800
FIFO (Step 2)
• Equivalent units for conversion costs
(beginning inventory 4,000,
ending inventory 2,000):
• Ending inventory (40%) 800
• Total 33,800
• Beginning inventory (25%) 1,000
Compute Equivalent Unit
Costs FIFO (Step 3)
• Cost per equivalent unit:
• Transferred-in: $139,590 ÷ 31,000 $4.50
• Direct materials: $9,780 ÷ 32,600 0.30
• Conversion: $42,640 ÷ 32,800 1.30
• Total unit cost $6.10
Costs FIFO (Steps 4 and 5)
• Current costs in Finishing Department $192,010
• Work-in-process beginning inventory 47,600
Costs to account for $239,610
• Same as weighted-average
• Work-in-process ending inventory:
• Transferred-in: 2,000 × $4.50 $ 9,000
• Direct materials: 2,000 × $0.30 600
• Conversion: 800 × $1.30 1,040
• Total $10,640
• From beginning inventory: $47,600
• Direct materials added:
4,000 × 40% × $0.30 480
• Conversion costs added:
4,000 × 75% × $1.30 3,900
• Total $51,980
Total costs transferred out:
From beginning inventory $ 51,980
From current production:
29,000 × $6.10 176,900
Total $228,880
• Total costs accounted for:
• Transferred to finished goods:
$176,900 + $51,980 $228,880
• Work-in-process ending inventory 10,640
• Rounding 90
• Total $239,610
• Costs to account for $239,610
• Work-in-process ending inventory -10,640
• Transferred to finished goods $228,970
Inter-process profits
Sometimes, it is considered desirable by a

manufacturing concern to value goods processed by
each process at a price corresponding to the market
price co parable goods.
Thus, profit or loss made by each process is revealed
and the efficiency of one process is not affected by the
efficiency or inefficiency of a previous process. The
market price of the goods processed being generally
higher than the cost of the process, each process
account will show some profit.
Illustration
The following are the details in respect of process X and

process Y of processing factory:
Process X Process Y
Rs. Rs.
Materials
10,000 --
Labour
10,000 14,000
Overheads
4,000 10,000
The output of Process X and Process Y at a price
calculated to give a process Y at a price calculated to
give a profit of 20% on transfer price and output of
Process Y is charged to Finished Stock at a profit of
25% on transfer price. The finished department
realized a profit of Rs.1,00,000 for the finished goods
received from Process Y. prepare the Process
accounts and total profit assuming there were no
opening and closing work-in-progress.
Sol.
Process X Account
Particulars Amount Particulars Amount

Transfer to Process
Materials 10,000 Y 30,000
Labor 10,000
Overheads 4,000
Profit- 20% of
transfer price 6,000
30,000 30,000
Process Y Account

Transfer to Process
Transfer from Process X 30,000 Stock 72,000
Labor 14,000
Overheads 10,000
Profit- 25% of transfer
price 18,000
72,000 72,000
Finished Stock Account

Transfer from
Process Y 72,000 Sale 1,00,000
Profit and Loss
A/C 28,000
1,00,000 1,00,000
Profit and Loss Account

Total
Costing Profit on
Profit 52,000 Process X 6,000
Profit on
Process Y 18,000
Profit on
Sales 28,000
52,000 52,000
Adjustments for Inter-process profits
It is sound financial principle that stock for

balance sheet purposes should be valued at cost
or market price whichever is less. Cost here
means „Cost‟ to the business as a whole.
Thus, it is necessary to eliminate the inter-process
profits included in the value of inventory in each
process and the stock of finished goods at the end
of accounting period.
THANK YOU
sirnkgupta@yahoo.com

Process Costing, RAMAN ROY

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ACCOUNTING MANAGEMENT - II

• Companies in these industries use process

Particulars Product A Particulars Product A

Direct Wages Units Damaged

Direct wages Rs. 6,500

Prepare the process account to bring out the effect of

Cost of Abnormal wastage = Rs. 15x 50 = Rs. 750

Particulars Process Particulars Process

Particulars Process Particulars Process

Particulars Process Particulars Process

1,000 1,61,000 1,000 1,61,000

Cost of Abnormal Loss = 1,61,000 – 8,000 = Rs. 180 per tonne

Particulars Process Particulars Process

915 1,81,800 915 1,81,800

Value of Abnormal Effectiveness = Rs. 1,78,650 – Rs. 18,000 = Rs. 210

• The following information relates to Aspen

• Total production costs are $146,050.

• Step 4: Total costs to account for: $146,050

Finished Goods Cost of Goods Sold

Work-in-Process, Finishing 139,500

• FIFO process-costing method assigns the

• A distinctive feature of the FIFO process-

• Assume that Aspen Inc. uses FIFO.

• Work-in-process ending inventory:

Work-in-Process Inventory, Finishing

• Equivalent units for transferred-in costs:

Equivalent units for materials costs:

Sometimes, it is considered desirable by a

The following are the details in respect of process X and

Particulars Amount Particulars Amount

Particulars Amount Particulars Amount

Particulars Amount Particulars Amount

Particulars Amount Particulars Amount

It is sound financial principle that stock for

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