Assignment Questions - PROCESS COSTING

 Assignment Questions

 

PROCESS COSTING

Question 1.

RST Limited processes Product Z through two distinct processes – Process I and Process II. On completion, it is transferred to finished stock. From the following information for the year 2006-07, prepare Process I, Process II, Finished Stock A/c & Income statement :

Particulars	Process I	Process II
Raw materials used	7,500 units	-
Raw materials cost per unit	Rs.60
Transfer to next process/finished stock	7,050 units	6,525 units
Normal loss (on inputs)	5%	10%
Direct wages	Rs.1,35,750	Rs.1,29,250
Direct Expenses	60% of Direct wages	65% of Direct wages
Manufacturing overheads	20% of Direct wages	15% of Direct wages
Realisable value of scrap per unit	Rs.12.50	Rs.37.50

6,000 units of finished goods were sold at a profit of 15% on cost. Assume that there was no opening or closing stock of work-in-progress.

 

Question 2.

Following details are related to the work done in Process 'A' XYZ Company during the month of March, 2007 :

Opening work-in progress (2,000 units)

Materials 80,000

Labour 15,000

Overheads 45,000

Materials introduced in Process 'A' (38,000 units) 14,80,000

Direct Labour 3,59,000

Overheads 10,77,000

Units scrapped : 3,000 units

Degree of completion :

Materials 100%

Labour and overheads 80%

Closing work-in progress : 2,000 units

Degree of completion :

Materials 100%

Labour and overheads 80%

Units finished and transferred to Process 'B' : 35,000 units

Normal Loss : 5% of total input including opening work-in-progress.

Scrapped units fetch Rs.20 per piece.

 

You are required to prepare :

(i) Statement of equivalent production

(ii) Statement of cost

(iii) Statement of distribution cost, and

(iv) Process 'A' Account, Normal and Abnormal Loss Accounts.

 

Question 3.

Pharma Limited produces product 'Glucodin' which passes through two processes before it is completed and transferred to finished stock. The following data relates to March, 2010:

Particulars	Process-I  (Rs.)	Process-II (Rs.)	Finished Stock (Rs.)
Opening Stock	1,50,000	1,80,000	4,50,000
Direct materials	3,00,000	3,15,000	-
Direct Wages	2,24,000	2,25,000	-
Factory Overheads	2,10,000	90,000	-
Closing Stock	74,000	90,000	2,25,000
Inter process profit included in Opening stock	NIL	30,000	1,65,000

Output of process I is transferred to process II at 25 percent profit on the transfer price, whereas output of process II is transferred to finished stock at 20 percent on transfer price. Stock in processes are valued at prime cost. Finished stock is valued at the price at which it is received from process II. Sales for the month is Rs. 28,00,000.

 

You are required to prepare Process-I a/c, Process-II a/c, and Finished Stock a/c showing the profit element at each stage.

 

 

ANSWER HINTS
Question No.	Answer
1	Process I Costing Per Unit Rs.96.795; Process II Costing Per Unit Rs. 140.05; Net Profit Rs.1,38,197
2	Equivalent Production; Material = 38,000; Labour & O.H. = 37,400 Material = Rs.40, Labour = Rs.10,  O.H. = Rs.30 Total = Rs. 30,56,000
3	Inter process profit; Process I = Rs.2,70,000; Process II = Rs. 4,50,000; Finished stock = Rs. 3,25,000