Equivalent Process Account
Equivalent Process Account
Equivalent Process Account
Degree of completion:
Material 100%, Labour and Overhead 331/3%
Input of materials
Direct Labour
Rs. 14,000
Overheads
Rs. 28,000
5,000 units
Degree of completion:
Material
90%
30%
Normal process loss is 10% of total input ( Opening work in progress plus units put in)
Scrap value Rs. 2 per unit
Units transferred to the next process 15,000 units.
You are required to:
Compute equivalent units of production
Compute cost per equivalent unit for each cost element i.e materials, labour and overheads.
Compute the cost of finished output and closing work in progress.
Prepare the process and other accounts.
Assume (i) FIFO Method is used by the company.
(ii) The cost of Opening work in progress is fully transferred to the next
2. During a month 40,000 units were introduced into process A. The process cost were as
follows:
Rs.
Direct Materials
302,000
Direct Wages
207,000
Factory Overhead
The normal loss was estimated at 10% of input. At the end of the month, 32,000 units have
been produced and transferred to process B. 5,000 units have been scrapped ( scrapped units
have been completely processed and realised Rs. 5 per unit) and 3,000 units were
incomplete and the stage of completion in respect of these units was estimated to be:
Materials
75%
Labour
50%
Overhead
50%
Find out (a) Equivalent production, (b) Cost per unit, (c) Value of output to be transferred
and show the necessary accounts.
3. The following information is given in respect of Process No. 3 for the month of January,
2007.
Opening stock 2,000 units made of
Materials I
Rs. 12,350
Direct Material
Rs. 13,200
Direct Labour
Rs. 17,500
Overheads
Rs. 11,000
Rs. 30,000
Direct Labour
Rs. 60,000
Overheads
Rs. 60,000
Scrap 1,000 units Direct Materials 100%, Direct Labour 60%, Overhead 40%. Normal
loss 10% of production.
Scrapped units realised Rs. 4 per unit.
Closing Stock: 4,000 units Degree of completion: Direct Materials 80%, Direct Labour
60% and Overhead 40%.
Prepare Process No. 3 Account using average price method along with necessary supporting
statements.
Compilation 19
4. From the following information for the month of October, 2003, prepare Process III cost
accounts:
Opening WIP in Process III
Transferred to Warehouse
43,200 units
4,500 units
Units scrapped
1,800 units
Rs. 177,840
Direct Wages
Rs. 87,840
Production Overhead
Rs. 43,920
Degree of completion:
Opening Stock
Closing Stock
Scrap
Material
80%
70%
100%
Labour
60%
50%
70%
Overhead
60%
50%
70%
The normal loss in the process was 5% of the production and scrap was sold @ 6.75 per
unit.
Compilation Q.N 18
5. Following data are available for a product for the month of July, 1993.
Process I
Process II
NIL
NIL
Rs.
Rs.
Direct Material
60,000
-----
Direct Labour
12,000
16,000
Factory Overhead
24,000
20,000
Received in Process
40,000
36,000
36,000
32,000
Closing WIP
2,000
2,000
1,500
Units of Production:
100%
Labour
50%
Overhead
50%
6. ABC Chemicals manufactures a range of products in a variety of processes and the data
given below relate to Process III for the month of April.
You are required to prepare:
A statement showing the cost per unit and the value of output;
An account for Process III;
An abnormal gain or loss account.
10,800 units
Rs. 7,980
Transfer to Process IV
9,650 units
----
----
Rs. 2,019
----
Rs. 2,889
----
Rs. 6,482
There is normal loss in process of 10% of the output. All units scrapped can be sold at Rs.
0.20 each.
Opening Work In Progress:
1,200 units
Degree of completion:
40%
Direct Wages
60%
Production Overhead
70%
1,000 units
Degree of completion:
80%
Direct Wages
60%
Production Overhead
40%
Units Scrapped:
1350 units
Degree of completion:
50%
Direct Wages
40%
Production Overhead
20%
Sanjeev Subedi Q. N 10