Commerce guide

Teacher: Prabir Kundu

Subject: Cost and Management Accounting-1

1. In a manufacturing unit, raw material has to pass through four successive operations to
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reach the A finished product stage. The normal loss in operation II, III and IV are 16 %, 20%
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2
and 163% of the input respectively. Cost of raw materials required to produce 8,000 units of
finished product is ₹43,200. Weight of one unit of finished product is 0.10kg. The price of raw
material is ₹20 per kg.
Calculate the normal loss in operation I as percentage of input. [Lec- 4] [2010]
[Ans. Percentage of Normal Loss in Process 1 = 33𝟏⁄𝟑%]

2. A product is produced through two distinct process - Process I and Process II. On
completion, t transferred to finished stock. From the following particulars during the month of
December, 20: prepare Process Accounts & Finished Stock Account-
Process I Process II
Units introduced 10,000 9,000
Transfer to next process/finished goods 9,000 8,250
Normal loss (on inputs) 10% 5%
Realisable value of normal loss (per unit) ₹2 ₹4
Costs incurred: ₹ ₹
Direct Materials 40,000 ____
Direct Labour 20,000 20,000
Direct Expenses 12,000 10,050
Production overhead (100% of direct labour)
Assume that there was no opening or closing stock of raw materials and work-in-progress.
[Ans. Cost per unit of output produced in Process I: ₹10 and Process II: ₹16.17; Abnormal
in Process II: 300 units; and its Gross amount ₹4,850; Balance of Finished Stock A/c
₹1,33,400] [1995]
3. In a factory, a product is produced through two distinct processes Process A and Process B.
On completion, the product is transferred to Finished Stock. During the month of December
2014, the following information was obtained:
Process A Process B
Unit introduced 2,000 ____
Unit transferred to next process 1,800 ____
Unit transferred to finished Stock ____ 1,750
Value of units introduced ₹11,000 ____
Materials ____ ₹1,000
Labour ₹7,300 ₹4,500

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Overhead ₹2,800 ₹2,240
The normal loss in each process is 5% and it was sold at 2 per unit. There was no stock of raw
materials or Working-in-progress at the beginning or at the end of the month.
Prepare the Process Account and Finished Stock Account.
[Ans. Cost per unit of Abnormal Loss in process A = ₹11 and in process B = ₹16; Abnormal
gain in process B = ₹40 units. Balance of finished stock A/c (Dr.) ₹28,200] [1997]

4. X Ltd. produced product 'Z' through two distinct processes - Process A and Process B. On
completion. it is transferred to finished stock.
From the following information relating to the year 2014-15, prepare Process Account and
Finish Stock Account.
Particulars Process A Process B
(i) Raw Materials used 1,000 units
(ii) Cost per unit ₹200
(iii) Transfer to next process
Finished stock 940 units 870 units
(iv) Normal loss (on inputs) 5% 10%
(v) Direct wages ₹15,600 ₹13,200
(vi) Direct expenses 75% of direct wages 75% of direct wages
(vii) Sundry expenses ____ ₹2,954
(viii) Realisable value of scrap per unit ₹4.50 ₹5.75
800 units of finished goods were sold at a profit of 20% on cost. Assume that there was no
opening or closing stock of work-in-progress. Lec-7 [1999]
[Ans. Cost per unit of output produced in process A: ₹239.026; Process B: ₹295.74.
Balance of finished stock ₹20.702.]
5. A product passes through three processes - A, B, C. 1,000 units @ ₹ 4 per unit were
introduced in- process 'A', Production overheads are absorbed as a percentage of direct wages.
The following information is available from the cost records.
Process A (₹) Process B (₹) Process C (₹) Total (₹)
Other materials 5,200 4,000 2,050 11,250
Direct wages 4,500 7,360 2,800 14,660
Production overheads - - - 14,660
The actual output and information relating to normal loss of the different processes are given
below:
Normal Loss as a Output units Value of Scrap
percent of input. per unit (₹)
Process A 10% 900 2
Process B 20% 680 4
Process C 25% 540 5
Prepare Process Accounts, Abnormal Loss Account and Abnormal Gain Account. [2010]
[Ans. Transfer to next process/Finished stock from: Process A: ₹18,000 (Per unit ₹20);
Process B ₹34,000 (per unit ₹50): Process C ₹43,200 (Per unit ₹80); Abnormal Loss :
Process B ₹2,000 (40 units); Abnormal Gain ₹2,400 (Per unit 30 units)]
6. X Ltd. produced a product through two distinct processes A and B and then to finished
stock. From the following information, prepare Process A A/c, Process B A/c, Normal Loss A/c.
Abnormal Loss A/c and Abnormal gain A/c:
Process A Process B
Input units 15,000 13,000

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Materials (₹) 30,000 4,000
Labour (₹) 18,000 15,275
Overhead (₹) 9,000 10,950
Normal Loss 10% ?
Scrap value per unit (₹) 2.00 3.00
There is no opening and closing work-in-progress. The final output from process B transferred
to finished stock 12,500 units. The finished goods are sold at ₹7.50 per unit with a profit of
₹1.00 per unit. [2014]
[Ans. Cost per unit of output processed in Process A ₹ 400. Abnormal Loss in process A
500 units (valued ₹2,000) Gain in Process B 150 units (valued ₹975). Percentage of
normal loss in process B 5%.]
7. At the end of process 'A' carried on in a factory during the month ending 31st December
2014 the number of units produced was 1,900 excluding 110 units abnormally damaged
during the process. The damaged units realised ₹4.00 per unit of scrap. A normal wastage of
8% during the process, the wastage realised was ₹3.00 per unit.
A unit of raw-material cost was ₹5.00. The other expenses for the month were:
Wages (₹) 900.00
Power (₹) 300.00
General expenses (₹) 800.00
45% of the output is sold so as to show a profit of 16% on selling price. The rest of the output
of process 'A' transferred to process 'B' A/c.
Prepare Process 'A' A/c and Abnormal Loss A/c. [2015] [Lec-4]
[Ans. Cost per unit of output processed in process A ₹6.169; Value of Abnormal Loss ₹679
(Actual Loss ₹ 239) Cost of Output transferred for sale ₹5.274.]
8. Z Ltd. produced product X through three processes P1, P2 and P3. On January 1, raw
materials 1,000 units were introduced in process P1 at ₹50 per unit. The details of expenses
incurred on three processes during the year 2015 were as under ;
P1 (₹) P2 (₹) P3 (₹)
Sundry other materials 1,600 3,315 3,220
Labour 2,600 8,000 6,392
Normal loss (% of input) 5% 10% 5%
Scrap value per unit 1 3 6
Actual output (units) 940 846 410
Sales price of output per unit 70 100 200
1
Entire output of P1 was passed to the next process while of the output of P2 was passed to
2
the next process and the balance was sold. The entire output of P3 was sold. Management
expenses and selling expenses were ₹6,000 and ₹9,000 respectively. These are not allocable to
the processes. You are required to prepare - (a) process A/cs and (b) Statement of Profit.
[2001]
[Ans. Cost per unit of output in P1 process ₹57; P2 process ₹76.37 and P3 process
₹103.96; Abnormal loss in P1- 10 units; Abnormal gain in P3 - 8 units. Net profit ₹34,593]
9. XY Ltd. produces a single product which undergoes two processes. From the following
information, prepare Process Accounts:
Particulars Process X Process Y
Raw Materials Issued (6,000 units) Rs. 30,000 _______
Additional Materials Rs. 2,000 Rs. 1,560
Direct Wages Rs. 28,000 Rs. 40,000

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Production overhead Rs. 6,000 Rs. 15,000
Normal Loss as % of Input 10% 5%
Scrap value per unit Rs.2 Rs. 5
Output in Units 5,600 5,200 2018(G)
10. A product passed through two processes P and Q. You are required to prepare process P
A/c, Process Q A/c and Normal Loss A/c from the following information:
Process P (Rs.) Process Q (Rs.)
Materials 60,000 6,000
Labour 20,000 24,000
Overheads 14,000 17,200
Input (units) 40,000 35,000
Normal loss 10% 4%
Scrap value Rs.1 Rs.2
Output (units) 35,000 34,000
There was no opening or closing work in progress.
[Ans. Cost per unit of Process - P and Q ₹ 2.50 and 3.9255; Normal Loss ₹ 4,000;
Abnormal Loss ₹ 2,500; Process Q ₹ 87,500; Normal Loss ₹ 2,800; Finished Goods
₹1,33,470; Abnormal Gain ₹ 800] Lec-6 2018(G)

11. The product of a manufacturing concern passes through two processes, viz., A and B, and
then to finished goods. From the following information prepare Process A Account, Process B
Account, Normal Loss Account, Abnormal Loss / Gain Accounts:
Process A Process B
Materials introduced (in tons) 2,000 140
Cost of materials per ton (Rs.) 250 400
Output (tons) 1,660 1,560
Normal weight loss (%) 5 5
Scrap (% of total input) 10 10
Scrap value per ton (Rs.) 160 400
Direct wages (Rs.) 1,12,000 40,000
Manufacturing expenses (Rs.) 32,000 21,000
[Ans. Cost per unit of Process - A and B ₹ 360 and 420 p. u.; Normal Loss ₹ 32,000;
Abnormal Loss ₹ 14,400; Process B ₹ 5,97,600; Normal Loss ₹ 72,000; Finished Goods
₹6,55,200; Abnormal Gain ₹ 12,600] Lec-5 2018(H)

12. A product is produced after passing through two processes - Process I and Process II. You
are required to prepare Process I A/c, Process II A/C, Abnormal Loss A/c and Abnormal Gain
A/c from the following information:
Process-I Process-II
Basic raw materials (1,000 units) Rs.15,000 -
Process materials added - Rs.8,160
Direct wages Rs.34,100 Rs.31,680
Manufacturing expense Rs.23,900 Rs.18,660
Output 900 units 800 units
Normal loss 15% 10%
Scrap value per unit Rs.20 Rs.30
There was no opening or closing work in progress.

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[Ans. Cost per unit of Process I and II ₹ 82.35 and 160.39 p. u.; Normal Loss ₹3,000;
Abnormal Gain ₹ 4,115; Process II ₹ 74,115; Normal Loss ₹ 2,700; Finished Goods
₹1,28,311; Abnormal Loss ₹ 1,604] Lec-6 2019(G)

13. The product of a manufacturing concern passes through two processes A and B and then
to Finished goods. From the following information Prepare Process A Account, Process B
Account, Normal Loss Account, Abnormal Loss/Gain Account:
Particulars Process A Process B
Materials introduced (in tons) 1,000 70
Cost of materials per ton (Rs.) 125 200
Output (Tons) 830 820
Normal Scrap (% of total input of the process) 15 10
Scrap value per ton (Rs.) 80 140
Direct wages (Rs.) 28,000 20,000
Manufacturing Expense (Rs.) 8,600 10,720
Administration & Selling Expenses Rs.4,800
Lec-6 2021(H)
14.The product of a manufacturing concern passes through two processes A and B,
and then to finished goods. From the following information prepare Process A Account,
Process B Account, Normal Loss Account and Abnormal Loss/Gain Account, if any.
Process A Process B
Materials introduced (in tons) 1,000 70
Cost of materials per ton (₹) 125 200
Output (tons) 830 780
Normal weight loss (%) 5 10
Scrap (% of input) 10 10
Scrap value per ton 80 200
Direct wages (₹) 28,000 10,000
Manufacturing expenses (₹) 8,000 5,230
Administration and selling expenses ₹ 4,800. 2022(H)
15. A product passes through two distinct processes before completion. The following
information
is obtained from the accounts for the month ending May 31, 2022:
Particulars Process A Process - B
Direct Materials (₹) 24,600 11,880
Direct Wages (₹) 12,000 18,000
Production Overheads ₹15,000 was apportioned on the basis of Direct Wages.
There was no stock of materials or work in progress. The output of each process passed
directly to the next process and finally to finished stock A/c.
The following additional data is obtained:
Process Input Output Normal Loss Value of Scrap per unit (₹)
Process-I 3,000 2,850 5% 4
Process - II 2,850 2,520 10% 8
Prepare Process Accounts, Abnormal Gain Account and/or Abnormal Loss Account.
2022(G)

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 Inter Process Profit

1. From the following information, prepare Process X A/c and Process Y A/c:
Process X Process Y
Cost of Raw Materials 10,000 _______
Labour Cost 10,000 14,000
Factory Overhead 4,000 10,000
Finished articles of Process X is transferred to Process Y at a profit of 20% on transfer price
and that of Process Y is transferred to finished stock at a profit of 25% on transfer price. Goods
received from Process Y are sold as final finished goods in the market at ₹1,00,000. 2018(G)
2. Product Z passes through two processes before it is transferred to finished stock. The
following information is available:
Process A (Rs.) Process B (Rs.) Process C (Rs.)
Materials 80,000 - -
Labour 1,04,000 1,80,000 -
Overhead 40,000 60,000 -
Closing stock at profit 32,000 80,000 60,000
Profit on transfer price 20% 20% -
There is no stock at the beginning. Sales were Rs.8,20,000.
Prepare Process accounts and the Finished Stock account. 2019(H) Lec-3
[Ans. Process - A. Total (Cost and Profit) ₹ 1,92,000 and ₹ 84,000; Process- B. Total (Cost
and Profit) ₹ 3,60,000 and ₹ 1,40,000; CGS (Cost and Profit) ₹ 3,16,800 and ₹ 1,23,200;
Profit ₹ 3,80,000]
3. A Ltd. produces product 'AXE' which passes through two processes before it is completed
and transferred to finished stock. The following data 'relate to October 2014.
Particulars Process Finishing Stock
₹ I II ₹
Opening stock 7,500 9,000 22,500
Direct materials 15,000 15,750
Direct Wages 11,200 11,250
Factory Overheads 10,500 4,500
Closing stock 3,700 4,500 11,250
Inter-process profit included in opening
stock 1,500 8,250
Output of process I is transferred to Process II at 25% profit on the transfer price process
Output of process II is transferred to finished stock at 20% profit on the transfer price. Stocks
in process are valued at prime cost. Finished Stock is valued at the price which it is received
from process II. Sales during the period is ₹ 1,40,000.
Required-Process Cost accounts and Finished Goods Account. Showing the profit element at
each stage.
[Ans: Inter-process Profit I 13,500; II 22,500.
Value of Goods transfer to next process/Finished stock: ₹54,000 (Cost ₹40,500); II
₹1,12,500 (cost ₹75,750); Profit on sale of Finished Stock ₹ 16,250.Unrealised profit on
stock :II ₹ 750; Finished Stock ₹3,750] Lec-1 (2016)

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