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AmitabhDewani 364 ACMA

This document contains details of three manufacturing processes (A, B, C) including inputs, outputs, costs and calculations of cost per unit for each process. It also includes accounts for normal losses, abnormal losses and a costing profit and loss statement. The key information provided are: 1) Process A, B and C accounts showing inputs, outputs and costs along with calculation of cost per unit for each process. 2) Normal losses are treated by charging the value to good units produced in each process. 3) Abnormal losses are transferred to an abnormal loss account and ultimately closed to costing profit and loss account. 4) A costing profit and loss statement calculates total cost of sales, net

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Ayush Dewani
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47 views3 pages

AmitabhDewani 364 ACMA

This document contains details of three manufacturing processes (A, B, C) including inputs, outputs, costs and calculations of cost per unit for each process. It also includes accounts for normal losses, abnormal losses and a costing profit and loss statement. The key information provided are: 1) Process A, B and C accounts showing inputs, outputs and costs along with calculation of cost per unit for each process. 2) Normal losses are treated by charging the value to good units produced in each process. 3) Abnormal losses are transferred to an abnormal loss account and ultimately closed to costing profit and loss account. 4) A costing profit and loss statement calculates total cost of sales, net

Uploaded by

Ayush Dewani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Faculty of Commerce and Economics

School of Commerce

Class: T.Y.B. Com


Subject: Advanced Cost and Management Accounting
Date of Submission:
Marks: 15
Name – Amitabh Dewani
Division – B
PRN - 1152190364
Process A
Particulars Unit Rs. Particulars Unit Rs.
To Raw 5000 500000 By Normal Loss 1000 1000
Material (1*1000)
To Direct - 100000 By transferred 4000 755000
Labour to process B
(4000*188.75)
To Direct - 81000
Expense
To factory - 75000
overhead
(450000*1/6)
5000 756000 5000 75600

Note -: Cost per unit = (500000 + 100000+ 81000+ 75000) – (1000)


5000-1000

= 755000 = 188.75Rs.
4000
Process B
Particulars Unit Rs. Particulars Unit Rs.
To Trf. From 4000 755000 By Normal Loss 800 NIL
process A (4000*20%)
To Direct - 200000 By transferred to 3200 1145000
Labour process C
(3200*357.81Rs.)
To Direct - 40000
Expense
To factory - 150000
overhead
(450000*2/6)
4000 1145000 4000 1145000

Cost Per Unit – 1145000


3200 = Rs. 357.8125

Process C
Particulars Unit Rs. Particulars Unit Rs.
To Trf. From 3200 1145000 By Normal Loss 640 NIL
process A
To Direct - 300000 By Abnormal 160 111875
Labour Loss
(160*699.21875)
To Direct - 120000 By Trf. To 2400 1678125
Expense distribution
department
(2400*699.218)
To factory - 225000
overhead
(450000*2/6)
3200 1790000 3200 1790000

Cost Per Unit – 1790000


3200-640 = Rs. 699.21875

Normal Loss A/C


Particulars Units Rs. Particulars Units Rs.
To Process A 1000 1000 By Bank 1000 1000

1000 1000 1000 1000


Abnormal Loss A/C
Particulars Units Rs. Particulars Units Rs.
To Process C 160 111875 By Bank - -
By Costing P&L 160 111875
A/C
160 111875 160 111875

Costing Profit & Loss A/C


Particulars Rs. Particulars Rs.
To Abnormal Loss 111875 By Sales 5034375
(160*699.21875) (1678125*300%)
To Cost of Sales 1675125
(2400*699.21875)
To Net Profit 3244375
(Balancing figure)
5034375 5034375

Price to be charged on per unit basis to earn a profit of 200% on cost


= 1678125*300% = Rs. 2097.65625
2400

The Process A account made by Mr. Q is wrong because he has wrongly absorbed Factory overhead.
Mr. R is right about the treatment of abnormal and normal loss.
normal wastage

This means the usual percentage of wastage arising in its natural course in a process or operation. Such
wastage is not avoidable as it occurs in its natural course. The normal wastage and loss due to it should
be charged to the good units arising out of the process. In this way, the cost of spoiled and lost units is
absorbed as an additional post of the good produced by a given process.
Treatment of Normal Loss in Process Accounts
Normal losses are those which we can not stop. These are natural wastage.
Abnormal Wastage (Loss)
Abnormal wastage is a wastage which does not occur in the natural course and is usefully in excess of
the normal process wastage or loss. This occurs because of carelessness on the part of the worker or the
management, defective scheduling or designing, sabotage etc.
Treatment of Abnormal Loss in Process Accounts
All those losses which happen due to abnormal reasons are called abnormal losses. Following are its
main example.

Abnormal Gain:
If the actual loss of a Process is less than that of expected loss then the difference between the two will
be treated as abnormal gain. In another way we can define it as the difference between actual production
and expected production.
treatment of abnormal gain :
The value of abnormal gain is transferred to the debit side of the relevant process and ultimately closed
by crediting it to the Costing Profit and Loss Account.

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