Process Accounts - Stock of Finished Goods and Normal Losses

Problem 2

The product of a company passes through two processes, called respectively I and II. From past experience the percentage of loss, which is computed on the number of units entering the process concerned, is ascertained as Process I - 2% and Process II - 5%.

The loss of each process possesses a scrap value. The loss of process I is sold at 10 per 100 units and that of process II at 20 per 100 units.

The following information is available for the year ended 31st March, 20_5.

40,000 units of crude materials were introduced in process I at a cost of 16,000.

Process I Process II
Materials consumed
Direct labour
Manufacturing expenses


Finished Products
Finished Stock:
April 1, 20_4
March 31, 20_5
Stock valuation at Jan. 1 (per unit)
8,000
12,000
3,080

Units
39,000

4,000
3,000
0.90
2,800
14,000
1,000

Units
38,500

6,000
8,000
1.47

Stock at March 31 are to be valued at the cost as shown by the year's Process accounts.

Prepare the necessary accounts.

Solution