Process Accounts : Stocks at Finished Goods Stage and Normal Losses : Problems

No.	Problems & Solutions [Click Hide/Show to display the solutions below the question]
01.	The product of a company passes through three different processes A, B and C. It is ascertained from past experience that loss in each process is incurred as under: Process A : 2%. Process B: 5% process C : 10% The percentage of loss in each case is computed on the basis of number of units entering the process concerned. The loss of each process has a scrap value. The loss of processes A and B is sold at Re. 1 per unit and that of process C at Rs. 4 per unit. The company gives you the following information for the month of July, 2005: 2,000 units of crude material were introduced in process A at a cost of Rs. 8 per unit. Besides this the following were other expenses: Process A Rs. Process B Rs. Process C Rs. Materials consumed Direct labour Works expenses 8,000 12,000 2,000 3,000 8,000 1,000 2,000 6,000 3,000 Output Stock : July 1          : July 31 Stock Valuation :          On July 1, per unit Units 1,950 200 150 Rs. 19  Units 1,925 300 400 Rs. 27  Units 1,590 500 -- Rs. 36.5 Stock on 31st July, 2005 are to be valued at cost as shown by month's production accounts. Prepare the Process Accounts. Solution []
02.	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 Rs. 10 per 100 units and that of process II at Rs. 20 per 100 units. The following information is available for the year ended 31st March, 2005. 40,000 units of crude materials were introduced in process I at a cost of Rs. 16,000. Process I Rs. Process II Rs. Materials consumed Direct labour Manufacturing expenses Finished Products Finished Stock:       April 1, 2004       March 31, 2005 Stock valuation at Jan. 1 (per unit) 8,000 12,000 3,080 Units 39,000 4,000 3,000 Re. 0.90 2,800 14,000 1,000 Units 38,500 6,000 8,000 Rs. 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 []
03.	The product of a manufacturing unit passes through two distinct process. From past experience the incidence of wastage is ascertained as under: Process A: 2 per cent, Process B: 10 per cent In each case the percentage of wastage is computed on the number of units entering the process concerned. The sales realization of wastage in Process A and B are Rs.25 per 100 units and Rs.50 per 100 units respectively. The following information is obtained for the month of April 2005: 40,000 units of crude material were introduced in process A at a cost of Rs. 16,000. Process A Process B Other Materials Direct labour Direct Expenses Rs. 16,000 9,000 8,200 Rs. 5,000 8,000 1,500 Output Finished Product Stock :       April 1st      April 30th Value of Stock per unit on April 1st Units 39,000 6,000 5,000 Rs. 1.20 Units 36,500 5,000 8,000 Rs. 1.60 Stocks are valued and transferred to subsequent process at weighted average costs. Prepare respective Process Accounts and Stock Accounts. Solution []

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