Part production sold - Process Accounts, Income Statement, Cost Sheet

Problem 1

Neo Pharma processes a product through three distinct stages the product of one process being passed on to the next process and so on to the finished product intact. Details of the cost incurred in each process are given below

	Process-A	Process-B	Process-C
Raw Materials Direct wages Direct expenses	1,000 500 150	800 600 250	200 700 500

The overhead expenses for the period amounted to 3,600 and is to be distributed to the processes on the basis of direct wages.

There were no stocks in any of the processes either at the beginning or at the close of the period.

Assuming the output was 1,000 kilos show the process cost of A, B and C indicating also the cost per kilo of each element of cost and the output in each process.

If 10 per cent of the output is lost in storage and giving samples, what should the selling price per unit be to make a gross profit 33⅓% on the selling price.

Solution Will update soon

Problem 2

Model Ltd. processes a patented material used in the construction of buildings. The material is produced in three consecutive grades - soft, medium and hard.

	Process I	Process II	Process III
Raw materials used Cost per tonne Manufacturing Wages and expenses Weight lost (% of input of the Process) Scrap (sale price 50 per tonne) Sale price per tonne	1,000 tonnes 200 87,500 5% 50 tonnes 350	39,500 10% 30 tonnes 500	10,710 20% 51 tonnes 800

Management expenses were 17,500 and selling expenses 10,000, and Interest on borrowed capital 4,000 not allocable to any process. Two-thirds of the output of Process I and one-half of the output of Process II are passed on to the next process and the balance are sold. The entire output of Process III is sold. Prepare the three processes accounts and a statement of profit.

Solution Will update soon

Problem 3

S. V. Ltd produces product 'AXE' which passes through three consequent processes known as A, B and C. In each process, 2% of the total weight put in is lost and 10% is scrap, which from processes A and B realized 100 a tonne, and from process C 200 a tonne. The produce of the three processes is dealt with as follows:

	A	B	C
Sale Passed on to the next process	25% 75%	50% 50%	100% —

The following particulars relate to the month of March, _5:

	A	B	C
Materials used	100 tonnes	140 tonnes	1,360 tonnes
Cost per tonne of material used Manufacturing expenses Sale price per tonne	120 30,800 580	200 25,760 610	80 2,467 210

Management expenses not allocable to these processes are 33,073. Selling and distribution expenses not allocable to any of the process 12,500.

Required:

Process cost accounts, and
Income statement

Solution Will update soon

Problem 4

Bengal Chemical Co. Ltd. produced three chemicals during the month of July, 2005 by three consecutive processes. In each process 2% of the total weight put in is lost and 10% is scrap which from processes (1) and (2) realizes 100 a ton and from process (3) 20 a ton.

The products of three processes are dealt with as follows:

	Process I		Process II		Process III
Passed on to the next Process Sent warehouse for sale Expenses incurred:	75% 25%		50% 50%		-- 100%
Raw Materials Manufacturing wages General expenses	1,20,000 20,500 10,300	Tons 1,000 — —	28,000 18,520 7,240	Tons 140 — —	1,07,840 15,000 3,100	Tons 1,348 — —

Prepare Process Cost accounts showing the cost per ton of each product.

Problem 5

A manufacturer makes two types of articles X and Y. They undergo two processes, namely, machining and finishing. Raw materials used in the factory and general expenses are apportioned in the ratio of output of each type. The output for the year ended 31st March, 20_2, was 24,000-X and 8,000-Y. The actual cost of labour for each process is ascertained. Other charges for each process are apportioned in the ratio of finishing wages.

From the following particulars prepare a statement of cost per article of each item in each process showing the cost of manufacture and the profit per article. The selling prices are 200 and 225 respectively. Determine the percentage of profit also.

	Machining	Finishing
Opening stock of Raw Materials Purchases of Raw Materials Closing stock of Raw Materials Expenses Wages: X Wages: Y General Expenses 3,84,000	7,36,000 21,42,000 9,90,000 7,45,000 8,52,000 2,60,000	1,44,000 6,74,000 1,58,000 3,30,000 3,00,000 2,00,000

Solution Will update soon

Author : The Edifier

Problems 5