Process Accounts - Stock of Raw materials and Normal Losses

Problems 8

Problem 1

The information given below is extracted from the Cost Accounts of a factory producing a commodity in the manufacture of which three processes are involved. Prepare Process Cost Accounts showing the cost of the output and the cost per unit at each stage of manufacture.

(a) The operations in each separate process are completed daily.

(b) The value at which units are to be charged to process B and C is the cost per unit of processes A, and A plus B respectively.

Processes
A B C
Direct Wages
Machine Expenses
Factory Overhead
Raw Materials consumed 		640
360
200
2,400 		1,200
300
225
— 		2,925
360
240
—

Production (Gross)
Wastage
Opening Stock of Raw Materials
Closing Stock of Raw Materials 		Units
3,700
1,000
—
— 		Units
—
1,500
4,000
1,000 		Units
—
500
16,500
5,500

Solution Will update soon

Problem 2

The following details have been extracted from the books of M/s Sunil Brothers (Pvt.) Ltd. having three workshops and a warehouse for the year 31st July, _5:
Workshop
A 		Workshop
B 		Workshop
C
Raw Materials used (in tonnes)
Cost per tonne
Direct wages
Chargeable expenses
Loss of tonnage due to processing
Proportion of production transferred:
To Workshop B at cost
To Workshop C at cost
Proportion of production transferred:
To Warehouse at cost
Stock on 1st August _4 at cost (ex-workshop)
Stock on 31st July _5 (ex-workshop-in tonnes)
Sales of products
Salaries
Administration expenses 		250
12
8,580
1,380
4%

20%


80%
250
10
40,000
4,000
2,000 		152
8
2,025
1,387
5%


50%

50%
200
20


 145
5
1,056
225
2½%




100%
400
40


The closing stock in the wholesale warehouse is to be valued at the prime cost per tonne during the year.

You are required:

  1. To prepare workshop cost accounts for the year ended 31st July, _5,
  2. To calculate prime cost per tonne of each process, and
  3. To prepare an account showing the net profit of the business for the year ended 31st July, _5.

Solution Will update soon

Problem 3

From the following figures, show the cost of each of the three processes of manufacture. The production of each process is passed on to the next process immediately on completion.

Process A Process B Process C
Materials
Wages
Work overhead
Production in units
Stock (Units from preceding process) 1st July, _9
Stock (Units from preceding process) 31st July, _9 		4,000
2,400
5,600
36,000 		8,000
4,000
5,250
37,500
4,000
1,000 		20,000
9,250
6,000
48,000
16,500
5,500
Author : The Edifier
Problems 10