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Process costing
Q1. Explain and illustrate the different between FIFO and the weighted average
method of calculating equivalent units of production in process costing. [1989]
Q2. Y processing company had work in progress at the beginning and end of 1990 as
follows:
Percentage of materials Completion
Conversion
January 1, 1990 3000 units 40% 10%
December 31, 1990 2,000 units 80% 40%
The company completed 40,000 units of finished goods during 1990. Manufacturing
costs incurred during 1990 were: materials, Rs. 2,42,600 conversion cost Rs. 4,45,200.
Inventory at January 1, 1990 e was carried at a cost of Rs. 10,600 (materials Rs. 7000
conversion cost Rs. 3600)
Assuming weighted average:
1. Compute equivalent production for 1990 for (a) materials and (b) conversion costs.
2. What is the proper cost of ending goods in process? [1991]
Answer: 1. Equivalent Production: Materials-41,600 units and Conversion Cost: 40,800
units.
2. Cost p.u. of Raw Material: Rs 6 and Conversion Rs 11. Closing Stock (Goods in
Process): Raw Material Rs 9,600 and Conversion Rs 8,800.
Q3. During the month of August 4,000 units were introduced in process 1. The normal
loss was estimated at 5% on input, at the end of the month 2800 units had been
produced and transferred to the next process: 920 units where an completed and
280 units had been scrapped. it was estimated that the completed units had reached
a stage in production as follows:
Materials 75% completed,
Labour 50% completed,
Overhead 50% completed.
The cost of the 4000 units was Rs. 11,600. Direct material introduced during the
process amounted to Rs. 2,880. Direct wages where Rs. 6,680. Production overheads
incurred where Rs. 3340. Units scrapped realized Rs. 1 each. The unit subscribe had
passed through the complete process, go where 100% completed as regards material
labour and overhead. Show process 1 account. [1992]
Answer: Rate per unit Rs 7 for FG and Abnormal Loss. Closing
WIP: Raw Material: 690 X 4= 2760
Labour: 460X2= 920
Overhead: 460 X 1= 460.
Total = 4140.
Q4. Xyz limited is engaged in the production of a commodity which is produced by three
distinct process. The process cost for the year ending 31st March, 1996 are as follows:
Materials Rs. 160000
Labour Rs. 124800
Overheads Rs. 62400
Opening closing work in progress is as follows:
Opening Closing
Work in progress Amount Work in progress
Degree of completion Rs. Degree of
completion
Materials 100% 8000 75%
Labour 60% 3000 50%
Overhead 50% 9000 40%
There are 3000 units of opening work in progress 7000 units are introduced in the
process and 8500 units are transferred to next process
prepared statement of equivalent production and statement of cost using FIFO
method of valuation of inventory. [1996]
Q5. A certain chemical process yields 75% of material introduced as main product and
20% as by product 5% being lost. In the process 1 unit of main product records
double the material required unit of by-products. Overheads are observed in the ratio
3:1. During a month 4000 units of raw material at a cost of rupees 68000 introduce.
Wages and overheads incurred Rs. 21,200 and Rs.10,800 respectively and wastage
realized Rs. 1200. Ascertain the cost of both the products and prepare for process
accounts. [2009]
Q6. How do you create fixed cost element from the semi variable cost? Explain
with examples. [2011]
Q7. What is inter process profit? Show the treatment of inter process profit with an
example.
Q8. Define Normal wastage, Abnormal wastage and Abnormal Effectiveness. State how
are treated in process costing. [2017]
Q9. The product of a company passes through three distinct process to completion. Fast
past experience it is ascertained that the normal wastage in each process is as
under:
Process Wastage Sale value of wastage
A 2% 25 paise per
B 4% unit 50 paise
C 2.5% per unit
60 paise per unit
The expenses were as follows:

Particulars Process A Process B Process C
Materials 12,000 10,000 9,000
Direct labour 16,000 5,000 4,900
Manufacturing exp. 2,000 3,400 3,590
Other factory Expenses, 3,500 2,005 2,004
4000 units were initially introduced in process at a cost of rupees 13560. The output of
each process was as under:
Process Output
A 3,850 units
B 3,600 units
C 3,500 units
Prepare process accounts and also work out the sale price per unit of finished stock so
as to realize 20% profit on selling price. [2008]

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Process costing

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