This document presents process accounts for three processes - I, II and III - involved in manufacturing a product over September 2017. It provides information on material consumed, labor, production overheads, output and normal loss for each process. Process I account shows an input of 500 units at Rs. 4 per unit with a normal loss of 50 units. Process II account shows an input from Process I of 450 units and an abnormal loss of 20 units. Process III account shows an input from Process II of 340 units and an abnormal gain of 15 units. Calculations are provided to determine the normal loss, abnormal loss/gain and rate per good unit for each process.

1. II M.Com
Applied Cost Accounting
Dr.C.Vadivel
Assistant Professor of Commerce

2. Total Process I Process II Process III
Material Consumed 5,625 2,600 2,000 1,025
Labour (₹) 7,330 2,250 3,680 1,400
Production overheads (₹) 7,330 - - -
Output (units) - 450 340 270
Normal loss (%) of input - 10 20 25
Scrap value (₹ per unit) - 2 4 5
Problem No.19. A product passes through 3 processes. The following relate to the 3
processes during Sep.2017.
500 units @ ₹ 4 per unit were introduced in process I. Production overheads is to be
distributed as 100% on wages. Prepare process accounts.

3. Workings:
Calculation of Normal Loss, Abnormal Loss/ Abnormal Gain
Particulars
Process
I I I
Units Units Units
Input 500 450 340
Less Normal Loss
Process I: 10%
Process II: 20%
Process III: 25%
50 90 85
Normal Output 450 360 255
Less : Actual Output 450 340 270
(-) Abnormal Loss/ (+)
Abnormal Gain
- (-)20 (+) 15

4. Process I A/C
Particulars Units Rate Amount Particulars Units Rate Amount
₹ ₹ ₹ ₹
To Input 500 4 2,000 By Normal Loss 50 2 100
To Material 2,600 By Output trans. to
Process II
450 20 9,000
To Labour 2,250
To Overheads 2,250
9,100 9,100

5. Process II A/C
Particulars Units Rate Amount Particulars Units Rate Amoun
t
₹ ₹ ₹ ₹
To Input 450 20 9,000 By Normal Loss 90 4 360
To Material 2,000 By Abnormal
Loss
20 50 1,000
To Labour 3,680 Output trans. to
Process III
340 50 17,000
To Overheads 3,680
450 18,360 450 18,360

6. Process III A/C
Particulars Units Rate Amount Particulars Units Rate Amount
₹ ₹ ₹ ₹
To Input 340 50 17,000 By Normal Loss 85 5 425
To Material 1,025 Output trans. to
Finished Stock A/c
270 80 21,600
To Labour 1,400
To Overheads 1,400
340 20,825
To Abnormal
Gain
15 80 1200
355 22,025 355 22,025

7. Workings:
Rate Per Good Unit
𝑹𝒂𝒕𝒆 𝒑𝒆𝒓 𝒈𝒐𝒐𝒅 𝒖𝒏𝒊𝒕 =
𝑻𝒐𝒕𝒂𝒍 𝒄𝒐𝒔𝒕 𝒐𝒇 𝒑𝒓𝒐𝒄𝒆𝒔𝒔 − 𝑺𝒄𝒓𝒂𝒑 𝑽𝒂𝒍𝒖𝒆
𝑰𝒏𝒑𝒖𝒕 − 𝑵𝒐𝒓𝒎𝒂𝒍 𝒍𝒐𝒔𝒔
Process – I : Rate 𝑝𝑒𝑟 𝑔𝑜𝑜𝑑 𝑢𝑛𝑖𝑡 =
9100−100
500−50
= 20
Process – II : Rate per 𝑔𝑜𝑜𝑑 𝑢𝑛𝑖𝑡 =
18360−360
450−90
= 50
Process – III : Rate per good unit =
20,825−425
340−85
= 80