Meta Company Ltd. is engaged in the production of product 'Trio' which passes through two different processes Process P and Process Q. Other…
CA Intermediate · Cost and Management Accounting · PYQS · May 2024
Meta Company Ltd. is engaged in the production of product 'Trio' which passes through two different processes Process P and Process Q. Other information obtained from books of account for the year is as follows: Particulars Process P Process Q Raw material used 10,000 Raw material cost per unit 80 Direct wages 52,000 78,000 Direct Expenses 8,600 11,100 Selling price per unit of output 130 190 Production overheads of 3,00,000 are recovered as percentage of direct wages. Actual output of the two processes was: P-9,200 units and Q-6,400 units. 3/4th of the output of Process P was passed on to the Process Q and the balance was sold. The entire output of process Q was sold. Management & Selling expenses during the year were - 1,70,000. These are not allocable to the processes. The normal loss of the two processes, calculated on the input of every process was: Process P- 6% and Process Q-10% The Loss of Process P was sold at 5 per unit and that of Q at 8 per unit. Assume that Process P and Process Q are not the responsibility centres. You are required to prepare: (i) Process P Account (ii) Process Q Account (iii) Abnormal Loss and Abnormal Gain Account (iv) Costing Profit & Loss Account.
Suggested Answer and Working Notes:
Process- P Account Particulars Units Amount (₹) Particulars Units Amount (₹) To Material 10,000 8,00,000 By Normal Loss 600 3,000 To Wages 52,000 By Process Q (9,200 × 3/4) 6,900 7,17,600 To Direct Exp. 8,600 By Costing Profit and Loss (P&L) (9,200 × 1/4) 2,300 2,39,200 To Production Overheads (3,00,000 × 2/5) 1,20,000 By Abnormal Loss 200 20,800 10,000 9,80,600 10,000 9,80,600 Cost per unit = (9,80,600-3,000) / (10,000-600) = 104 per unit Process- Q Account Particulars Units Amount (₹) Particulars Units Amount (₹) To Process P 6,900 7,17,600 By Normal Loss 690 5,520 To Wages 78,000 By Costing P&L 6,400 10,11,200 To Direct Exp. 11,100 To Production Overheads (3,00,000 × 3/5) 180,000 To Abnormal Gain 190 30,020 7,090 10,16,720 7,090 10,16,720 Cost per unit = (9,86,700-5,520) / (6900-690) = 158 per unit Abnormal Loss Account Particulars Units Amount (₹) Particulars Units Amount (₹) To Process- P 200 20,800 By Bank 200 1,000 By Costing P&L 19,800 200 20,800 200 20,800 Abnormal Gain Account Particulars Units Amount (₹) Particulars Units Amount (₹) To Normal Loss 190 1,520 By Process Q 190 30,020 To Costing Profit and Loss 28,500 190 30,020 190 30,020 Costing Profit & Loss Account for the year Dr. Particulars Amount (₹) Cr. Particulars Amount (₹) To Cost of Sales By Sales P 2,39,200 P 2300 @ 130 Q 10,11,200 12,50,400 Q 6400 @ 190 15,15,000 To Abnormal Loss 19,800 By Abnormal Gain 28,500 To Selling Expense 1,70,000 To Net Profit 1,03,300 15,43,500 15,43,500
Topics: Process & Operation Costing
Related Questions in this Topic
- A company produces a component, which passes through two processes. During the month of November, 2025, materials for 40...
- Kanika Ltd. has furnished the following information pertaining to its process account for the month of March 2026: ...
- Discuss the treatment of by-product Cost in Cost Accounting.
- The following data are available in respect of process I for February: i. Opening stock of work-in-progress: 2,400 unit...
- Sunrise Oil Mills Ltd. is engaged in refining crude vegetable oil into multiple marketable products. During the refining...