A chemical compound manufactured through two processes namely Process X and Process Y. Process Y is dependent on the output generated by Process X…

CA Intermediate · Cost and Management Accounting · PYQS · January 2025
A chemical compound manufactured through two processes namely Process X and Process Y. Process Y is dependent on the output generated by Process X and the semi-finished chemical compound received from Process X shall be mixed up with further materials in Process Y. The details of costs and other particulars for each process are given as follows: Process X Process Y Direct Material 1,000 kgs @50 per kg 700 kgs @90 per kg Direct Labour 35,000 25,000 Process Plant time 200 hrs @60/hr 120 hrs @80/hr Expected output 75% of input 80% of input Actual output kgs 700 1150 Realizable value of Normal Loss 8 per kg 5 per kg Notes: (i) The departmental overhead for the period was - 30,000 and is absorbed in each process on direct labour cost. (ii) Process plant time represents the attributable plant run time with respect to each process and is a part of direct process cost. (iii) Assume no finished stock and work in progress either at the beginning and end of the period. Required: Prepare Process X Account, Process Y Account, Normal Loss Account and Abnormal Gain Account. (2 + 2 + 2 + 2 = 8 Marks)

Suggested Answer and Working Notes:

Process X Account Particulars Kg Amount (₹) Particulars Kg Amount (₹) To Material 1,000 50,000 By Normal Loss (250 kg × 8per kg) 250 2,000 To Direct Labour 35,000 By Abnormal loss A/c (50 kg × 150per kg) 50 7,500 To Process Plant Time 200 hrs @60/hr 12,000 By Process Y (700 kg × 150per kg) 700 1,05,000 To Departmental Overhead 17,500 1,000 1,14,500 1,000 1,14,500 Cost per kg = (1,14,500 -2,000) / (1,000 kg - 250 kg) = 150.00 per kg Process Y Account Particulars Kg Amount (₹) Particulars Kg Amount (₹) To Process X 700 1,05,000 By Normal Loss (280 kg × 5per kg) 280 1,400 To Material 700 63,000 By Finished stock (1,150 kg x 190.803 per kg) 1,150 2,19,424 To Direct Labour 25,000 To Process Plant Time 120 hrs @80/hr 9,600 To Departmental Overheads 12,500 To Abnormal Gain A/c (30 kg × ₹ 190.803 per kg) 30 5,724 1,430 2,20,824 1,430 2,20,824 Cost per kg = (2,15,100 -1,400) / (1,400 kg - 280 kg) = 190.803 per kg Normal Loss Account Particulars Units Amount (₹) Particulars Units Amount (₹) To Process X A/c 250 2,000 By Cash (Sales) (250 kg × 8per kg) 250 2,000 To Process Y A/c 280 1,400 By Cash (Sales) (250 kg × 5per kg) 250 1,250 By Abnormal Gain A/c (30 kg × 5per kg) 30 150 430 3,400 430 3,400 Abnormal Gain Account Particulars Units Amount (₹) Particulars Units Amount (₹) To Normal Loss (30 kg × 5per kg) 30 150 By Process Y A/c 30 5,724 To Costing Profit and Loss 5,574 30 5,724 30 5,724

Topics: Process & Operation Costing

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