A product passes through three processes A, B and C. The details of expenses incurred on the three processes during the year 2025 were as under:…

Process A Account Dr. Particulars Units ₹ Cr. Particulars Units ₹ To Units brought in 10,000 10,00,000 By Normal Loss (5% of 10,000 units @2/- p.u.) 500 1,000 To Sundry Materials 10,000 By Abnormal loss (Working note 1) 200 22,000 To Labour 30,000 By Process B A/c (Output to be transferred) 6,200 6,82,000 To Direct expenses 6,000 By Profit & Loss A/c (3,100 units) (W. Note 1) 3,100 3,41,000 10,000 10,46,000 10,000 10,46,000 Working Notes: 1. Per unit cost of normal production under process A: = (Normal cost of normal output) / Normal production output = (₹ 10,46,000 - 1,000) / (10,000 – 500) units = 10,45,000 / 9,500 units = 110 2. Value of Abnormal loss under process A: Abnormal loss units = Normal production – Actual production = 9,500 – 9,300 = 200 units Value of Abnormal Loss = Per unit cost of normal production × Abnormal loss units = 110 × 200 = 22,000. Process B Account Dr. Particulars Units ₹ Cr. Particulars Units ₹ To Process A A/c 6,200 6,82,000 By Normal Loss (15% of 6,200 Units = 930 units @5 p.u.) 930 4,650 To Sundry Materials 15,000 By Process C A/c (Output to be transferred) 2,700 4,05,000 To Labour 80,000 By Abnormal gain (Working Note 2) 130 19,500 To Direct expenses 18,150 By Profit & Loss A/c (2,700 units) 2,700 4,05,000 6,330 8,14,650 6,330 8,14,650 Working Notes: 1. Per unit cost of normal production under process B: = (Normal cost of normal output) / Normal production output = (₹ 6,82,000 +15,000 +80,000 +18,150 - 4,650) / (6,200 – 930) units = 7,90,500 / 5,270 units = 150 2. Value of Abnormal gain under process B: Abnormal gain units = Normal loss – Actual loss = 930 – (6,200 – 5,400) = 930 – 800 = 130 units Value of Abnormal Gain = Per unit cost of normal production × Abnormal gain units = 150 × 130 = 19,500. Process C Account Dr. Particulars Units ₹ Cr. Particulars Units ₹ To Process B A/c 2,700 4,05,000 By Normal Loss (20% of 2,700 units = 540 units @10/- p.u.) 540 5,400 To Sundry Materials 5,000 By Abnormal Loss (Working Note 3) 60 13,800 To Labour 65,000 By Profit & Loss A/c (2,100 units) 2,100 4,83,000 To Direct expenses 27,200 2,700 5,02,200 2,700 5,02,200 Working Notes: 1. Per unit cost of normal production under process C: = (Normal cost of normal output) / Normal production output = (₹ 4,05,000 +5,000 +65,000 +27,200 - 5,400) / (2,700 – 540) units = 4,96,800 / 2,160 units = 230 2. Value of Abnormal loss under process C: Abnormal loss units = Normal production – Actual production = 2,160 – 2,100 = 60 units Value of Abnormal Loss = Per unit cost of normal production × Abnormal loss units = 230 × 60 = 13,800. Abnormal Loss Account Dr. Particulars Units Cost p.u. Amount ₹ Cr. Particulars Units Cost p.u. Amount ₹ To Process A A/c 200 110 22,000 By Sale proceeds of Process A Loss 200 2 400 To Process C A/c 60 230 13,800 By Sale proceeds of Process C loss 60 10 600 By Profit & Loss A/c 34,800 260 35,800 260 35,800 Abnormal Gain Account Dr. Particulars Units Cost p.u. Amount ₹ Cr. Particulars Units Cost p.u. Amount ₹ To Normal loss shortfall 130 5 650 By Process B 130 150 19,500 To Profit & Loss A/c 18,850 19,500 19,500 Profit & Loss Account Dr. Particulars Units ₹ Cr. Particulars Units ₹ To Process A A/c 3,100 3,41,000 By Sale (Process A's Output @120/- p.m.) 3,100 3,72,000 To Process B A/c 2,700 4,05,000 By Sale (Process B's Output @165/- p.u.) 2,700 4,45,500 To Process C A/c 2,100 4,83,000 By Sale (Process C's Output @250/- p.u.) 2,100 5,25,000 To Management Expenses 80,000 By Abnormal gain A/c 18,850 To Selling Expenses 50,000 By Net Loss 32,450 Total 7,900 13,59,000 7,900 13,73,800 To Net Profit 14,800 13,73,800 13,73,800