The following details are available of Process X for August 2025: (1) Opening work-in-progress 8,000 units Degree of completion and cost: Material…

CA Intermediate · Cost and Management Accounting · MTP · May 2026
The following details are available of Process X for August 2025: (1) Opening work-in-progress 8,000 units Degree of completion and cost: Material (100%) 63,900 Labour (60%) 10,800 Overheads (60%) 5,400 (2) Input 1,82,000 units at 7,56,900 (3) Labour paid 3,28,000 (4) Over heads incurred 1,64,000 (5) Units scrapped 14,000 Degree of completion: Material 100% Labour and overhead 80% (6) Closing work-in-process 18000 units Degree of completion: Material 100% Labour and overhead 70% (7) 1,58,000 units were completed and transferred to next process. (8) Normal loss is 8% of total input including opening work-in-process (9) Scrap value is 8 per unit to be adjusted in direct material cost You are required to COMPUTE, assuming that average method of inventory is used: (i) Equivalent production, and (ii) Cost per unit

Suggested Answer and Working Notes:

(i) Statement of Equivalent Production Particulars Units Material Labour and Overhead (%) Units (%) Units Production units completed 1,58,000 100 1,58,000 100 1,58,000 Normal Loss: 8% of Input (1,82,000 + 8,000) 15,200 -- -- -- -- Closing WIP 18,000 100 18,000 70 12,600 1,91,200 1,76,000 1,70,600 Less: Abnormal Gain 1,200 100 1,200 100 1,200 Total 1,90,000 1,74,800 1,69,400 (ii) Statement of cost Particulars Materials (₹) Labour (₹) Overhead (₹) Opening WIP 63,900 10,800 5,400 Input of Materials 7,56,900 - - Expenses - 3,28,000 1,64,000 Total 8,20,800 3,38,800 1,69,400 Less: Sale of Scrap (15,200 x 8) 1,21,600 Net cost 6,99,200 3,38,800 1,69,400 Equivalent Units 1,74,800 1,69,400 1,69,400 Cost Per Unit 4.00 2.00 1.00 Total cost per unit = ₹ (4+2+1) = 7.00

Topics: Process & Operation Costing

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