The following data are available in respect of process I for February: i. Opening stock of work-in-progress: 2,400 units at a total cost of ₹ 12000…
CA Intermediate · Cost and Management Accounting · MTP · September 2026
The following data are available in respect of process I for February: i. Opening stock of work-in-progress: 2,400 units at a total cost of ₹ 12000 ii. Degree of completion of opening work-in-progress: Materials 100% Labor 60% Overhead 60% i. Input of materials at a total cost of ₹ 1,10,400 for 27,600 units. ii. Direct wages incurred ₹ 50,220 iii. Production overheads ₹ 25,110 iv. Units scrapped 3,600 units. The stage of completion of these units. Materials 100% Labor 80% overheads 80% v. Closing work-in-progress: 2,700 units. The stage of completion of these units was: Materials 100% Labor 70% overheads 70% vi. 23,700 units were completed and transferred to the next process. vii. Normal loss is 8% of the total input (opening stock plus units put in) viii. Scrap value is ₹ 4 per unit. You are required to: a. Compute equivalent production, b. Calculate the cost per equivalent for each element, c. Calculate the cost of abnormal loss (or gain), closing work-in-process and the units transferred to the next process using the FIFO method, d. Show the process Account for February.
Suggested Answer and Working Notes:
a. Statement of Equivalent Production Process I Input Details Units Output Particulars Units Equivalent Production Material- A Labour Overhead % Units % Units % Units Opening WIP 2,400 Work on Op. WIP 2,400 40 960 40 960 Introduced 27,600 Introduced & completed during the month 21,300 100 21,300 100 21,300 100 21,300 30,000 Normal loss (8% of 30,000 units) 2,400 Closing WIP 2,700 100 2,700 70 1,890 70 1,890 Abnormal Loss 1,200 100 1,200 80 960 80 960 30,000 25,200 25,110 25,110 Working note: Production units = Opening units + Units Introduced - Closing Units - Units Scrapped = 2,400 units + 27,600 units – 2,700 units - 3600 units = 23,700 units (Opening WIP 2,400 + Introduced and completed 21,300) b. Statement of Cost Cost (₹) Equivalent units Cost per equivalent units (₹) Material Cost 1,10,400 Less: Scrap value of normal loss (2,400 units x ₹ 4) (9,600) 1,00,800 25,200 4.00 Labour 50,220 25,110 2.00 Overheads 25,110 25,110 1.00 c. Statement of apportionment of process cost Amount (₹) Opening WIP (2400 units) 12,000 Completed opening WIP (960 units× ₹3) Labour + Overheads (2 + 1) 2,880 Introduced & Completed- 21,300 units × ₹7 Material + Labour + Overheads (4 + 2 + 1) 1,49,100 Total cost of 23,700 finished goods units 163,980 Closing WIP units- 2700 Material (2,700 units × ₹ 4) 10,800 Labour (1890 units x Rs 2.00) 3,780 Overheads (1,890 units x ₹ 1.00) 1,890 16,470 Abnormal Loss- 1,200 Units Material (1,200 units × ₹ 4) 4,800 Labour (960 units x ₹ 2.00) 1,920 Overheads (960 units x ₹ 1.00) 960 7,680 d. Process I A/c Particulars Units Amount ₹ Particulars Units Amount ₹ To Balance b/d 2400 12,000 By Normal loss 2,400 9,600 To Units Introduced 27,600 1,10,400 Finished By goods 23,700 1,63,980 To Wages 50,220 By Closing WIP 2,700 16,470 To Overheads 25,110 By Abnormal Loss 1,200 7,680 30,000 1,97,730 30,000 1,97,730
Topics: Process & Operation Costing
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