Question

10,000 units of raw material were introduced in Process ‘A' at a cost of Rs. 80,000. The output of Process ‘A' is transferred to Process ‘B'. Normal wastage is 10% and each unit of waste is realised @ Rs. 10. Actual production was 8700 units. Direct wages incurred Rs. 16,000. Indirect expenses amounted to Rs. 4,000. Prepare Process ‘A' Account.

Hint:

To confirm your process account is balanced:
• Ensure total units on the Debit side ($10,000$) match the total units on the Credit side ($1,000 + 300 + 8,700 = 10,000$).
• Ensure the total value on the Debit side ($\text{Rs. } 1,00,000$) matches the total value on the Credit side ($\text{Rs. } 10,000 + \text{Rs. } 3,000 + \text{Rs. } 87,000 = \text{Rs. } 1,00,000$).
• Always value abnormal losses and final output using the calculated cost per good unit, never the scrap value.

Answer 1