Question 1182666: Following information relates to Process A account
10000 Units introduced at Rs 20000
Material consumed Rs 5000
Manufacturing expenses Rs 2000
Direct Labour charges Rs 6000
Units transferred to next process B- 9500
It is bound that wastage in this process is 3%
There is no realizable value of scrap
Prepare the process account reflecting the value at which output will be transferred to the next
process
Answer by CPhill(1987)   (Show Source):
You can put this solution on YOUR website! **Process A Account**
| Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
|---------------------------------|-------------|---------------------------------|-------------|
| Units Introduced | | Units Transferred to Process B | |
| 10,000 Units @ Rs. 20,000 | 20,000 | 9,500 Units | *See Calculation Below* |
| Materials Consumed | 5,000 | Normal Wastage (3% of 10,000) | 300 Units |
| Manufacturing Expenses | 2,000 | | |
| Direct Labour Charges | 6,000 | | |
| **Total Inputs** | **33,000** | **Total Outputs** | **33,000** |
**Calculation of Value of Units Transferred to Process B:**
1. **Total Cost:**
Total cost incurred in Process A = Rs. 33,000 (as shown in the account)
2. **Cost per Unit:**
Total units introduced = 10,000 units
Normal Wastage = 300 units
Good output units = 10,000 - 300 = 9,700 units
Cost per unit = Rs. 33,000 / 9,700 units = Rs. 3.40 (approximately)
3. **Value of Units Transferred:**
Units transferred to Process B = 9,500 units
Value of units transferred = 9,500 units * Rs. 3.40/unit = Rs. 32,300 (approximately)
*Therefore, the Process A account will be completed as follows:*
**Process A Account**
| Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
|---------------------------------|-------------|---------------------------------|-------------|
| Units Introduced | | Units Transferred to Process B | |
| 10,000 Units @ Rs. 20,000 | 20,000 | 9,500 Units @ Rs. 32,300 | 32,300 |
| Materials Consumed | 5,000 | Normal Wastage (3% of 10,000) | 300 Units |
| Manufacturing Expenses | 2,000 | | |
| Direct Labour Charges | 6,000 | | |
| **Total Inputs** | **33,000** | **Total Outputs** | **33,000** |
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