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Process Costing Examples

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8 views

Process Costing Examples

Uploaded by

frieda20093835
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Process Costing

Example: 1

3,000 units of material are input to a process, Process costs are as follows.
Material $11,700
Conversion costs $6,300
Output is 2,000 units. Normal loss is 20% of input.
Required
Prepare a process account and the appropriate abnormal loss/gain account.

Example: 2
During a 4-week period, period 3, costs of input to a process were $29,070, Input was 1,000 units,
output was 850 units and normal loss is 10%.

During the next period, period 4, costs of input were again $29,070, Input was again 1,000 units, but
output was 950 units,

There were no units of opening or closing inventory,

Required

Prepare the process account and abnormal loss or gain account for each period,

Example: 3

3,000 units of material are input to a process, Process costs are as follows.
Material $11,700
Conversion costs $6,300
Output is 2,000 units. Normal loss is 20% of input.
The units of loss could be sold for $1 each. Prepare appropriate accounts.

1
Example: 4

Suppose that we have the following account for Process 2 for period 9.
PROCESS ACCOUNT
Units $ $.
Materials 1,000 6,200 Finished goods 800 ?
Labour and overhead 2,850 Closing WIP 200
1,000 9050
-'--
[boo
Let us also assume that the closing WIP is 100% complete for materials and 25% complete for labour
and overhead.
How would we now put a value to the finished output and the closing WI P?

Example: 5 – OPENING WORK-IN-PROGRESS using the average cost method


Magpie produces an item which is manufactured in two consecutive processes. Information relating to
process 2 during September 20X3 is as follows.
Opening inventory 800 units
Degree of completion: $
process 1 materials 100% 4,700
added materials 40% 600
conversion costs 30% 1,000
6,300
During September 20X3, 3,000 units were transferred from process 1 at a valuation of $18,100. Added
materials cost $9,600 and conversion costs were $11,800.
Closing inventory at 30 September 20X3 amounted to 1,000 units which were 100% complete with
respect to process 1 materials and 60% complete with respect to added materials. Conversion cost work
was 40% complete.
Magpie uses a weighted average cost system for the valuation of output and closing inventory.
Required
Prepare the process 2 account for September 20X3.

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