PROCESS COSTING

PROCESS COSTING

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In entities mass production involving, it is difficult to calculate on base of individual units, so to make issues simple costs are accounted  making processes or departments as base. Let suppose a  product is transformed in final shape after passing three departments A,B,C. materials , labor  and FOH are will be accounted for department A, after they will be moved to department B and accounted for in department B and similarly to department C, from where they are finally ready as final product  for sale

COST PER UNIT =

 

Process I (dept. A)

  QTY $ 00   QTY $00
 

Direct material

Direct labour

Overheads

Direct Expenses

 

ABNORMAL GAIN

 

     

NORMAL LOSS

ABNORMAL LOSS

 

 

Output transferred to process I

   
           

 

Process II(dept. B)

  QTY $000   QTY $000
 

Transferred from process I

Direct material

Direct labour

Overheads

 

 

ABNORMAL GAIN

 

     

NORMAL LOSS

ABNORMAL LOSS

 

 

Output transferred to process II

   
           

 

 

 

Process I (dept A)

 

Transferred from process II

Direct material

Direct labour

Overheads

 

 

ABNORMAL GAIN

 

     

NORMAL LOSS

ABNORMAL LOSS

 

 

Finished goods

 

   
           

 

NORMAL LOSS/GAIN Account

 

 

Process I

Process I

Process III

 

 

Abnormal loss

 

 

 

 

 

X

X

X

 

 

X

 

 

 

Proceeds from sale of scrap

Abnormal gain

 

 

 

X

X

  XX   XX

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