8/12/2019 7.ProcessCosting

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Cost Accounting Process Costing____________________________________________________________

PROCESS COSTING

Format of Process A/c

Format of Abnormal loss

Particulars nit Rs! Particulars nit Rs!To Process A/c By Sale of wasted units

By costing P & L a/c

Total Total

Format of Abnormal gain a/c

Particulars nits Rs Particulars nits Rs

To Normal Loss a/c By Process a/c (names ofdifferent process)To costing P/L a/c

Total Total

1) To find te cost "er unitfor !aluation of units to "e transferred to ne#t process and also for a"normal$loss or gain% Total process cost ' Sal!age !alue of normal spoilage

Total units introduced ' Normal loss in units

) To find abnormal loss (or) gain(all in units)% nits from pre!ious process * fres units introduced ' Normal loss ' nits transferred to ne#t process

(+f te result is positi!e ten a"normal loss, +f negati!e ten a"normal gain)

-) +n case of opening .+P and closing .+P are gi!en ten tere are different met#o$s of %aluation ofclosing &IP%

i) +0 etod ii) L+0 etodiii) A!erage etod i!) .eigted A!erage etod

2) 3arious statements to "e prepared wile .+P is gi!en%

i) Statement of e4ui!alent productionii) Statement of costiii) Statement of apportionment of costi!) Process cost a/c

'( FIFO )et#o$*+n tese metod total units transferred to ne#t process includes full opening stoc5 units and teclosing stoc5 includes te units introduced during te process, +n tis metod te cost incurred duringte process is assumed as to "e used%

a) irst to complete te units already in process ") Ten to complete te newly introduced units c) or te wor5 done to "ring closing in!entory to gi!en state of completion

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Particulars nit + Rs Particulars nit + Rs

To 9irect material By Normal Loss

To 9irect La"our By nits transferredto oter processTo +ndirect material

To 0ter :#penses By A"normal loss (B/)

To A"normal gain(B/)

Total Total

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8/12/2019 7.ProcessCosting

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Cost Accounting Process Costing____________________________________________________________

,( -IFO )et#o$ ;ost incurred in process is used for%

a) irst to complete newly introduced units

") Ten to complete units already in process in tis metod closing stoc5 is di!ided into two% i) nits wic represent opening stoc5 "ut lie at te end of te period ii) Newly introduced units in closing stoc5,

.( A%erage )et#o$*+n tis metod

a) No distinction is made "etween opening stoc5 and newly introduced material,

") +n finding cost per unit$ cost incurred for opening stoc5 is also to "e added wit current cost,(This addition is not done in LIFO & FIFO method as cost incurred in that process is only taken)

( &eig#te$ a%erage met#o$*Tis metod is only used wen !aried product in processed troug asingle process,