Process Costing and Joint Product and By Product

To Process . . . A/c Unit Amt Opening Stock of Material Transfer from previous process Material Incurred Royalty (Unit Produced on Production Capacity x Rate / unit) Conversion Cost (Wages/oh) 5000 By Normal loss Wastage Loss in Weight By Product Unit 750 Amt Scrap

To Balance B/d Cost Till Date @10 Abnormal Gain @10 x (5250 5000)

Balance C/d Cost till Date 4250 42500 @ 10 = 42500 / 4250 4250 42500 By Transfer to next process Abnormal Loss COST 250 2500 @10 COST Closing Stock Material WIP

Normal Loss A/c To Unit Amt By Unit Amt Process A/c@ Scarp Rs.2 750 1500 Abnormal Gain @Rs. 2 Scrap Value 250 500 Bank Scrap Sold @ Rs. 2 ( 750-250) 500 1000 Abnormal Loss A/c To Unit Amt By Unit Amt Process A/c COST COST Bank Sale Of Scrap @ RS. 2 Scrap Costing P/L Bal. Fig **** Abnormal Gain A/c To Unit Amt By Unit Amt Normal Loss A/c 250 500 Process A/c 250 2500 - Transfer - Transfer Royalty Transfer Costing P/L Bal. Fig 2000 Royalty A/c To Unit Amt By Unit Amt Bank Actual Payment Process Transfer Abnormal Gain Bal .Fig

VALUATION OF WIP AND EQUIVALENT UNIT (FIFO)

Unit Particular Unit In Out 800 WIP 800 9200 Input /Output 7100 (Total Completed 7900 unit) Normal Loss 800 Abnormal Loss 400 Abnormal Gain (200) Closing WIP 900 Total EQP Unit Cost Incurred Normal Loss Net COST Cost/unit Material 1 % age Amt --100% 7100 --100% 100% 100% --400 (200) 900 8200 338000 10000 328000 Rs. 4.00 Material 2 % age 60% 100% --40% 100% 70% Conversion Cost Packing Material Amt % age Amt % age Amt 480 40% 320 100% 800 7100 100% 7100 100% 7100 --160 (200) 630 8170 16340 -----16340 Rs. 2.00 --20% 100% 30% ---80 (200) 270 7570 7570 ----7570 Rs. 1.00 ----100% ------(200) --7700 3850 ----3850 Rs. 0.50

Valuation of Unit Completed: Particular Amount Opening WIP( 800 unit) xxxx Add: Current Year Cost - Material2 60% xxxx - Conv. Cost 40% .xxxx - Packing 100% .xxxx XXXXX Completed Unit Cost (7900-800) x (4+2+1+0.5) .xxxxx XXXX

If there in any packing material cost then for unit completed packing material cost will be applied it will not applied on Closing WIP and Abnormal/ Normal Loss

VALUATION OF WIP AND EQUIVALENT UNIT (Weighted Average Method)

Unit Particular Unit Material 1 In Out % age Amt 800 WIP 9200 Input /Output 7900 100% 7900 (Total Completed 7900 unit) Normal Loss 800 ----Abnormal Loss 400 100% 400 Abnormal Gain (200) 100% (200) Closing WIP 900 100% 900 Total EQP Unit 9000 Cost Incurred 338000 OP. WIP 32000 Normal Loss 10000 Net COST 360000 Cost/unit Rs. 4.00 Valuation Of Completed Unit = 7900 x
Pro - 1 A/c Cost Profit Amt By 15000 -15000 Finish Process 11200 -11200 26200 -26200 7500 -7500 (3700) -(3700) 30000 -30000 40500 x 10500 -10500 100/75 40500 -40500 13500 13500

Material 2 % age 100% --40% 100% 70%

Conversion Cost Packing Material Amt % age Amt % age 7900 100% --160 (200) 630 8890 16340 10330 -----16670 Rs. 3.00 --20% 100% 30% 7900 100% ---80 (200) 270 8050 7570 8530 ----16710 Rs. 2.00 ----100% ---

Amt 7900

----(200) --7700 5775 --------5775 Rs. 0.75

(4+3+2+0.75)
Finishing Process A/C Profit Amt By Cost Profit Amt 13500 54000 Sale 75750 36750 11250 15750 90000 x --11200 (100/80) 13500 81000 1500 9000 (750) (4500) 13500x 14250 85500 (4500/ --4500 81000) 14250 90000 32500 32500

Inter Process Profit

To DM DL PC +OPST - CLST WC O/H COP P/L Cost Profit Amt 40500 13500 54000 To Pro 1 DM DL PC +OPST - CLST WC O/H COP P/L Cost 4050 15750 11200 67500 7500 (3750) 71250 4500 75750 ----

Here we are following FIFO Method So That Profit on Closing Stock is 750 In Case Of Weighted Average Method = (13500+1500) / (54000+9000) = 1071 In Case of LIFO = 1500 x (4500/9000) = 750

Joint Product And By Product Joint Cost = Expenditure incurred till Split Of Point ( Before Further Cost) Apportionment of Joint Cost 1) Physical unit Method , 2) Sales Value at Split Of Point, 3) Estimated And Net Realizable Value at Split Of Point, 4) Estimated Joint Cost at Split Off, 5) Constant Gross Margin Method

Illustration: Following is the Process A/c Unit Amount Unit Amount To Material 10000 50000 By Product A 5000 To Conversion Cost 40000 By Product B 3000 By Product C 2000 1) Physical Unit Method: Product A = 90000 x 5000/10000 = Rs. 45000 (its Joint Cost Part) Product B = 90000 x 3000/10000 = Rs. 27000 (Its Joint Cost Part) Product C = 90000 x 2000/10000 = Rs. 18000 (Its Joint Cost Part) 2) Sales at Split of Point (Before Further Processing) Assume Sales Price At Split Of point are = 120, 110, & 80 Here, Joint Cost 90000 will be apportioned on the basis of Sales Value Ration At the Time of Sale at split Of Point 3) Estimated NRV at Split of Point Final sale Value After Further Process xxx ### (-) further Processing Cost xx ## ENRV ( Ratio for Apportionment) xxx #### 5) Constant Gross Margin Method: Total Sale Value of all product (-) Total Joint Cost of all Product (-) Total Further Processing Cost Total Profit of all product As per above formula GP % = 13.54% Joint Cost Apportionment: Total Sale 6000 3600 (-) GP@13.54% 812 487 Joint Cost 5188 3113 XXX XXX XXX XXX Here it is assume that All Products are Same value Product A B C Unit 5000 3000 2000 Sales Price 120 110 80 Ratio ( Sale) 60000 33000 16000 4) Estimated Joint Cost: Final Sale Value xxxx #### (-) Profit Estimated xxxx ### (-) Further Process Cost xx ## EJC (Ratio for Apportionment) xxxx ####

Therefore, % of GP = Total Profit of All Product / Total sales Value of All Procust

Find out the joint Cost Apportionment of The Main Product A&B Sales # A = 100kg @ 60, B = 120kg @ 30 Joint Cost # Variable Cost = 4400, Fixed Cost = 3900 However, this Method is Used only For Variable joint Cost. Therefore Variable Cost Apportionment: A = (4400 / 200) x 100 = 2000 B = (4400 / 200) x 120 = 2400 Fixed Cost Apportionment:- Total Contribution A = 6000-2000 = 4000 B = 3600-2400 = 1200 FC Apportion: A = (3900/5200) x 4000 = 3000 B = (3900/5200) x 1200 = 900 Total Joint Cost : A = (2000+3000) = 5000 B = (2400+900) = 3300

In Case of By Product: Step1 : Find out joint cost with By-Product, Step 2: Separate it From The Total Joint Cost and the resulting figure distribute among main product Statement to find out joint Cost With BY-Product *** Final sale Value of By-Product *** (-) Selling Distribution Exp *** (-) Further process Cost *** (-) Profit *** Joint Cost of By-Product Step 1: Particular Delhi to Agra Total Joint Cost (-) Joint Cost of By Product Joint Cost For Main Product
*** *** ***

Must See @ no 13 &14 solution page 51 & 52

OPERATING COSTING:
Distance Travelled ( KM) KM( Distance) x No of trip daily x no of days in a month x no of month travelled in a year = Result km Passenger or Tones KM Result km x ( occupancy / load) = Passenger/Tones km

Step 2: Statement of Cost: Fixed Cost + Variable Cost ( Cost Vary With The Km like Diesel And Lubricant Oil) = Total Cost xxxx Add: Tax @ 20% & Profit @10% xxxx Net Revenue to be earned (Assume 100%) xxxx Therefore, Fair Per Passenger = Net Revenue / Passenger KM Method of Tones KM: Let : a truck carrying And A ====== 30 km & 45tones ======B ======== 60km & 40tones =======C A ================25tons & 75km ============================== C

1) Absolute Tones Km :(45x30) + (60x40) + (25x75) = 5625 tones KM 2) Commercial tones Km:Average Load x Total Km = [(45+40+25)/3] x (75+30+60) 110/3 x 165 6050 tones km Hotel Operating Costing: Strep1: In a year total cost Expected Profit Total Room Rent & Taking Step 2: Room Days Peak Season ( 25 x 30 x 8) x 80% Off Season ( 25 x 30 x 4) x 60% 200000 100000 300000 4800 1800 Let There are 25 rooms: Peak season = 8 month/ = 80% occupancy Off Season = 4 months = 60% Occupancy and Discount given to 25% of Room rent in off-season. Step 3: Let Room Rent = R Peak Season = R & Off Season = 0.75R Total Taking = (4800 x R) + (1800x 0.75R) Or 300000 = 6150R Or R = 487.80 and off season rent = (487.8 25%) =365.85 Nature of suite Occupancy Equivalent single room suites Single room suites Double rooms suites Triple rooms suites 100 360 100% 50 360 80% 30 360 60% 36,000 14,400 6,480

Q2. Type of Number suite Single room 100 Double rooms 50 Triple rooms 30 assume 360 days in a year

Occupancy percentage 100% 80% 60%

Suppose u are travelling from taxi and u wants to purchase either Small car or Big car U r travelling 19000 km daily @ 0.90 per km U Have calculate that Small Car Fixed Cost = 5779 & Big Car Fixed Cost = 3500 And Small car variable cost(diesel) 3.5/10 = 0.35 per km & Big car variable cost(diesel) 3.5/7 = 0.50 per km 3) Calculating Which Option is better : Taxi = 19000 * 0.90 = 17100 Small car = 5279 + (19000 * 0.35) = 11929 Big Car = 3500 + (19000 * 0.50) = 13000 So Small car Is Better 4) Find out Break even Km and indifferent point of Km how much u will travel where cost for big or small car will be same: Indifferent point KM = Fixed Cost Difference / Variable Cost Difference Per KM = (5279 3500) / (0.50 0.35) 11860 km When Ever Rate per Passenger Changes Due to Change in Km Traveled Than To Calculate Fare Charged to per Passenger: Step 1: Make All Traveling Passenger as Average Traveler for a particular Km For KM No of Student 4 9 8 18 16 33 Carrying Total Student if 4 km (junior for 1st shift) Carrying Total Student (Junior + Senior) EQV Student for 4 km 9 18 x ( 8 4) = 36 33 x (16 4) = 132 177 student 177 x 2 = 354 per month