CA – IPC TEST
PROCESS COSTING
DURATION: 1hour 15 mins
MM: 38 Marks
Solution 1: (a) Statement showing computation of profit after further processing:
Amount in (`)
Particulars
A
B
C
D
Total
Sales after further processing
9,20,000
80,000
32,000
2,40,030
12,72,030
Less: Separate/ further costs
(2,40,000)
(48,000)
(8,030)
(2,96,030)
Sales at split off (being NRV)
6,80,000
32,000
32,000
2,32,000
9,76,000
Less: Joint costs (NRV basis)
(5,78,000)
(27,200)
(27,200)
(1,97,200)
(8,29,600)
Profit (1)
1,02,000
4,800
4,800
34,800
1,46,400
(b) Statement showing computation of additional Profit by further processing:
Amount in (`)
Particulars
A
B
C
D
Total
Sales at split off
6,00,000
40,000
32,000
2,16,000
8,88,000
Less: Joint costs as apportioned above
(5,78,000)
(27,200)
(27,200)
(1,97,200)
(8,29,600)
Profit (2)
22,000
12,800
4,800
18,800
58,400
Additional Profit/Loss (1) – (2)
80,000
(8,000)
16,000
88,000
Advise: Products A & B should be further process, because there is incremental profit and where as products B and C need not
be further process.
Solution 2: Statement of Apportionment of Cost
Main Product
By-Products
Particulars
Total
P (`)
A (`)
B (`)
Sales
90,000
60,000
40,000
1,90,000
Less: Profit 25%, 20%, 15% on Sales
(22,500)
(12,000)
(6,000)
(40,500)
Cost of Sales
67,500
48,000
34,000
1,49,500
Less: Selling & Distribution Expenses
(6,750)
(4,800)
(3,400)
(14,950)
(Balancing figure in the ratio of cost of sales)
60,750
43,200
30,600
1,34,550
Less: Cost beyond split off
(6,000)
(5,000)
(4,000)
(15,000)
Share in Joint Costs
54,750
38,200
26,600
1,19,550
Main Product P A/c
Particulars
Amount in (`) Particulars
Amount in (`)
To Share in Joint Costs
54,750 By Sales
90,000
To Costs after split off
6,000
To Selling & Distribution Expenses
6,750
To Profit
22,500
90,000
90,000
Solution 3: 1. Statement of Equivalent Production
Material
Labour & Overheads
Input
Particulars
Output
DOC
Units
DOC
Units
2000
Opening WIP
2000
75%
1500
15200
Put & Processed
14000
100%
14000
100%
14000
Closing WIP
1200
100%
1200
50%
600
17200
17200
15200
16100
Statement showing Cost per unit
Type of Cost
Amount in (`)
Equivalent units
Cost per unit (`)
Material
98,800
15,200
6.50
Labour & Overheads
28,980 (17,200 + 11,780)
16,100
1.80
Total
8.30
Statement showing Computation of Total Cost (Cost of Production Report)
Particulars
Amount in (`)
Value of Opening WIP b/d
13,700
Add: Current Costs of completing units of Opening WIP:
Material
Labour & Overheads (1500 units x `1.80)
2,700
2,700
Value of Computing 2000 units
16,400
Add: Value of Computing 14000 units (14000 units x `8.30)
Value of 16,000 Computed units
Value of Closing WIP
Material (1200 units x `6.50)
Labour & Overheads (600 units x `1.80)
1,16,200
1,32,600
7,800
1,080
8,880
2. Cost of goods sold:
1,800 units at `8.00
`14,400
(from finished goods beginning inventory)
2,000 units at `8.20*
`16,400
(from work in process beginning inventory)
12,000 units at `8.30**
`99,600
(from May production started and completed)
15,800 units
`1,30,400
*(`13,700 + `2,700) ÷ 2,000 units
**`1,16,200 ÷ 14,000 units
3. Finished goods inventory, May 31:2,000 units at `8.30 = `16,600
Solution 4:
Process B
Gasoline
1,36,800 litres
1,44,000 litres
Process A
3,60,000 litres
`10,80,000
Crude Oil
litres
4,50,000 litres
Process C
`1,71,99,775
HSD
1,94,400 litres
2,16,000 litres
`1,35,000
Calculation of quantity produced
Particulars
Process-A (Ltr.)
Process-B (Ltr.)
Process-C (Ltr.)
Input
4,50,000
1,44,000
2,16,000
Normal Loss
(90,000)
(7,200)
(21,600)
(20% of 4,50,000 ltr.)
(5% of 1,44,000 ltr.)
(10% of 2,16,000 ltr.)
3,60,000
1,36,800
1,94,400
Production of Gasoline
1,44,000
1,36,800
--Production of HSD
2,16,000
--1,94,400
(i) Statement of apportionment of joint cost on the basis of sale value at split-off point
Particulars
Gasoline
HSD
Output at split-off point (Ltr.)
1,44,000
2,16,000
Selling price per Ltr. (`)
64
41
Sales value (`)
92,16,000
88,56,000
Share in Joint cost (128:123)
87,71,200
84,28,575
`1,71,99,775 × 128
`1,71,99,775 × 123
251
251
(ii) Statement of cost per Litre.
Particulars
Gasoline
HSD
Output (Ltr.)
1,36,800
1,94,400
Share in joint cost (`)
87,71,200
84,28,575
Cost per Ltr. (`) (Joint cost) (A)
64.11
43.36
Further processing cost (`)
10,80,000
1,35,000
Further processing cost per Ltr. (`) (B)
7.89
0.69
Total cost per Ltr. (`) [(A)+(B)]
72.00
44.05
(iii) Statement of profit
Particulars
Gasoline
HSD
Output (Ltr.)
1,36,800
1,94,000
Sales (Ltr.)
1,32,000
1,88,000
Closing stock (Ltr.)
4,800
6,400
Sales @ `68 and `46 for Gasoline and HSD respectively (`)
89,76,000
86,48,000
Add: closing stock (Ltr.) (at full cost) (`)
3,45,600
2,81,920
Value of production (`)
Less: Share in joint cost (`)
Less: Further processing cost (`)
Profit (Loss) (`)
93,21,600
(87,71,200)
(10,80,000)
(5,29,600)
89,29,920
(84,28,575)
(1,35,000)
3,66,345