Cost and Management Accounting Question Banks

Product AB passes through two processes A and B before it is transferred to finished stock. The following information is obtained for the month of January:

	Process A (Rs.)	Process B (Rs.)	Finished Stock (Rs)
Opening Stock	12,000	15,000	20,000
Direct Material	30,000	40,00	-
Direct Wages	25,00	30,000	-
Factory Overhead	20,000	30,000	-
Closing Stock	7,000	15,000	20,000
Inter -process profit included in Opening Stock	-	3,125	9,750

The output of process A is transferred to process B at 25% profit on the cost price.

The output of process B is transferred to finished stock at 25% profit on cost price.

The stocks in process are valued at prime cost. The finished stock is valued at the price at which it is received from process B. Sales during the period are Rs. 300,000.

Required:

a. Process Account

b. Finished Stock Account

c. Actual realized profit

d. Stock valuation for Balance Sheet purpose (5+5+3+1+1)

	Production Department A	Production Department B
Factory Rent ( Rs)	1,000	3,000
Depreciation (Rs)	6,000	9,000
Machine hours	1,000	2,000

Months	Chaitra	Baishak	Jestha	Ashad	Shawan
Output ( Units )	10,000	9,000	8,000	10,000	11,000

	Product X	Product Y
Outputs in units	2,000	4,000
Machine hour per unit	4	3
No.of Purchase Orders	20	30
No.of Set-ups	80	120

Material	Quantity	Standard Price Per Kg
A	8	Rs . 5
B	2	Rs. 6
C	10	Rs. 7

Material	Quantity	Actual Price Per Kg
A	120	Rs. 4
B	80	Rs. 5
C	200	Rs 8

Year	Sale Revenue (Rs)	Profit (Rs)
2077	200,000	8,000
2088	300,000	28,000

Cost and Management Accounting

Faculty of Management