costing
COURSE: ADVANCED COST ACCOUNTING SUBMITTED BY: PRATIK KHOLE (ROLL NO.120 M!"#$% &' C&(($%)$ (P!%#*1 (SEM*I
PROCESS COSTING
CERTIFICATE
THIS IS TO CERTIFY THAT MR.PRATIK KHOLE HAS SATISFACTORILY CARRIED OUT THE PROJECT WOR ON THE TOPIC THE CONCEPT OF process For MCOM (SEM I IN THE ACADE!IC YEAR "#1$%1&'
costing
SIGNATURE OF PROJECT GUIDE( % SIGNATURE OF CO%ORDINATOR( % *!CO! + COURSE, SIGNATURE OF E-TERNAL E-A!INER( %
))))))))))))))) )))))))))))))))
)))))))))))))))
"
PROCESS COSTING
DECLARATION
I. PRATI HOLE THE STUDENT OF '!'AGRAWAL COLLEGE OF !CO!
*SE!%I, HERE /Y DECLARE THAT I HA0E CO!PLETED THIS PROJECT ON% 1T THE CONCEPT OF process
costing2
IN THE ACADE!IC YEAR "#1"%1$ THE INFOR!ATION SU/!ITTED IS TRUE AND ORIGINAL TO THE /EST OF !Y NOWLEDGE'
PLACE( ALYAN
DATE( )))3)))3)))))
PROCESS COSTING
ACKNO+LEDGEMENT
I E-PRESS !Y GRATEFUL THAN 4S TO PROJECT GUIDE PROF' FOR HER TI!ELY GUIDANCE AND HELP RENDRED AT E0ERY STAGE OF THE PROJECT WOR ' I E-PRESS SINCERE THAN S TO OUR PRINCIPAL PROF' WHO HAS GI0EN HER 0ALUA/LE !ORAL SUPPORT. !OTI0ATION. INSPIRATION. AND EDUCATIONAL AT!OSPHERE IN THE INSTITUTE FOR THE SUCCESSFUL CO!PLETION OF THE PROJECT WOR ' I ALSO WISH TO E-PRESS !Y REGARDS TO THE LI/RARIAN FOR HER CO% OPERATION IN PRO0IDING !E WITH NECESSARY REFERENCE !ATERIALS' I ALSO E-PRESS !Y THAN S TO FACULTY !E!/ERS AND FOR CO% OPERATION AND HELP GI0EN IN CO!PLETING THIS PROJECT'
PRATI
HOLE
*RESERCHER,
&
PROCESS COSTING
COST OF PRODUCTION REPORT JOINT AND /Y%PRODUCTS COSTING /Y%PRODUCT AND ITS ACCOUNTING TREAT!ENT TOTAL COST PER UNIT DETER!INATION USING NR0 !ETHOD CONCLUSION REFERENCE
PROCESS COSTING
1. INTRODUCTION
Process costing is < =et>o? o@ costing Ase? =<inBC in =<nA@<ctAring D>ere Anits <re continAoAsBC =<ss%pro?Ace? t>roAg> one or =ore processes' EE<=pBes o@ t>is incBA?e t>e =<nA@<ctAre o@ er<sers. c>e=ic<Bs or processe? @oo?' In process costing it is t>e process t><t is coste? *AnBiFe GoH costing D>ere e<c> GoH is coste? sep<r<teBC,' T>e =et>o? Ase? is to t<Fe t>e tot<B cost o@ t>e process <n? <Ier<ge it oIer t>e Anits o@ pro?Action' Process costing is < =et>o? Ase? in < sitA<tion D>ere pro?Action @oBBoDs < series o@ seJAenti<B processes' T>e =et>o? is Ase? to <scert<in t>e cost o@ < pro?Act or serIice <t e<c> st<ge o@ pro?Action. =<nA@<ctAre or process' It is gener<BBC <ppBie? in p<rticAB<r in?Astries D>ere continAoAs =<ss pro?Action is possiHBe' In IieD o@ t>e continAoAs n<tAre o@ t>e process <n? t>e Ani@or=itC o@ t>e oAtpAt. it is not possiHBe or necess<rC to i?enti@C < p<rticAB<r Anit o@ oAtpAt Dit> < ti=e o@ =<nA@<ctAre' T>e cost o@ <nC p<rticAB<r Anit =Ast He t<Fen <s t>e <Ier<ge cost o@ =<nA@<ctAre oIer < perio?' T>is c<n He co=pBic<te? Hec<Ase o@ t>e nee? to <pportion costs HetDeen co=pBete? oAtpAt <n? An@inis>e? pro?Action <t t>e en? o@ t>e perio?' W<st<ge =Ast <Bso He <ccoAnte? @or' In process costing. it is t>e <Ier<ge cost incArre? t><t concerns =<n<ge=ent' Process costing is Ase? in < I<rietC o@ in?Astries. incBA?ing @oo? processing. p<per =iBBing. c>e=ic<B <n? ?rAg =<nA@<ctAring. oiB re@ining. so<p =<Fing. teEtiBes. HoE%=<Fing. p<int <n? inF =<nA@<ctAring. HreDerC. @BoAr =iBBing. HottBing <n? c<nning. HiscAits pro?Acts. =e<t pro?Acts. sAg<r =<Fing. etc' It is proH<HBC t>e =ost Di?eBC Ase? cost <ccoAnting sCste= in t>e DorB?. Process costing is < @or= o@ oper<tions costing D>ic> is Ase? D>ere st<n?<r?iKe? >o=ogeneoAs goo?s <re pro?Ace?' T>is costing =et>o? is Ase? in in?Astries BiFe c>e=ic<Bs. teEtiBes. steeB. rAHHer. sAg<r. s>oes. petroB etc' Process costing is <Bso Ase? in t>e <sse=HBC tCpe o@ in?Astries <Bso' It is <ssA=e? in process costing t><t t>e <Ier<ge cost presents t>e cost per Anit' Cost o@ pro?Action ?Aring < p<rticAB<r perio? is ?iIi?e? HC t>e nA=Her o@ Anits pro?Ace? ?Aring t><t perio? to <rriIe <t t>e cost per Anit'
1. MEANING
5
PROCESS COSTING Process Costing is < =et>o? o@ costing' It is e=pBoCe? D>ere e<c> si=iB<r Anits o@ pro?Action inIoBIe? in ?i@@erent series o@ process @ro= conIersion o@ r<D =<teri<Bs into @inis>e? oAtpAt' T>As. 'Anit cost is ?eter=ine? on t>e H<sis o@ <ccA=AB<te? costs o@ e<c> oper<tion or <t e<c> st<ge o@ =<nA@<ctAring A pro?Act' C><rBes T' Horngren ?e@ines process costing <s L< =et>o? o@ costing ?e<Bs Dit> t>e =<ss pro?Action o@ t>e BiFe Anits t><t AsA<BBC p<ss t>e continAoAs @<s>ion t>roAg> < nA=Her o@ oper<tions c<BBe? process costing'L T>e <ppBic<tion o@ process costing D>ere in?Astries <?opting costing proce?Are @or continAoAs or =<ss pro?Action' TeEtiBes. c>e=ic<B DorFs. ce=ent in?Astries. @oo? processing in?Astries etc' <re t>e @eD eE<=pBes o@ in?Astries D>ere process costing is <ppBie?' Process costing is < =et>o? o@ costing An?er D>ic> <BB costs <re <ccA=AB<te? @or e<c> st<ge o@ pro?Action or process. <n? t>e cost per Anit o@ pro?Act is <scert<ine? <t e<c> st<ge o@ pro?Action HC ?iIi?ing t>e cost o@ e<c> process HC t>e nor=<B oAtpAt o@ t><t process'
DEFINITION:
CIMA L&23&2 ?e@ines process costing <s 1t><t @or= o@ oper<tion costing D>ic> <ppBies D>ere st<n?<r?iKe goo?s <re pro?Ace?2
PROCESS COSTING ABt>oAg>. ?et<iBs DiBB I<rC @ro= one HAsiness concern to <not>er. t>ere <re co==on @e<tAres in =ost process costing sCste=s t><t s>oAB? He t<Fen note o@' T4$"$ !%$: I' CBe<rBC ?e@ine? process cost centers DiBB nor=<BBC He set Ap @or e<c> oper<tion<B st<ge. D>ic> c<n He i?enti@ie?' EEpen?itAre @or e<c> cost centre is coBBecte? <n?. <t t>e en? o@ t>e <ccoAnting perio?. t>e cost o@ t>e co=pBete? Anits <re t>en tr<ns@erre? into < stocF <ccoAnt or to < @Art>er process cost centre' AccAr<te recor?s <re. t>ere@ore. reJAire? o@ Anits pro?Ace? <n? p<rt pro?Ace? Anits <n? t>e tot<B cost incArre? HC t>e cost centers' II' T>e cost Anit c>osen s>oAB? He reBeI<nt to t>e org<nis<tion' III' T>e cost o@ t>e oAtpAt o@ one process is t>e r<D =<teri<B inpAt cost o@ t>e @oBBoDing process' T>e cost incArre? in < process cost centre coAB? incBA?e. t>ere@ore. costs tr<ns@erre? @ro= < preIioAs process pBAs t>e r<D =<teri<Bs. L<HoAr <n? oIer>e<? costs reBeI<nt to t>e cost centre' I0' W<st<ge ?Ae to scr<p. c>e=ic<B re<ction or eI<por<tion is An<Ioi?<HBe' T>e oper<tion or =<nA@<ctAring s>oAB?. >oDeIer. He in sAc> < D<C t><t D<st<ge c<n He re?Ace? to t>e H<rest =ini=A=' 0' Eit>er t>e =<in pro?Act or HC%pro?Act o@ t>e pro?Action process =<C reJAire @Art>er processing He@ore re<c>ing < =<rFet<HBe st<te' 0I' ContinAoAs or =<ss pro?Action D>ere pro?Acts D>ic> p<sses t>roAg> ?istinct process or oper<tions' 0II' E<c> process is ?ee=e? <s < sep<r<te oper<tions or pro?Action centres' 0III' Pro?Acts pro?Ace? <re co=pBeteBC >o=ogenoAs <n? st<n?<r?iKe?' I-' OAtpAt <n? cost o@ one process <re tr<ns@erre? to t>e neEt process tiBB t>e @inis>e? pro?Act co=pBete?' -' Cost o@ r<D =<teri<Bs. B<HoAr <n? oIer>e<?s <re coBBecte? @or e<c> process' -I' T>e cost o@ < @inis>e? Anit is ?eter=ine? HC <ccA=AB<te? o@ <BB costs incArre? in <BB t>e process ?iIi?e? HC t>e nA=Her o@ Anits pro?Ace?'
PROCESS COSTING -II' T>e cost o@ nor=<B <n? <Hnor=<B Bosses AsA<BBC incArre? <t ?i@@erent st<ges o@ pro?Action is <??e? to @inis>e? goo?s' -III' T>e interconnecte? processes =<Fe t>e @in<B oAtpAt o@ HC%pro?Act or Goint pro?Acts possiHBe' -I0' T>e pro?Action is continAoAs' T>e pro?Act is >o=ogeneoAs. T>e process is st<n?<r?iKe?' OAtpAt o@ one process Heco=e r<D =<teri<B o@ <not>er process' T>e oAtpAt o@ t>e B<st process is tr<ns@erre? to @inis>e? stocF -0' Costs <re coBBecte? process%Dise. /ot> ?irect <n? in?irect costs <re <ccA=AB<te? in e<c> process' I@ t>ere is < stocF o@ se=i%@inis>e? goo?s. it is eEpresse? in ter=s o@ eJAiI<Bent Anits' T>e tot<B cost o@ e<c> process is ?iIi?e? HC t>e nor=<B oAtpAt o@ t><t process to @in? oAt cost per Anit o@ t><t process'
PROCESS COSTING
1#
PROCESS COSTING
11
PROCESS COSTING
1"
PROCESS COSTING
1$
PROCESS COSTING STEP 1:* Dr<D Ap < T <ccoAnt @or t>e process <ccoAnt' *T>ere =<C He =ore t><n one process. HAt st<rt Dit> t>e @irst one initi<BBC', FiBB in t>e in@or=<tion giIen in t>e JAestion'
PROCESS ACCOUNT P!%#8)<1!%" O:$2827 +IP M!#$%8!1" L!0&<% O;$%4$!3" A02&%(!1 7!82 U28#" 555 R". P!%#8)<1!%" 555 N&%(!1 L&"" 555 T%!2"'$% #& :%&)$"" 2 &% 555 '828"4$3 7&&3" 555 A02&%(!1 1&"" 555 C1&"827 +IP 555 U28#" 555 555 555 555 555 R". 555 555 555 555 555
555 555
STEP 2:* C<BcAB<te t>e nor=<B Boss in Anits <n? enter on to t>e Process <ccoAnt' *T>e I<BAe DiBB He Kero AnBess t>ere is < scr<p I<BAe + see Step &,' STEP .:* C<BcAB<te t>e <Hnor=<B Boss or g<in *t>ere DonPt He Hot>,' Enter t>e @igAre on to t>e Process <ccoAnt <n? open < T <ccoAnt @or t>e <Hnor=<B Boss or g<in' STEP /:* C<BcAB<te t>e scr<p I<BAe *i@ <nC, <n? enter it on to t>e Process <ccoAnt' Open < T <ccoAnt @or t>e scr<p <n? ?eHit it Dit> t>e scr<p I<BAe' STEP 6 (%C<BcAB<te t>e eJAiI<Bent Anits <n? cost per Anit' STEP =:* Repe<t t>e <HoIe i@ t>ere is < secon? process'
N&#$: ABt>oAg> t>is pro@or=< incBA?es Hot> Bosses <n? WIP. t>e P<per F"3F!A sCBB<HAs speci@ic<BBC eEcBA?es sitA<tions D>ere Hot> occAr in t>e s<=e process' T>ere@ore. ?onPt eEpect to ><Ie to co=pBete <BB o@ t>e steps in t>e JAestions'
1&
PROCESS COSTING
COST OF GOOD UNIT : T&#!1 )&"# 82)%$!"$3 B S!1$ V!1<$ &' S)%!: I2:<# B N&%(!1 L&"" <28#"
2. ABNORMAL LOSS: AnC Boss c<Ase? HC AneEpecte? <Hnor=<B con?itions sAc> <s pB<nt Hre<F?oDn. sAHst<n?<r? =<teri<B. c<reBessness. <cci?ent etc' sAc> Bosses <re in eEcess o@ pre%?eter=ine? nor=<B Bosses' T>is Boss is H<sic<BBC <Ioi?<HBe' T>As <Hnor=<B Bosses <rriIe D>en <ctA<B Bosses <re =ore t><n eEpecte? Bosses' T>e Anits o@ <Hnor=<B Bosses in c<BcAB<te? <s An?er (
T&#!1 )&"# 82)%$!"$ B S)%!: ;!1<$ &' 2&%(!1 1&"" D U28#" &' !02&%(!1 1&"" I2:<# <28#" B N&%(!1 1&"" <28#"
19
PROCESS COSTING AHnor=<B Process Boss s>oAB? not He <BBoDe? to <@@ect t>e cost o@ pro?Action <s it is c<Ase? HC <Hnor=<B *or, AneEpecte? con?itions' SAc> Boss representing t>e cost o@ =<teri<Bs. L<HoAr <n? oIer>e<? c><rges c<BBe? <Hnor=<B Boss <ccoAnt' T>e s<Bes I<BAe o@ t>e <Hnor=<B Boss is cre?ite? to AHnor=<B Loss AccoAnt <n? t>e H<B<nce is Dritten o@@ to costing P ; L A3c'
CR.
RS. 555 555
.. ABNORMAL GAINS: T>e =<rgin <BBoDe? @or nor=<B Boss is <n esti=<te *i'e' on t>e H<sis o@ eEpect<tion in process in?Astries in nor=<B con?itions, <n? sBig>t ?i@@erences <re HoAn? to occAr HetDeen t>e <ctA<B oAtpAt o@ < process <n? t><t <nticip<tes' T>is ?i@@erence =<C He positiIe or neg<tiIe' I@ it is neg<tiIe it is c<BBe? <? <Hnor=<B Loss <n? i@ it is positiIe it is AHnor=<B g<in i'e' i@ t>e <ctA<B Boss is Bess t><n t>e nor=<B Boss t>en it is c<BBe? <s <Hnor=<B g<in' T>e I<BAe o@ t>e <Hnor=<B g<in c<BcAB<te? in t>e si=iB<r =<nner o@ <Hnor=<B Boss' T>e @or=AB< Ase? @or <Hnor=<B g<in is( A02&%(!1 G!82 :* T&#!1 C&"# 82)<%%$3 B S)%!: V!1<$ &' N&%(!1 L&"" D A02&%(!1 G!82 U28#$" I2:<# <28#" B N&%(!1 L&"" U28#" T>e s<Bes I<BAes o@ <Hnor=<B g<in Anits <re tr<ns@erre? to Nor=<B Loss AccoAnt since it <rriIe oAt o@ t>e s<Iings o@ Nor=<B Loss' T>e ?i@@erence is tr<ns@erre? to Costing P ; L A3c' <s < Re<B G<in'
PROCESS COSTING
DR.
PARTICULARS TO NORMAL LOSS A@C. TO COSTING P - L A@C. UNITS 555 555 555 RS. PARTICULARS UNITS 555
CR.
RS. 555
555
555
ILLUSTRATION:
Pro?Act A is oHt<ine? <@ter it p<sses t>roAg> t>ree ?istinct processes' YoA <re reJAire? to prep<re Process <ccoAnts @ro= t>e @oBBoDing in@or=<tion( PARTICULARS 5 RS. MATERIAL DIRECT +AGES PRODUCTION OVERHEADS 6,200 /,000 Y RS. .,F=0 =,000 PROCESS E RS. 6,F2/ G,000 TOTAL RS. 16,0G/ 1G,000 1G,000
1.### Units Q Rs' 5 Per Unit Dere intro?Ace? in Process -' Pro?Action oIer>e<? to He ?istriHAte? <s 1##N on Direct W<ges'
VALUE OF 16
PROCESS COSTING RS. PROCESS 5 PROCESS Y PROCESS E SOLUTION : F60 G/0 A60 H 6H 10H 16H SCRAP PER UNIT / G 10
PROCESS 5 A@C.
DR. PARTICULAR !ATERIAL INTRODUCED Q RS' 5 PER UNIT !ATERIAL DIRECT WAGES PRODUCTION O0ERHEADS 1.### UNITS 1.### RS. 5.### TRANSFERRED TO PROCESS Y Q RS' "# 9."## PER UNIT &.### &.### 18."## 89# 18.### PARTICULAR NOR!AL LOSS UNITS 9# CR. RS. "##
1.###
18."##
PROCESS Y A@C.
DR. PARTICULAR TRANSFERRED FRO! PROCESS !ATERIAL DIRECT WAGES PRODUCTION O0ERHEADS 89# DR. PARTICULAR UNITS RS. PARTICULAR UNITS UNITS 89# RS. 18.### A/NOR!AL LOSS $.85# TRANSFERRED TO 5.### PROCESS R Q RS' &# PER UNIT 5.### $&.85# 7&# 18.### 19 5## PARTICULAR NOR!AL LOSS UNITS 89 CR. RS. 65#
89#
PROCESS E A@C.
17
PROCESS COSTING TRANSFERRED FRO! PROCESS Y !ATERIAL DIRECT WAGES PRODUCTION O0ERHEADS A/NOR!AL GAIN Q RS' 65 PER UNIT $5 765 NOR!AL LOSS 7&# $$.5## FINISHED GOODS 9.8"& *Q RS' 65, 7.### 7.### ".6$5 97."5# 69# 96.### 1"5 1."5#
765
97."5#
To Process Y
5## /C C<s> *s<Be o@ Scr<p o@ AHnor=<B Loss Anits, /C Costing Pro@it An? Loss A3C' 5## ABNORMAL GAIN ACCOUNT
DR.
PARTICULAR RS. PARTICULAR
CR.
RS.
".6$5
".6$5
18
PROCESS COSTING
Scr<p I<BAe O 89 - 7 O Rs' 65#' */, AHnor=<B Boss Nor=<B pro?Action 89#%89 ActA<B pro?Action AHnor=<B Boss Units 799 7&# 19
*C, Cost o@ Nor=<B Pro?Action' $&.85# % 65# O $&."##' Cost o@ Nor=<B Pro?Action per Anit Cost o@ AHnor=<B Loss(% $&."## O Rs' &# per Anits 7&9
&# - 19 O 5##
AHnor=<B Loss ><s Heen cre?ite? Dit> Rs'1"# Heing t>e <=oAnt re<BiKe? @ro= t>e s<Be o@ scr<p <n? AHnor=<B Loss'
PROCESS E:
*A, Nor=<B Process' 19N o@ 7&# Anits O 7&# - 19 O 1"5 Units 1## S<Be o@ scr<p O 1"5 - Rs' 1# O Rs' 1."5# */, AHnor=<B g<in ActA<B pro?Action Esti=<te? pro?Action Units 69# 61& $5
T>e Cost o@ AHnor=<B G<in ><s Heen c<BcAB<te? in t>e AsA<B D<C AHnor=<B G<in A3C ><s Heen ?eHite? Dit> Rs'$5# Heing Bess <=oAnt. recoIere? on t>e s<Be o@ Boss o@ Anits D>ic> Dere 8# Anits inste<? o@ nor=<B 1"5 Anits' i'e'. $5 E 1# O Rs' $5#'
G. PRODUCT FLO+
As < pro?Act p<sses @ro= one cost centre to <not>er. per Anit cost <n? tot<B cost s>oAB? He ?eter=ine?' As s>oDn in @igAre ". t>e tot<B cost incArre? <t t>e BoDer BeIeB o@ processing is to He
"#
PROCESS COSTING seen <s t>e tr<ns@erre? in cost o@ t>e >ig>er BeIeB to D>ic> cost o@ <??ition<B =<teri<B <n? conIersion cost =Ast He <??e? He@ore <rriIing <t its tot<B costs' T><t tot<B cost =<C He < tr<ns@erre? in cost. i@ t>e pro?Action process is not co=pBete. or t>e @in<B tot<B cost o@ pro?Action. i@ @inis>e? pro?Acts ><Ie Heen <rriIe? <t' Pro?Act @BoDs ><Ie to He <cco=p<nie? HC t>eir tot<B costs <t e<c> BeIeB o@ processing'
ILLUSTRATION :% A pro?Act p<sses t>roAg> t>ree ?istinct processes *A. /. <n? C, to co=pBetion' DAring t>e perio? 19t> !<C. "##8. 1### Biters Dere pro?Ace?' T>e @oBBoDing in@or=<tion is oHt<ine?(
In?irect oIer>e<? eEpenses @or t>e perio? Dere N$#.### <pportione? to t>e processes on t>e H<sis o@ D<ges' T>ere D<s no DorF%in%process <t t>e Heginning or en? o@ t>e perio?' ReJAire?( C<BcAB<te t>e cost o@ oAtpAt to He tr<ns@erre? to @inis>e? goo?s stocF <n? t>e cost per Biter'
"1
PROCESS COSTING !ATERIALS LA/OUR DIR' E-PENSES INDIRECT E-P' &# "# 9 1# 69 &#.### TRANSFERRED "#.### TO PROCESS / 9.### 1#.### 69.### 69 69.### 69 69.###
PROCESS B A@C.
PARTICULAR PROCESS A !ATERIALS LA/OUR DIR' E-PENSES INDIRECT E-P' COST@LITER TOTAL PARTICULAR COST@LITER TOTAL 69 69.### TRANSFERRED 19 "9 $ 1"'9 1$#'9# 19.### TO PROCESS C "9.### $.### 1".9## 1.$#.9## 1$#'9# 1.$#.9## 1$#'9# 1.$#.9##
PROCESS C A@C.
PARTICULAR PROCESS / !ATERIALS LA/OUR DIR' E-PENSES INDIRECT E-P' COST@LITER TOTAL PARTICULAR 1$#'9# 1.$#.9## OUTPUT TO 9 19 $ 6'9# 151 9.### FINISHED 19.### GOODS STOC $.### 6.9## 1.51.### 151 1.51.### 151 1.51.### COST@LITER TOTAL
N&#$:
*A, In?irect eEpenses Dere <pportione? <s @oBBoDs( Process A O "#.### E $#.### O 5#.### Process / O "9.### E $#.### O 5#.### 1#.### 1".9##
""
PROCESS COSTING
6.9## $#.###'
*/, T>e cost per Biter o@ t>e pro?Act is N151 <n?. so. t>e seBBing price =Ast He >ig>er t><n t><t <=oAnt i@ t>e HAsiness is to =<Fe <nC pro@it
*C, In?irect eEpenses incBA?e <BB eEpenses t><t c<nnot He ?irectBC tr<ce? to t>e pro?ActiIe process <n?. so. t>eC incBA?e gener<B <?=inistr<tiIe. seBBing <n? ?istriHAtiIe cost'
F. E?UIVALENT UNITS
At t>e en? o@ < giIen perio?. in t>e coArse o@ t>e pro?Action process. it is IirtA<BBC cert<in t><t so=e ite=s DiBB onBC He p<rtBC co=pBete? *DorFing% process,' So=e o@ t>e costs o@ t>e perio?. t>ere@ore. <re <ttriHAt<HBe to t>ese p<rtBC co=pBete? Anits <s DeBB <s to t>ose t><t <re @ABBC co=pBete?' In or?er to spre<? t>e costs eJAit<HBC oIer p<rt%@inis>e? <n? @ABBC co=pBete? Anits. t>e concept o@ eJAiI<Bent Anits is Ase?'
"$
PROCESS COSTING For t>e c<BcAB<tion o@ costs. t>e nA=Her o@ eJAiI<Bent Anits is t>e nA=Her o@ eJAiI<Bent @ABBC co=pBete? Anits D>ic> t>e p<rtBC co=pBete? Anits represent' For eE<=pBe. in < giIen perio? pro?Action D<s $.### co=pBete? Anits. <n? 1.5## p<rtBC co=pBete? Dere ?ee=e? to He 5#N co=pBete. Tot<B eJAiI<Bent pro?Action O co=pBete? Anits pBAs eJAiI<Bent Anits pro?Ace? in DorF in progress' O $.### S *5#N o@ 1.5##, O $.### S 85# O $.85# Anits T>e tot<B costs @or t>e perio? DoAB? He spre<? oIer t>e tot<B eJAiI<Bent pro?Action <s @oBBoDs( Cost per unit = Total Cost Total equivalent production (units)
In c<BcAB<ting eJAiI<Bent Anits. it is =ore ?esir<HBe to consi?er t>e percent<ge co=pBetion o@ e<c> o@ t>e cost eBe=ents( =<teri<B. B<HoAr <n? oIer>e<?' Here. e<c> cost eBe=ent =Ast He tre<te? sep<r<teBC <n? t>en t>e costs per Anit o@ e<c> eBe=ent <re <??e? to giIe t>e cost o@ < co=pBete Anit'
ILLUSTRATION (%
T>e pro?Action <n? cost ?<t< o@ EBse=co S>oe=<Fers @or t>e =ont> o@ J<nA<rC. "##9 Dere <s @oBBoDs( !<teri<Bs L<HoAr OIer>e<? Tot<B cost &."".&## $.89.5## "."9.### 1#.&$.### "&
PROCESS COSTING
Pro?Action D<s 7.### @ABBC co=pBete? Anits <n? ".### p<rtBC co=pBete?' T>e percent<ge co=pBetion o@ t>e ".### Anits DorF%in process D<s( !<teri<B L<HoAr OIer>e<? 7#N 5#N 9#N
R$><8%$3:
Fin? t>e I<BAe o@ co=pBete? pro?Action <n? t>e I<BAe o@ DorF%in process *WIP,'
SUGGESTED SOLUTION :* C&"# $1$($2#" !<teri<B L<HoAr OIer>e<? E><8;. <28#" 82 F<11I )&(:1I T&#!1 T&#!1 )&"# +IP <28#" :%&3<)#8&2 "### - 7#N 7.### 8.5## &."".&## O 1.5## "### - 5#N 7.### 8."## $.89.5## O 1."## ".### - 9#N O 7.### 8.### "."9.### 1.### 1#.&$.###
0<BAe o@ co=pBete? Anits O 11" E 7.### O 7.85.#### 0<BAe o@ WIP O TC + 0<BAe o@ co=pBete? Anits O 1.#&$.### + 7.85.### O 1.&6.###
To c>ecF t>e I<BAe o@ WIP. t>e cost per e<c> cost eBe=ent is to He =ABtipBie? HC t>e nA=Her o@ eJAiI<Bent Anits o@ pro?Action in WIP reB<te? to e<c> cost eBe=ent'
"9
PROCESS COSTING
V!1<$
PROCESS ACCOUNT
E1$($2#" !<teri<B L<HoAr OIer>e<? U28#" 1#.### T&#!1 )&"# E1$($2#" &."".&## Goo?s tr<ns@erre? $.89.5## to neEt st<ge "."9.### WIP c3? 1#.&$.### 1.&6.### U28#" 7.### ".### 1#.### T&#!1 )&"# 7.85.### 1.&6.### 1#.&$.###
WIP H3?
1#.### ".###
"5
PROCESS COSTING p<rt o@ t>e cost o@ goo? pro?Action' T>is is Hec<Ase in t>e pro?Action o@ goo? Anits nor=<B spoiB<ge occAr' Since t>e spoiB<ge <rises An?er e@@icient oper<ting con?itions. it c<n He esti=<te? Dit> so=e ?egree o@ <ccAr<cC' AHnor=<B process spoiB<ges <re t>ose <HoIe t>e BeIeB ?ee=e? nor=<B in t>e pro?Action process' AHnor=<B spoiB<ge c<nnot He pre?icte? <n? =<C He ?Ae to speci<B circA=st<nces sAc> <s pB<nt Hre<F?oDn. ine@@icient DorFing. or AneEpecte? ?e@ects in =<teri<Bs' AHnor=<B spoiB<ge is t>e ?i@@erence HetDeen <ctA<B spoiB<ge in t>e perio? <n? t>e nor=<B *esti=<te?, spoiB<ge' AHnor=<B g<in is D>ere t>e <ctA<B spoiB<ge is Bess t><n t>e nor=<B spoiB<ge' T>e cost o@ <Hnor=<B spoiB<ge is to He c><rge? to t>e pro@it <n? Boss <ccoAnt AnBiFe t>e cost o@ nor=<B spoiB<ge D>ic> is to He p<rt o@ t>e goo? pro?Acts tot<B cost' Process <ccoAnt is to He cre?ite? <s <Hnor=<B Boss <ccoAnt is ?eHite?' T>e <Hnor=<B Boss <ccoAnt is t>en to He cBose? to t>e pro@it <n? Boss <ccoAnt' AHnor=<B g<in re<BiKe? is to He cre?ite? to t>e <Hnor=<B g<in <ccoAnt <s process <ccoAnt is ?eHite?' T>e <Hnor=<B g<in <ccoAnt is to He cBose? to t>e cre?it o@ pro@it <n? Boss <ccoAnt'
11.TRANSFERRED IN :*
It is i=port<nt to re=in? t>e re<?er t><t t>e oAtpAt o@ one process BeIeB @or=s t>e inpAt =<teri<B to t>e neEt process BeIeB' T>e @ABB cost o@ t>e co=pBete? Anits tr<ns@erre? @or=s t>e inpAt =<teri<B cost o@ t>e sAHseJAent process <n?. HC its n<tAre. =Ast He 1##N co=pBete' !<teri<B intro?Ace? is <n eEtr< =<teri<B reJAire? HC t>e process <n? s>oAB? <BD<Cs He s>oDn sep<r<teBC' I@ t>ere <re p<rtBC co=pBete? Anits <t t>e en? o@ one perio?. t>ere DiBB He opening WIP <t t>e Heginning o@ t>e neEt perio?' T>e I<BAes o@ t>e cost eBe=ents o@ t>e HroAg>t @orD<r? WIP <re nor=<BBC FnoDn <n? t>eC <re to He <??e? to t>e costs incArre? ?Aring t>e perio?'
ILLUSTRATION :*
"6
PROCESS COSTING A process ><s < nor=<B spoiB<ge o@ 9N D>ic> ><s < res<Be I<BAe o@ N19# per Fg' Fin? t>e cost per Fg o@ goo? pro?Action. i@ =<teri<B cost is "6.### <n? conIersion cost is 1$.### o@ pro?Acing 1## Fg' Fin? t>e <Hnor=<B spoiB<ge <n? its I<BAe i@ goo? pro?Action D<s 81 Fg <n? cost per Fg o@ goo? pro?Action is t>e s<=e *t><t is &1$'15 per Fg,' SUGGESTED SOLUTION :* AHnor=<B spoiB<ge O 8 Fg % 9 Fg O & Fg
PROCESS ACCOUNT
Particulars Material conversion (kg.) 100 Value Particulars Kg. (1 ) * 100 Value " !)(+ )0 1!,)2 *0!000
100
*0!000
N&#$AHnor=<B SpoiB<ge Cost W<s Deter=ine? As FoBBoDs( Tot<B Cost % *Cost O@ Goo? Pro?' S Cost O@ Nor=<B SpoiB<ge, &#.### % *81 - &1$'15 S 9 - 19#, &#.### % *$6.987 S 69#, &#.### % $7.$&7 O 1.59"
"7
PROCESS COSTING
F8%"#,
T>e p>Csic<B @BoD o@ t>e Anits o@ pro?Action =Ast He c<BcAB<te? ><Iing reg<r?s to t>e tot<B nA=Her o@ Anits to He <ccoAnte? @or. reg<r?Bess o@ t>e ?egree o@ co=pBetion'
S$)&231I.
T>e eJAiI<Bent Anits inIoBIe? in t>e p>Csic<B @BoD <re to He c<BcAB<te?' In t>is respect. it is o@ten necess<rC to ?iIi?e t>e @BoD into its =<teri<B cost eBe=ent <n? conIersion cost eBe=ent <s t>e ?egree o@ Co=pBetion =<C I<rC HetDeen t>e='
T48%31I,
H<Iing <Bre<?C est<HBis>e? t>e p>Csic<B Anits to He <ccoAnte? @or HC =e<ns o@ t>e @irst tDo st<ges. t>e tot<B eJAiI<Bent Anits <n? t>e cArrent eJAiI<Bent Anits inIoBIe? <re to He c<BcAB<te?' T>ese <re to He <ccoAnte? @or in respect o@ t>e cost eBe=ents *tr<ns@erre? in cost. =<teri<B cost <n? conIersion cost,'
F&<%#41I,
"8
PROCESS COSTING T>e Anit costs <re to He c<BcAB<te?. p<Cing <ttention to t>e stocF I<BA<tion =et>o? <ssA=e? *FIFO. WAP. LIFO. etc','
ILLUSTRATION :*
Wit>in t>e pro?Action ?ep<rt=ent o@ S<I<nn<> SAg<r Co=p<nC Li=ite?. t>ere <re tDo processes D>ic> pro?Ace t>e @inis>e? pro?Act' R<D =<teri<Bs <re intro?Ace? initi<BBC <t t>e co==ence=ent o@ Process 1 <n? @Art>er r<D =<teri<Bs <re <??e? <t t>e en? o@ process "' ConIersion costs <ccrAe Ani@or=BC t>roAg>oAt Hot> processes' T>e @BoD o@ t>e pro?Act is continAoAs. t>e co=pBete? oAtpAt o@ process 1 p<sses i==e?i<teBC into process " <n? t>e co=pBete? oAtpAt o@ process " p<sses i==e?i<teBC into t>e @inis>e? goo?s D<re>oAse' T>e @oBBoDing in@or=<tion is <I<iB<HBe @or t>e =ont> o@ JAne-
P%&)$"" 1
Particulars Opening WIP !<teri<Bs ConIersion *"39 co=pBete, Co=pBetion o@ Anits in JAne Units co==ence? in JAne 2nit . 3s. unit ")!000 2!10!000 )2!)00 unit 1!,+!000 unit 1!*0!000 $#
PROCESS COSTING CBosing WIP *T co=pBete <s to conIersion, !<teri<B intro?Ace? in JAne ConIersion cost <??e? in JAne unit !000 ! 0!000 ,!"0!000
P%&)$"" 2
P!%#8)<1!%" Opening WIP !<teri<Bs @ro= process 1 ConIersion *"3$ co=pBete, Co=pBetion o@ Anits in JAne Units co==ence? in JAne CBosing WIP *"37 co=pBete <s to conIersion, !<teri<B intro?Ace? in JAne ConIersion cost <??e? in JAne unit ),!000 *!,2!000 22!0!)!000 Unit / Rs. unit *2!000 "!*"!000 "!(2!)00 unit 1!)*!000
R$><8%$3:
GiIe t>e cost o@ pro?Action report o@ T>eres< ABice SAg<r Co=p<nC Li=ite? @or t>e =ont> o@ JAne. Asing e<c> o@ t>e WAP <n? FIFO =et>o?s. <n? s>oDing cBe<rBC t>e cost o@ @inis>e? pro?Action <n? WIP <t en? o@ t>e perio?'
SUGGESTED SOLUTION :*
T<#&%8!1 N&#$: T>e Anits to He <ccoAnte? @or. tot<B eJAiI<Bent Anits <n? cArrent eJAiI<Bent Anits <re to He ?eter=ine? He@ore going to t>e cost st<te=ent. Asing e<c> o@ t>e tDo stocF I<BA<tion =et>o?s' T>e >e<?ing o@ t>e report s>oAB? He DeBB eEpresse?' Cost o@ Pro?Action Report o@ T>eres< ABice SAg<r Co=p<nC Li=ite? @or t>e =ont> o@ JAne. Asing Weig>te? AIer<ge Price *WAP, !et>o?'
$1
PROCESS COSTING
P%&)$"" 1
P>Csic<B @BoD o@ Anits o@ =<teri<B (% WIP *Heginning, !<teri<B intro?Ace? Tot<B Anits to He <ccoAnte? @or P<rticAB<rs Units AccoAnte? For (% Units Co=pBete? ; Tr<ns@erre? OAt WIP *En?ing, Tot<B Units AccoAnte? For Tot<B EJAiI<Bent Units *TEU, Less (% WIP */eginning, CArrent EJAiI<Bent Units $9.### 1.&#.### 1.69.### EJAiI<Bent Units !<teri<B 1.57.### 6.### 1.69.### 1.57.### 6.###*1##N, 1.69.### $9.### 1.&#.### ConIersion 1.57.### $.9##*9#N, 1.61.9## 1&.### 1.96.9##
N&#$ :*
*<, ConIersion WIP en?ing O 13" E 6.### O $.9## Anits *H, ConIersion WIP Heginning O "39 E $9.### O 1&.### Anits
COST STATEMENT
Cost EBe=ents Cost o@ WIP *Heginning, ".1#.### 9".9## ".5".9## CArrent Cost 6.6#.### 5.$#.### 1&.##.### Tot<B Cost T' E' U' Cost 3Unit 9'5# $'87 8'97
!<teri<B ConIersion
1.69.### 1.61.9##
$"
PROCESS COSTING !<teri<B ConIersion O $8."## O 1$.8$# 9$.1$# Anot>er D<C *D>ic> is e<sier, o@ ?eter=ining t>e cost o@ WIP en?ing is to @in? t>e ?i@@erence HetDeen tot<B cost <n? cost o@ t>e co=pBete? Anits' Cost o@ WIP *en?, O TC + Cost o@ co=pBete? Anits O 1.55".9## % 1.5#8.&&# O 9$.#5# 6.### E 1 E 9'5 6.### E T E $'87
N&#$:
T>e ?i@@erence o@ N6# is ?Ae to t>e <pproEi=<tion =<?e to tDo ?eci=<B pB<ces' Cost o@ Pro?Action Report Using First%In%First%OAt *FIFO, !et>o?' P%&)$"" 1 P<rticAB<rs !<teri<B ConIersion CArrent cost 6.6#.### 5.$#.### C' E' Units 1.&#.### 1.96.9## Units Cost 9'9# &'##
C&"# &' C1&"827 +IP !<teri<B 6.### E 1 E 9'9 O ConIersion 6.### E T E &'# O Units co=pBete? ; tr<ns@erre? oAt Cost o@ t>e co=pBete? Anit $7.9## 1&.### 9".9## O 157.### Anits O TC + cost o@ cBosing WIP O 1.55".9## + 9".9## O 1.51#.###'
$$
PROCESS COSTING P>Csic<B @BoD o@ Anits o@ =<teri<B WIP *Heginning, Units tr<ns@erre? in Units to He <ccoAnte? @or P<rticAB<rs Units AccoAnte? For (% Units Co=pBete? in t>e perio? WIP *En?ing, Tot<B Units AccoAnte? For Tot<B EJAiI<Bent Units *TEU, Less (% WIP */eginning, CArrent EJAiI<Bent Units 1.9&.### 95.### ".1#.### ".1#.### &".### 1.57.### 1.9&.### ### 1.9&.### 1.69.### "7.### 1.&6.### 1.9&.### 95.### 1.9&.### ### 1.9&.### "1.### &".### 1.57.### ".1#.### EJAiI<Bent Units Tr<ns@erre? in' !<teri<B conIersion
COST STATEMENT
Cost EBe=ents Tr<ns@erre? In !<teri<B ConIersion Cost o@ WIP *Heginning, $.&$.### # $.8".### 6.$9.### CArrent Cost 15.#8.&&# &.5".### "".#9.### &".65.&&# Tot<B Cost 18.9".&&# &.5".### "9.86.### 9#.11.&&# T' E' U' ".1#.### 1.9&.### 1.69.### TC3UNITS Cost 3Unit 8'"86$ $'#### 1&'7&## "6'1$6$
Cost o@ co=pBete Anits O 19&.### E "6'1$6$ O &.168.1&&'"# C&"# &' +IP (E23827 Tr<ns@erre? in !<teri<B ConIersion A2$% +!I Cost o@ En?ing WIP O TC + Cost o@ co=pBete? Anits $& 95.### E 1 E 8'"86$ 95.### E # E $ 95.### E $37 E 1&'7& O O O 9"#.5&7'7# #'## $11.5&#'## 7$"."77'7#
PROCESS COSTING O 9.#11.&&# + &.168.1&&'"# O 7$"."89'7# Note t><t t>e ?i@@erence o@ 6 is ?Ae to t>e <pproEi=<tion =<?e to @oAr ?eci=<B pB<ces'
$9
PROCESS COSTING T>e process costing principBe ?iscAsse? in t>is c><pter is <HoAt ?eter=ining t>e cost o@ processing so=e inpAts t><t CieB? t>e s<=e tCpe o@ pro?Act' At t>e en? o@ t>e processing <ctiIities. onBC one tCpe o@ pro?Act DoAB? resABt @ro= t>e processe? r<D =<teri<B' HoDeIer. it is not <BD<Cs t><t De ><Ie onBC one tCpe o@ pro?Act @ro= < processing oper<tion' It is possiHBe @or < singBe r<D =<teri<B to CieB? tDo or =ore pro?Acts si=ABt<neoAsBC D>en processe?' SAc> pro?Acts <re FnoDn <s Goint pro?Acts' For eE<=pBe. D>en crA?e oiB *< singBe r<D =<teri<B, is processe? or re@ine?. petroB. Ferosine. g<s. etc. coAB? He oHt<ine? @ro= it' T>e cost o@ processing < pro?Action inpAt *r<D =<teri<B, t><t DoAB? <=oAnt to Goint pro?Acts is FnoDn <s Goint cost' T>e Goint cost is to He restricte? to t>e spBit%o@@ point *point <@ter D>ic> e<c> Goint pro?Act DoAB? He incArring sep<r<te processing cost,' Joint cost is not to He tr<ce? to <nC p<rticAB<r pro?Act HAt r<t>er to <BB t>e Goint pro?Acts <s < groAp' T>ere <re =<nC D<Cs o@ <pportioning Goint cost to Goint pro?Acts @or @in<nci<B <ccoAnting pArposes' T>ese DoAB? He ?iscAsse? in t>is c><pter' In pr<ctice. it is nor=<B to i?enti@C one pro?Act oAt o@ t>e Goint pro?Acts <s t>e =<in or princip<B pro?Act <n? t>e rest to He tre<te? <s Goint pro?Acts or <s HC%pro?Acts' In t>e eE<=pBe <HoIe. it is cBe<r t><t petroB is t>e =<in pro?Act to He i?enti@ie? <s crA?e oiB is processe?' P<irs o@ s>oes coAB? He =<in pro?Acts <s Be<t>er is processe?. D>iBe H<gs. D<BBets. etc. coAB? He Goint or HC%pro?Acts' One D<C o@ ?i@@erenti<ting HetDeen HC%pro?Act <n? Goint pro?Act is to consi?er t>eir cost o@ pro?Action or s<Bes I<BAe' A pro?Act t><t cost HetDeen 1#N to 19N o@ t>e =<in pro?Act cost s>oAB? He tre<te? <s < HCpro?Act' AnC pro?Act t><t costs HetDeen 19N to &#N o@ t>e =<in pro?Act cost is < Goint pro?Act' AnC pro?Act t><t costs <HoIe &#N o@ t>e i?enti@ie? =<in pro?Act cost s>oAB? <Bso He tre<te? <s < =<in pro?Act' As < resABt o@ c><nges in price. t>ere@ore. < HC% pro?Act c<n Heco=e < Goint%pro?Act or eIen < =<in pro?Act <n? Iice Iers<'
$5
PROCESS COSTING
$6
PROCESS COSTING
$7
PROCESS COSTING SALES VALUE (AT THE POINT OF SEPARATION Un?er t>is =et>o?. t>e Goint cost is s><re? <=ong t>e Goint pro?Acts on t>e H<sis o@ t>eir s<Bes I<BAe He@ore @Art>er processing' At t>e spBit o@@ point. =<rFet I<BAe c<n He esti=<te? per Anit o@ e<c> o@ t>e Goint pro?Acts' T>e r<tios o@ t>e s<Bes I<BAe o@ t>e Goint pro?Acts <re to He Ase? <s H<sis o@ <pportioning t>e Goint cost' T>e proHBe=s Dit> t>is =et>o? <re tDo%@oB?( One. < pro?Act =<C ><Ie Kero I<BAe <t t>e point o@ sep<r<tion HAt signi@ic<nt I<BAe Dit> BittBe processing cost <@ter t>e spBit%o@@ point' Secon?BC. < pro?Act =<C ><Ie >ig> seBBing price <t t>e spBit%o@@ point <n? >ence >ig> s<Bes I<BAe HAt =<C inIoBIe B<rge seBBing <n? ?istriHAtion cost *<?Iert. c<rri<ge. etc, so t><t its I<BAe is =Ac> Bess t><n its seBBing cost' ILLUSTRATION JAssA=ing t><t An<?<riC< Co=p<nC Lt? ><s esti=<te? t>e @oBBoDing seBBing prices @or its t>ree pro?Acts <t t>e point o@ sep<r<tion( O S T O O &##3Anit &Anit $Anit
Use t>e S<Bes 0<BAe =et>o? to <pportion t>e Goint cost <n? ?eter=ine t>e per Anit cost o@ e<c> o@ t>e t>ree pro?Acts' SUGGESTED SOLUTION :* (A PRODUCT UNIT SP@UNITS K S T 6,000 .,000 2,000 /00 //0 ./0
(B Unit cost H<se? on t>e s><re o@ Goint cost( O 9.##.### O 1##3Unit' 9.### S O $.$#.### O 11#3Unit' $.###
$8
PROCESS COSTING AssA=ing t><t t>e s<Bes I<BAes in iBBAstr<tion <re =<rFet prices <@ter @Art>er processing <n? t><t sep<r<te processing <n? =<rFeting costs <re <s @oBBoDs( O ".##.### S O $.##.### T O 1.5#.### Deter=ine t>e s><re o@ t>e Goint cost to t>e t>ree *$, pro?Acts' S>oD <Bso t>e per Anit cost o@ e<c> o@ t>e t>ree pro?Acts' SUGGESTED SOLUTION:* (1 PRODUCT UNIT SP@UNITS SALES VALUE SPC VALUE K S T 6,000 .,000 2,000 /00 //0 ./0 20,00,000 1.,20,000 =,G0,000 /0,00,000 N&#$: *A, Net Re<BiK<HBe 0<BAe *NR0, O S<Bes 0<BAe Less sep<r<te processing costs *SPC,' */, T>e tot<B o@ t>e NR0 o@ <BB t>e Goint pro?Acts is oHt<ine? <n? t>e Goint cost is s><re? in proportion to t>e NR0 o@ e<c> pro?Act' *C, T>is =et>o? is t>e VHest <s it consi?ers t>e JA<ntitC *Anits, pro?Ace? o@ <BB t>e Goint pro?Acts. t>eir s<Bes I<BAes <n? t>eir @Art>er processing costs' *", Unit cost H<se? on t>e s><re o@ Goint cost( O 9$7.8"" O 1#73Anit 9.### S O $#9.$78 O 1#"3Anit $.### T O 199.578 O 673Anit ".### 2,00,000 .,00,000 1,=0,000 1G,00,000 10,20,000 6,20,000 ..,/0,000 6,00,000 .,.0,000 1,A0,000 10,00,000 NRV SHARE OF JC
&#
PROCESS COSTING Tot<B cost o@ < Goint pro?Act is giIen HC its s><re o@ Goint cost pBAs its @Art>er processing <n? =<rFeting cost' To <rriIe <t its tot<B cost per Anit. t>e tot<B cost is ?iIi?e? HC t>e Anits pro?Ace?' Using iBBAstr<tion 6%11. tot<B cost per Anit coAB? He ?eter=ine? @or e<c> o@ t>e t>ree pro?Acts <s @oBBoDs( O SO TO 9$7.8"" S "##.### 9.### $#9.$78 S $##.### $.### 199.578 S 15#.### ".### O O O 6$7.8"" 9.### 5#9.$78 $.### $19.578 ".### O O O 1&6'67 "#1'7# 196'7&
t>e I<BAe o@ cBosing stocF @or re@Bection in t>e H<B<nce s>eet coAB? He ?eter=ine? <s @oBBoDs( O SO TO 8## E 1&6'67 O 9## E "#1'7# O &## E 196'7& O 1$$.##" 1##.8## 5$.1$5 "86.#$7 Note( It s>oAB? He An?erstoo? t><t pro@it is <BD<Cs t>e ?i@@erence HetDeen tot<B reIenAe *s<Bes I<BAe, <n? tot<B cost' T><t econo=ics principBe is IerC =Ac> <ppBic<HBe in Goint%pro?Act costing'
1G. CONCLUSION
&1
PROCESS COSTING T>is c><pter ><s intro?Ace? t>e =e<ning o@ process costing. its <ppBic<tion <re<s. <n? >oD it c<n He pAt to Ase @or proper <ccoAnt<HiBitC' T>e c><r<cteristics o@ process costing. >oD pro?Acts @BoD in t>e coArse o@ processing. t>e eJAiI<Bent Anits o@ pro?Action to He tr<ns@erre? to t>e neEt st<ge o@ pro?Action. <ccoAnting @or spoiB<ges3Bosses <n? t>e I<BA<tion process @or cost o@ pro?Action report ><Ie <BB Heen tre<te?' Fin<BBC. cost o@ pro?Action <n? report Drite%Aps ><Ie Heen <?eJA<teBC iBBAstr<te?. Asing >ig>BC st<n?<r?iKe? eEercises' Process costing. D>ic> is <rgA<HBC t>e =ost Di?eBC Ase? costing in t>e DorB?. ><s Heen giIen <?eJA<te coIer<ge it ?eserIes' T>e c><pter ><s <Bso pAt t>e re<?ers t>roAg> Goint pro?Acts costing. D>ere t>ree ?i@@erent =et>o?s o@ <pportioning Goint cost to Goint pro?Acts Dere ?iscAsse?' /C%pro?Act. <n? its <ccoAnting tre<t=ent. ><s <Bso Heen ?iscAsse?'
1F.REFERENCE:*
&"
PROCESS COSTING LOTS OF /OO S AND WE/SITES ARE A0AILA/LE FOR THIS PROJECT /UT THE A/O0E !ATERIAL OR INFOR!ATION A/OUT 1THE PROCESS COSTING2 IS COLLECTED FRO! THE FOLLOWING SOURCES(% 1. INTERNET 2. COST ACCOUNTING TE-T/OO PS .. COST ACCOUNTING REFERENCE /OO PS COST ACCOUNTING + S P GUPTA. AJAY SHAR!A. SATISH AHUJA + F PU/LICATIONS'
&$