By Abnormal Gain [Total Abnormal Gain - Abnormal gain realised^^]
XXX
To Abnormal Loss [Total Abnormal Loss - Abnormal loss realised^]
XXX
By Sales [Units sold × Selling price]
XXX
To Net Profit
XXX
YYY
YYY
^ [Abnormal loss realised = Abnormal loss units × Scrap value per unit]
^^ [Abnormal gain realised = Abnormal gain units × Scrap value per unit]
7. Statement of Equivalent Units under FIFO Method
INPUT DETAILS
UNITS
OUTPUT PARTICULARS
UNITS
EQUIVALENT UNITS
MATERIAL
LABOUR
OVERHEADS
%
UNITS
%
UNITS
%
UNITS
Opening WIP
XXX
Completed output: From Opening WIP
XXX
XX
XXX
XX
XXX
XX
XXX
Units Introduced
XXX
Completed output: From Units Introduced
XXX
XX
XXX
XX
XXX
XX
XXX
Normal Loss
XXX
-
-
-
-
-
-
Abnormal Loss
XXX
XX
XXX
XX
XXX
XX
XXX
Closing WIP
XXX
XX
XXX
XX
XXX
XX
XXX
XXX
YYY
YYY
YYY
Less: Abnormal Gain
(XXX)
TOTAL
ZZZ
TOTAL
ZZZ
8. Statement showing cost per unit for each element under FIFO Method
PARTICULARS
MATERIAL
LABOUR
OVERHEADS
TOTAL
Cost of the Process (₹)
XXX
XXX
XXX
XXX
Less: Scrap value of Normal Loss* (₹)
(ZZZ)
-
-
-
Total Cost (₹) (A)
XXX
XXX
XXX
XXX
Equivalent Units (B)
XX
XX
XX
XX
COST PER EQUIVALENT UNITS (₹) (A ÷ B)
YY
YY
YY
YY
* Remember to deduct only Normal Loss Scrap; Not Abnormal Loss Scrap
9. Statement of Distribution of Cost under FIFO Method
PARTICULARS
AMOUNT (₹)
AMOUNT (₹)
1) Value of Units Completed & Transferred
[Units completed EU × Total cost per EU]
YYY
2) Value of Opening WIP:
– Materials (EU × Cost per EU of Material)
XXX
– Labour (EU × Cost per EU of Labour)
XXX
– Overheads (EU × Cost per EU of OHs)
XXX
YYY
3) Value of Abnormal Loss:
– Materials (Abnormal EU × Cost per EU)
XXX
– Labour
XXX
– Overheads
XXX
YYY
4) Value of Closing WIP:
– Materials (Closing WIP EU × Cost per EU)
XXX
– Labour
XXX
– Overheads
XXX
YYY
10. Statement of Equivalent Units under Weighted Average Method
INPUT DETAILS
UNITS
OUTPUT PARTICULARS
UNITS
EQUIVALENT UNITS
MATERIAL
LABOUR
OVERHEADS
%
UNITS
%
UNITS
%
UNITS
Opening WIP
XXX
Units completed and transferred
XXX
XX
XXX
XX
XXX
XX
XXX
Units introduced
XXX
Normal Loss
XXX
-
-
-
-
-
-
Abnormal Loss
XXX
XX
XXX
XX
XXX
XX
XXX
Closing WIP
XXX
XX
XXX
XX
XXX
XX
XXX
XXX
YYY
YYY
YYY
Less: Abnormal Gain
(XXX)
TOTAL
ZZZ
TOTAL
ZZZ
11. Statement showing cost per unit for each element under Weighted Average Method
PARTICULARS
MATERIAL
LABOUR
OVERHEADS
TOTAL
Cost of the Opening WIP (₹)
XXX
XXX
XXX
XXX
Cost incurred (₹)
XXX
XXX
XXX
XXX
Less: Realisable value of Normal Loss Scrap* (₹)
(XXX)
-
-
(XXX)
Total Cost (₹) (A)
XXX
XXX
XXX
XXX
Equivalent Units (B)
YY
YY
YY
YY
COST PER EQUIVALENT UNITS (₹) (A ÷ B)
ZZ
ZZ
ZZ
ZZ
* Don't deduct Abnormal Loss Scrap value
12. Statement of Distribution of Cost under Weighted Average Method
PARTICULARS
AMOUNT (₹)
AMOUNT (₹)
1) Value of Units Completed & Transferred
[Units completed EU × Total cost per EU]
YYY
2) Value of Abnormal Loss:
– Materials (Abnormal EU × Cost per EU)
XXX
– Labour
XXX
– Overheads
XXX
YYY
3) Value of Closing WIP:
– Materials (Closing WIP EU × Cost per EU)
XXX
– Labour
XXX
– Overheads
XXX
YYY
NOTE: Value of Opening WIP is included in value of units completed & transferred
13. Inter-process Profits
13.1 Process-A A/c
PARTICULARS
TOTAL (₹)
COST (₹)
PROFIT (₹)
PARTICULARS
TOTAL (₹)
COST (₹)
PROFIT (₹)
Opening Stock
XXX
XXX
-
Process-B A/c
XXX
XXX
XXX
Direct Materials
XXX
XXX
-
Closing Stock
XXX
XXX
XXX
Direct Wages
XXX
XXX
-
Finished Stock A/c
XXX
XXX
XXX
PRIME COST
XXX
XXX
-
Overheads
XXX
XXX
-
TOTAL COST
XXX
XXX
-
Profit
XXX
-
XXX
YYY
YYY
YYY
YYY
YYY
YYY
13.2 Finished Stock A/c
PARTICULARS
TOTAL (₹)
COST (₹)
PROFIT (₹)
PARTICULARS
TOTAL (₹)
COST (₹)
PROFIT (₹)
Opening Stock
XXX
XXX
XXX
Costing P&L A/c (Sales)
XXX
XXX
XXX
Process-B
XXX
XXX
XXX
Closing Stock
XXX
XXX
XXX
Profit
XXX
XXX
XXX
YYY
YYY
YYY
YYY
YYY
YYY
Formulae
Value of Normal Loss = Normal Loss units × Scrap value per unit [NOTE: If scrap value per unit is not given, consider it as zero]
Value of units transferred to next process = {(Total Cost - Realisable value of Normal Loss) / (Total input units - Normal Loss units)} × Units transferred
Value of Abnormal Loss or Gain = {(Total Cost - Realisable value of Normal Loss) / (Total input units - Normal Loss units)} × Abnormal Loss or Gain units
Cost per unit transferred to next process = (Total Cost - Realisable value of Normal Loss) / (Total input units - Normal Loss units)
Percentage of Wastage = {(Units of Normal Loss / Input units) × 100}
Equivalent Completed Units = Actual number of units in process of manufacture × Percentage of work completed
Transfer Price = {(Total Cost - Closing Stock) / (100 - Percentage of profit on transfer price)}
Cost of Closing Stock (on Prime Cost) = {(Cost of Prime Cost / Total of Prime Cost ^) × Total of Closing Stock ^} [^ Cost + Profit]
Conversion Cost = Labour Cost + Overheads
Points to Remember
If question is silent about Completion of Abnormal Loss units, consider it as 100% complete. If given in question, calculate Equivalent Units as per given information.
Under FIFO Method, Normal Loss Equivalent Units always be zero, and Opening WIP Equivalent Units calculated by taking incomplete (%) of work.
Under Weighted Average Method, no Equivalent Unit is calculated for Normal Loss, and Opening WIP units and their cost are taken in full.
