Following are the problems and solutions of Process Costing (Cost Accounting).

Process Costing Question & Answer (Cost Accounting)

1. What do mean by Process costing method?

Answer: It is a method of cost determination and is used manufacturing concern where raw material passes through many processes up to finished goods.

2. Explain the objective of Process Costing method?

Answer: It is useful to determine the cost of the process, to ascertain wastage in each process, to ascertain the price of by-product and join product and to segregation total expenses.

3. Define Joint Product?

Answer: Joint products are produced by the same type of raw material in the same process having nearly equal importance and value as of main product and require further processing.

4. What do mean Joint Cost?

Answer: Cost prior to segregation point is known as joint cost as it related to the main product, joint product & by-product.

5. What is Scrap?

Answer: It is incidental residue material from certain manufacturing operation. It is measurable but having relatively minor recovery value then by-products.

6. What is Abnormal Wastage?

Answer: When actual wastage is more than normal wastage the difference is termed as abnormal wastage.

7. What is represented by the excess of Actual wastage over Normal Wastage?

Answer: Excess of actual wastage over normal wastage is abnormal is wastage.

8. What do you mean by abnormal Effective?

Answer: When actual wastage is less than normal wastage the difference Is termed as abnormal effectiveness the balance of this account is transferred to profit or loss.

9. What are the main products and by-Products in the dairy industry and coke industry?

Answer:

Industry: dairy industry, coke industry.

Main products: butter, cheese, coke.

By-products: skimmed milk, gas coal tar, benzol, ammonia.

10. What is the difference between By Product and Scrap?

Answer: Joint product is an incidental product of the main product of the main product having saleable value while scrap is a loss of material during production.

11. What journal Entry is Passed for Accounting Abnormal Effective?

Answer: Accounting entry for sales value of abnormal effective is made as follows:

Abnormal effective account.

To Normal wastage account.

At the end of the year balance of abnormal effective is transferred to costing profit & loss account:

Abnormal effective account.

To Costing profit& loss account.

12. Differentiate between Abnormal Waste and Abnormal Effective?

Answer: When actual loss is more than the normal loss it is called as the abnormal loss while if actual loss is less than the normal loss it is called as an abnormal effective abnormal loss is transferred in the debit side of costing profit and loss account.

While abnormal effective is transferred is the credit side of costing profit and loss account. Abnormal loss and abnormal effective is reduced by sale value of scrap.

13. What is Interprocess Profit?

Answer: When the transfer of manufacturing goods from one process to another is being done after adding a certain percentage of profit. This creates a problem of interprocess profit main advantage is that efficiency of every process is ascertained.

Valuation of finished stock and work in process will not be realistic as it includes interprocess profit and loss account will not exhibit the correct amount of profit this problem can be eliminated if a reserve for unrealized profit is made.

Top 13 Process Costing Question & Answer (Cost Accounting)