Cost Sheet Problems and Solutions | (Part 3)

[Cost Sheet Practical Problems and Solutions,  Cost Accounting, Cost Sheet Format, All Universities of India, B.Com]

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In this post, you will get cost sheet practical problems and solutions which are asked Various B.Com Exams. Also go through Part 1 , Part 2 and Part 4 of cost sheet problems and solutions for more.

You can also go through my comprehensive article on Cost Sheet Format.  

Cost Sheet Practical Problems and Solutions (Part 3)

17. The books of manufacturing company present the following data for the month of April, 2011: Direct labour cost Rs. 17,500 being 175% of works overhead. Cost of goods sold excluding administrative expenses Rs. 56,000. Inventory accounts showed the following opening and closing balances:

Particulars

April 1 (Rs.)

April 30 (Rs.)

Rs.

Raw materials

Work-in-progress

Finished goods

Other data are:

Selling expenses

General and administration expenses

Sales for the month

8,000

10,500

17,600

10,600

14,500

19,000

 

 

 

 

3,500

2,500

75,000

You are required to:

a)    Compute the value of raw materials purchased; and

b)   Prepare a cost statement showing the various elements of cost and also the profit earned.

Cost Sheet or Statement of Cost

Particulars

Amount (Rs.)

Opening stock of Raw Material

Add: Purchases (Note – 1)

Less: Closing Stock of raw material

8,000

36,500

10,600

Raw material consumed during the year

Add: Direct Labour

33,900

17,500

Prime Cost

Add: Works overhead:

51,400

10,000

 

Adjustment for work-in-progress:

Opening                                                    10,500

Closing                                                   (-) 14,500

61,400

 

 

(-) 4,000

Works cost or cost of production

Add: Opening stock of finished goods

57,400

17,600

 

Less: Closing stock of finished goods

75,000

19,000

Cost of goods sold

Add: General and administration expenses

Add: Selling expenses

56,000

2,500

3,500

 

Profit (Balancing figure)

62,000

13,000

Sales

75,000

Note – 1: Statement computing the value of Raw materials purchased

Cost of goods sold

Add: Closing Stock of finished goods

56,000

19,000

 

Less: Opening stock of finished goods

75,000

17,600

Work Cost or Cost of production

Add: Closing Stock of work-in-progress

57,400

14,500

 

Less: Opening Stock of work-in-progress

71,900

10,500

 

Less: Works overhead: (100/175*17,500)

61,400

10,000

Prime Cost

Less: Direct Labour

51,400

17,500

Raw Materials consumed

Add: Closing Stock of raw materials

33,900

10,600

 

Less: Opening Stock of raw materials

44,500

8,000

Value of Raw materials purchased

36,500

18. A factory produces and sells 1,000 units of a product in July, 2011, for which the following particulars are available:

Particulars

Amount (Rs.)

Stock of direct materials on 1.7.11

Purchase and receipt of direct materials in July, 2011

Direct wages paid in cash in July, 2011

(which includes Rs. 3,000 on account of June 2011 and an advance of Rs. 2,000)

Works overhead charges for the month

Stock of direct materials on 31.7.11

Administration and selling overheads

Sales price

6,000

1,44,000

55,000

 

60,000

10,000

Rs. 25 per unit

Rs. 300 per unit

From the above particulars you are required to:

a)    Prepare a cost statement for July, 2011; and

b)   Estimate the sale price of a unit of the same product in August, 2011, assuming: (i) 20% increase in direct materials cost; (ii) 10% increase in direct wages; (iii) 5% increase in works overhead charges; (iv) 20% reduction in administration and selling overhead charges; and (v) same percentage of profit on sales price as in July, 2011.

Cost Sheet

Output: 1,000 units (See Note – 1)

Period: July, 2011

Particulars

Amount (Rs.)

Cost Per Unit

Materials Consumed:

Stock as on 1-7-11

Purchases during the month

 

6,000

1,44,000

 

Less: Stock as on 31-7-11

1,50,000

10,000

 

1,40,000

 

140

Direct Wages (paid In July)

Less: Payment for June

55,000

3,000

 

Less: Advance payment

52,500

2,000

 

50,000

 

50

Prime Cost

Add: Works overhead

1,90,000

60,000

190

60

Works cost or Cost of Production

Add: Administration and selling overheads @ Rs. 25 per unit

2,50,000

25,000

250

25

Cost of Sales

Profit (Balancing figure)

2,75,000

25,000

275

25

Selling Price @ Rs. 300 [Seen Note – 1]

3,00,000

300

Estimate of Selling Price per unit in August, 2011

Note – 1:

Direct Materials: (120/100*140)

Direct Wages: (110/100*50)

Prime Cost

Works Overhead: (105/100*60)

168.00

55.00

223.00

63.00

Works Cost or Cost of Production

Administration and Selling overhead: (80/100*25)

286.00

20.00

Cost of Sales

Profit [@8.33% on sales or 1/12th of sales or 1/11th of cost] [See Note – 2]

306.00

27.82

Selling Price

333.82

Working Note: Ratio of Profit to sales in July, 2011 = (25,000/3,00,000*100) = 1/12th or 8.33%

19. The following figures are extracted from the books of an iron foundry after the close of the year:

Particulars

Amount (Rs.)

Raw Materials:

     Opening stock

     Purchase during the year

     Closing stock

Direct wages

Works overhead

Stores overhead on materials

 

14,000

1,00,000

10,000

20,000

50% on direct wages

10% on the cost of materials

10% of the castings were rejected being not up to specification and a sum of Rs. 800 was realised from sale of scrap, 10% of the finished castings were found to be defective in manufacture and were rectified by expenditure of additional works overhead charged to the extent of 20% on proportionate direct wages. The total gross output of castings during the year: 2,000 tons. Find out the manufacturing cost of the saleable castings per ton.

Cost Sheet or Statement of Cost

Particulars

Amount

Materials Used:

Opening Stock                                          14,000

Purchases                                              1,00,000

                                                                1,14,000

Less: Closing Stock                                  10,000

Direct Wages

 

 

 

 

1,04,000

20,000

Prime Cost

Work overhead: 50% of direct wages

Stores overhead: 10% of material cost

1,24,000

10,000

10,400

 

Less: Sale of scrap: 200 tons (i.e. 10% of gross output)

1,44,000

800

 

Add: Cost of rectification of defective works: 180 tons (i.e. 10% of net output)

@ Rs. 2 per ton [Note – 1]

1,43,600

 

360

Manufacturing cost of 1,800 tons saleable castings

1,43,960

Cost per ton (approx)

80.00

Working Note:  Cost of rectification of defective works per ton:

Direct Wages per ton = (20,000/2,000 = 10)

Rectification cost: 20% of Rs. 10 = Rs. 2

20. From the following particulars prepare a Cost Sheet showing the total cost per tone for the period ended 31st Dec, 2012.

Particulars

Rs.

Particulars

Rs.

Raw materials

Productive wages

Unproductive wages

Factory rent and taxes

Factory lighting

Factory heating

Motive power

Haulage (works)

Director’s fees (works)

Director’s fees (office)

Factory cleaning

Sundry office expenses

Estimating expenses (works)

Factory stationery

Office stationery

Loose tools written off

33,000

38,000

10,500

7,500

2,200

1,500

4,400

3,000

1,000

2,000

500

200

800

750

900

600

Rent and taxes (office)

Water supply (works)

Factory Insurance

Office Insurance

Legal expenses

Rent of warehouse

Depreciation of

-          Plant and Machinery

-          Office Building

-          Delivery vans

Bad debts

Advertising

Sales department’s salaries

Upkeep of delivery vans

Bank charges

Commission on sales

500

1,200

1,100

500

400

300

The total output for the period has been 14,775 tones.

Cost Sheet or Statement of Cost

Particulars

Amount

Amount

Raw Materials

Add: Productive Wages

33,000

38,000

(a) Prime Cost

Add: Factory Overhead:

Unproductive wages

Factory rent and taxes

Factory lighting

Factory heating

Motive power

Haulage (works)

Director’s Fees (works)

Factory cleaning

Estimating expenses (works)

Factory stationery

Water supply (works)

Factory insurance

Depreciation of Plant & Machinery

Loose Tools written off

 

 

10,500

7,500

2,200

1,500

4,400

3,000

1,000

500

800

750

1,200

1,100

2,000

600

71,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37,050

(b) Factory Cost

Add: Office and administrative overhead:

Director’s fees (Office)

Sundry office expenses

Office stationery

Office Insurance

Legal expenses

Depreciation on office Building

Rent and Taxes (office)

Bank charges

 

 

2,000

200

900

500

400

1,000

500

50

1,08,050

 

 

 

 

 

 

 

 

5,550

(c) Cost of production

Add: Selling & Distribution overhead:

Rent of warehouse

Depreciation on Delivery vans

Bad debts

Advertising

Sales department’s salaries

Un of delivery vans

Commission of sales

 

 

300

200

100

300

1,500

700

1,500

1,13,600

 

 

 

 

 

 

 

4,600

Total Cost

1,18,200

Cost per ton = 1,18,200/14,775 = Rs. 8 per ton

21. The accounts of Z Manufacturing Company for the year ended December, 2012 show the following:

Particulars

Amount

Particulars

Amount

Factory Office Salaries

General Office Salaries

Carriage Outward

Carriage on Purchases

Bad Debts written off

Repair of Plant, Machinery and Tools

Rent, Rates, Taxes & Insurance

-          Factory

-          Office

Sales

Stock of Materials

-          31st Dec, 2011

-          31st Dec, 2012

Materials Purchased

6,500

12,600

4,300

7,150

6,500

4,450

 

8,500

2,000

4,61,100

 

62,800

48,000

1,85,000

Travelling Expenses

Traveler’s Salaries & Commission

Productive Wages

Depreciation – Plant, Machinery and Tools

Depreciation – Furniture

Director’s fees

Gas and Water – Factory

-          Office

Manager’s Salary

(3/4 Factory and 1/4 Office)

General Expenses

Income Tax

Dividend

2,100

7,700

1,26,000

6,500

300

6,000

1,200

400

 

10,000

3,400

500

1,000

Prepare statement giving the following information:  Materials Consumed; Prime Cost; Factory Cost; Cost of Production; Total cost; Net Profit.

In the Books of Z Manufacturing Company

Cost Sheet

Particulars

Amount

Amount

Raw Material Consumed:

Opening Stock

Purchases

Carriage on purchases

Less: Closing Stock of Raw Materials

 

62,800

1,85,000

7,150

48,000

(a) Raw Materials consumed during the year

Productive wages

2,06,950

1,26,000

(b) Prime Cost

Works overheads:

Factory Office salaries

Repairs of plant, machinery & tools

Rent, rates, taxes & insurance

Depreciation on plant, machinery and tools

Gas and water

Manager’s salary

 

 

6,500

4,450

8,500

6,500

1,200

7,500

3,32,950

 

 

 

 

 

 

34,650

(c) Factory Cost

Administrative Overheads:

General Office salaries

Rent, rates, taxes & insurance

Depreciation on furniture

Director’s fees

Manager’s salary

General expenses

Gas and water

 

 

12,600

2,000

300

6,000

2,500

3,400

400

3,67,600

 

 

 

 

 

 

 

27,200

(d) Cost of production

Selling & distributive Overheads:

Carriage outward

Bad debts written off

Travelling expenses

Traveler’s salaries & commission

 

 

4,300

6,500

2,100

7,700

3,94,800

 

 

 

 

20,600

(e) Total Cost

Net Profit

4,15,400

45,700

(f) Sales

4,61,100

22. Following data have been extracted from the books of Sunshine Industries Ltd. for the year 2012:

Particulars

Amount

Particulars

Amount

Opening Stock of Raw Material

Purchase of Raw Material

Closing Stock of Raw Material

Carriage Inward

Wages – Direct

Wages – Indirect

Rent and Rates – Factory

-          Office

Depreciation

-          Plant and Machinery

-          Office Furniture

Cash Discount

25,000

85,000

40,000

5,000

90,000

10,000

5,000

500

 

1,500

100

5,000

Indirect Consumption of Material

Salary – Office

-          Salesmen

Other Factory Expenses

Other Office Expenses

Manager’s Remuneration

Bad Debts written off

Advertisement Expenses

Travelling Expenses of Salesmen

Carriage and Freight Outward

Sales

Advance Income-tax paid

500

2,500

2,000

5,700

900

12,000

1,000

2,000

1,100

1,000

2,50,000

15,000

The manager has the overall charge of the company and his remuneration is to be allocated as Rs. 4,000 to the factory, Rs. 2,000 to the office and Rs. 6,000 to the selling operations.

From the above particulars prepare a statement showing (a) Prime Cost; (b) Factory Cost; (c) Cost of production; (d) Cost of sales; and (e) Net profit.

Cost Sheet of sunshine Industries Ltd.

For the year 2012

Particulars

Amount

Amount

Opening Stock of Raw Material

Add: Purchases

Add: Carriage inward

Less: Closing Stock of Raw Materials

25,000

85,000

5,000

40,000

(a) Raw Material Consumed during the year

Add: Direct wages

75,000

90,000

(b) Prime Cost

Add: Factory Overheads:

Wages (Indirect)

Rent & Rates

Depreciation on Plant & Machinery

Indirect consumption of Material

Other Factory expenses

Manager’s Remuneration

 

 

10,000

5,000

1,500

500

5,700

4,000

1,65,000

 

 

 

 

 

 

26,700

(c) Work’s Cost

Add: Office and Administrative Overhead:

Rent & Rates

Depreciation on office furniture

Salary

Other office expenses

Manager’s Remuneration

 

 

500

100

2,500

900

2,000

1,91,700

 

 

 

 

 

6,000

(d) Cost of Production

Add; Selling & distributive overhead:

Salary of salesmen

Manager’s Remuneration

Advertisement expenses

Travelling expenses of salesmen

Carriage and Freight outward

Bad debts written off

 

 

2,000

6,000

2,000

1,100

1,000

1,000

1,97,700

 

 

 

 

 

 

13,100

(e) Cost of sales

(f) Profit (Balancing figure)

2,10,800

39,200

Sales

2,50,000

23. A manufacturing concern requires a statement showing the result of its production operation for September, 2012. Cost records give the following information.

Particulars

1st Sep. 2012 (Rs.)

30th Sep. 2012 (Rs.)

Raw Material

Finished Goods

Work-in-Progress

1,00,000

71,500

31,000

1,23,500

42,000

34,500

Transactions during the month of September 2012:

Particulars

Amount

Particulars

Amount

Purchase of Raw Materials

Direct Wages

Works Expenses

Administration Expenses

88,000

70,000

39,500

13,000

Sale of Factory Scrap

Selling and Distribution Expenses

Sales

2,000

15,000

2,84,000

Cost Sheet

For the month of September, 2012

Particulars

Amount

Raw Materials (Opening)

Add: purchase of Raw Materials

Less: Raw Materials (closing)

1,00,000

88,000

1,23,500

Raw Materials consumed

Add: Direct wages

64,500

70,000

Prime Cost

Add: Work’s overheads:

Less: Sale of Factory scrap

1,34,500

39,500

2,000

Work’s Cost incurred

Add: Work-in-progress (Opening)

Les: work-in-progress (Closing)

1,72,000

31,000

34,500

Work’s Cost

Add: Office and administrative Overhead

1,68,500

13,000

Cost of Production

Add: Finished goods (Opening)

1,81,500

71,500

 

Less: Finished goods (Closing)

2,53,000

42,000

Cost of goods sold

Add: Selling and Distributive overhead:

Cost of goods sold

Profit (Balancing figure)

2,11,000

15,000

2,26,000

58,000

Sales

2,84,000

24. The Modern Manufacturing Company submits the following information on 31st March, 2012:

Particulars

Amount (Rs.)

Amount (Rs.)

Sales for the year

Inventories at the beginning of the year:

-          Finished goods

-          Work-in-Progress

Purchase of materials for the year

Materials Inventory:

-          At the beginning of the year

-          At the end of the year

Direct Labour

Factory overhead @ 60% of the direct labour cost

Inventories at the end of the year:

-          Work-in-Progress

-          Finished goods

Other expenses for the year:

-          Selling expenses 10% of sales

-          Administrative expenses 5% of sales

 

 

7,000

4,000

 

 

3,000

4,000

 

 

 

6,000

8,000

2,75,000

 

 

 

1,10,000

 

 

 

65,000

Prepare a statement of cost and profit.

In the Books of Modern Manufacturing Company

Cost Sheet

Particulars

Amount

Amount

Raw Material Consumed:

Opening

Purchases

Less: Closing Stock of Raw Materials

 

3,000

1,10,000

4,000

(a) Raw Materials Consumed during the year

Direct Labour

1,09,000

65,000

(b) Prime Cost

Works Overheads:

Factory overhead (60% of direct labour cost)

Add: Opening stock of work-in-progress

Less: Closing stock of work-in-progress

 

 

39,000

4,000

6,000

1,74,000

 

 

 

37,000

(c) Factory’s Cost

Administrative Overheads:

Administrative expenses (5% of sales)

2,11,000

 

13,750

(d) Cost of Production

Add: Opening stock of finished goods

Less: Closing stock of finished goods

2,24,750

7,000

8,000

(e) Cost of goods sold

Selling and Distributive Overhead:

Selling Expenses (10% of sales)

2,23,750

 

27,500

(f) Total cost

Net Profit

2,51,250

23,750

(g) Sales

2,75,000

25. Following information has been obtained from the records of a Manufacturing Company:

Particulars

1-1-2012 (Rs.)

31-12-2012 (Rs.)

Stock of Raw Materials

Stock of Finished Goods

Stock of Work-in-Progress

40,000

1,00,000

10,000

50,000

1,50,000

14,000

Particulars

Rs.

Particulars

Rs.

Indirect Labour

Lubricants

Insurance on plant

Purchase of Raw Materials

Sales Commission

Salaries of Salesmen

Carriage Outward

50,000

10,000

3,000

4,00,000

60,000

1,00,000

20,000

Administration Expenses

Power

Direct Labour

Depreciation on Machinery

Factory Rent

Property Tax on Factory Building

Sales

1,00,000

30,000

3,00,000

50,000

60,000

11,000

12,00,000

Prepare a Statement of Cost and Profit showing (a) Cost of Raw Materials Consumed; (b) Prime Cost; (c) Total Manufacturing Cost; (d) Factory Manufacturing Cost; (e) Cost of Production; (f) Cost of Goods Sold; (g) Cost of sales; (h) Profit;

In the Books of Manufacturing Company

Cost Sheet

Particulars

Amount

Amount

Raw Material Consumed:

Opening Stock

Purchases

Less: Closing Stock of Raw Materials

 

40,000

4,00,000

50,000

(a) Raw Material consumed during the year

Direct Labour

3,90,000

3,00,000

(b) Prime Cost

Works Overheads:

Indirect Labour

Lubricants

Insurance on Plant

Power

Depreciation on Machinery

Factory Rent

Property for factory Building

 

 

50,000

10,000

3,000

30,000

50,000

60,000

11,000

6,90,000

 

 

 

 

 

 

 

2,14,000

(c) Factory cost incurred

Add: Opening Stock of work-in-progress

Less: Closing Stock of work-in-progress

9,04,000

10,000

14,000

(d) Factory Cost

Administrative Overheads:

Administrative Expenses

9,00,000

 

1,00,000

(e) Cost of Production

Add: Opening Stock of finished goods

Less: Closing Stock of finished goods

10,00,000

1,00,000

1,50,000

(f) Cost of goods sold

Selling and Distributive Overhead:

Sale Commission

Salaries of Salesman

Carriage outward

 

 

60,000

1,00,000

20,000

9,50,000

 

 

 

1,80,000

(g) Total Cost

Net Profit

11,30,000

70,000

(h) Sales

12,00,000

26. Following information has been obtained from the records of a manufacturing concern:

1-1-2012 (Rs.)

31-12-2012 (Rs.)

Stock of Raw Materials

Work-in-Progress

Stock of Finished Goods

30,000

15,000

43,700

35,000

20,000

54,000

Particulars

Rs.

Particulars

Rs.

Indirect Wages

Sales

Factory Rent & rates

Office Salaries

General Expenses

Office Rent

Rent of Show Room

9,720

3,25,000

7,830

15,030

13,500

2,000

1,200

Purchase of Raw Materials

Productive Wages

Plant Repair

Depreciation on Plant

Factory Lighting

Salesmen’s Salaries

1,20,000

90,000

3,420

8,360

7,380

7,650

Prepare (i) Cost Sheet showing cost of raw materials consumed, prime cost, factory cost incurred and factory cost. (ii) Income statement in traditional form for the year showing gross profit and net profit.

Statement Cost Sheet

Particulars

Amount

Amount

Raw Material Consumed:

Opening Stock

Purchases

Carriage inward

 

 

30,000

1,20,000

 

Less: Closing Stock of Raw Materials

1,50,000

35,000

(a) Raw Material consumed during the year

Productive wages

1,15,000

90,000

(b) Prime Cost

Factory Overheads:

Indirect wages

Factory rent & rates

Plant repair

Depreciation on plant

Factory lighting

 

 

9,720

7,830

3,420

8,360

7,380

2,05,000

 

 

 

 

 

36,710

(c) Factory cost incurred

Add: Opening Stock of work-in-progress

Less: Closing Stock of work-in-progress

2,41,710

15,000

20,000

(d) Factory Cost

2,36,710

Income Statement

For the year ended on 31-12-2012

Particulars

Amount

Net Sales

Less: Cost of Goods Sold

Opening stock of finished goods                        43,700

Add: Factory cost                                               2,36,710

                                                                              2,80,410

Less: Closing stock of finished goods                 54,000

3,25,000

 

 

 

 

2,26,410

Gross Profit

Less: Operating Expenses

Office and Administrative overheads            30,530

(15,030+13,500+2,000) 

Selling and Distribution overheads                  8,850   

(1,200+7,650) 

98,590

 

 

 

39,380

Net Profit

59,210

27. From the following particulars, prepare a Cost Statement showing the components of Total Cost and Profit for the year ended 31st

1-1-2012 (Rs.)

31-12-2012 (Rs.)

Stock of finished goods

Stock of raw materials

Work-in-Progress

6,000

40,000

15,000

15,000

50,000

10,000

Particulars

Rs.

Particulars

Rs.

Purchase of raw materials

Carriage inward

Wages

Works Manger’s Salary

Factory employees salaries

Factory rent, taxes and insurance

Power expenses

Other production expenses

General expenses

4,75,000

12,500

1,75,000

30,000

60,000

7,250

9,500

43,000

32,500

Sales for the year

Income-tax

Dividend

Debenture interest

Transfer to Sinking Fund

for replacement of machinery

Goodwill written off

Payment of sales tax

Selling expenses

8,60,000

500

1,000

5,000

 

10,000

10,000

16,000

9,250

Statement Cost Sheet

Particulars

Amount

Amount

Raw Material Consumed:

Opening Stock

Purchases

Carriage inward

Less: Closing Stock of raw material

 

40,000

4,75,000

12,500

50,000

(a) Raw Material Consumed during the year

Wages

4,77,500

1,75,000

(b) Prime Cost

Factory Overhead:

Work’s manager’s salary

Factory employee’s salary

Factory rent, taxes, insurance

Power expenses

Other production expenses

 

 

30,000

60,000

7,250

9,500

43,000

6,52,500

 

 

 

 

 

1,49,750

(c) Factory cost incurred

Add: Opening stock of work-in-progress

Less: Closing Stock of work-in-progress

8,02,250

15,000

10,000

(d) Factory Cost

Administrative Overhead:

General Expenses

8,07,250

 

32,500

(e) Cost of Production

Add: Opening stock of finished goods

Less: Closing stock of finished goods

8,39,750

6,000

15,000

(f) Cost of goods Sold

Selling and Distribution Overhead:

Selling Expenses

8,30,750

 

9,250

(g) Total Cost

Net Profit

8,40,000

20,000

(h) Sales

8,60,000

28. From the following particulars of a manufacturing firm, prepare a statement showing (a) Cost of materials used; (b) Works cost; (c) Cost of production; (d) Percentage of works overhead to productive wages: (e) Percentage of general overhead to works cost.

Particulars

Rs.

Particulars

Rs.

Stock of materials on 1-1-2012

Purchase of materials in January, 2012

Stock of finished goods on 1-1-2012

Productive wages

40,000

11,00,000

50,000

5,00,000

Finished goods sold

Works overhead

Office and general expenses

Stock of materials on 31-1-2012

Stock of finished goods on 31-1-2012

24,00,000

1,50,000

1,00,000

1,40,000

60,000

In the books of a Manufacturing firm

Cost Sheet

Particulars

Amount

Amount

Opening Stock of Raw Materials

Add: Purchases of Raw Materials

40,000

11,00,000

 

Less: Closing Stock of Raw Materials

11,40,000

1,40,000

(a) Raw Materials Consumed during the year

Add: Productive Wages

10,00,000

5,00,000

(b) Prime Cost

Add: Factory Overheads:

Work’s Overhead

15,00,000

 

1,50,000

(c) works/Manufacturing/Factory Cost

Add: Office and Administrative Overheads

16,50,000

1,00,000

(d) Cost of production

Add: Opening Stock of finished goods

Less: Closing Stock of finished goods

 

50,000

60,000

17,50,000

 

(10,000)

(e) Cost of goods sold /sales

Add: Profit

17,40,000

6,60,000

Sales

24,00,000

Working Note:

% of works overheads to Productive Wages = (1,50,000/5,00,000 * 100) = 30%

% of General overheads to Works Cost = (1,00,000/16,50,000*100) = 6.06%

29. Mr. Gopal furnishes the following data relating to the manufacture of a standard product during the month of April, 2012:

Raw materials consumed

Direct labour charges

Machine hours worked

Machine hour rate

Administrative overheads

Selling overheads

Units produced

Units sold

Rs. 15,000

Rs. 9,000

Rs. 900

Rs. 5

20% on works cost

Rs. 0.50 per unit

17,100

16,000 at Rs. 4 per unit

You are required to prepare a Cost Sheet from the above showing: (a) the cost of production per unit; (b) profit per unit sold and profit for the period.

Statement of Cost Sheet or Cost Sheet

Particulars

Amount

Amount

Raw Material Consumed

Wages

15,000

9,000

(a) Prime Cost

Factory Overheads (900 x 5)

24,000

4,500

(b) Work’s cost

Administrative Overheads (28,500 x 20%)

28,500

5,700

(c) Cost of Production

Less: Closing Stock of finished goods

(34,200/17,100 = 2*1,100)

17,100

 

1,100

34,200

 

2,200

(d) Cost of goods sold

Selling & Distribution Overheads (16,000*0.5)

16,000

32,000

8,000

(e) Total Cost

Net Sales

16,000

40,000

24,000

Sales

16,000

64,000

Working Note: 

Cost of production per unit = (34,200/17,100 = 2)

Profit per unit = (24,000/16,000 = 1.50)

30. Prepare the Cost Sheet to show the total cost of production and cost per unit of goods manufactured by a company for the month of July, 2012. Also find the cost of sales and profit.

Rs.

Rs.

Stock of Raw Materials 1-7-2012

Raw Materials purchased

Stock of Raw Material 31-7-2012

Manufacturing Wages

Depreciation on Plant

Loss on sale of a part of Plant

3,000

28,000

4,500

7,000

1,500

300

Factory Rent and Rates

Office Rent

General Expenses

Discount on Sales

Advertisement Expenses

to be charged fully

Income-tax paid

Sales

3,000

500

400

300

 

600

2,000

50,000

The number of units produced during July, 2012 was 3,000. The stock of finished goods was 200 and 400 units on 1-7-2012 and 31-7-2012 respectively. The total cost of the units on hand on 1-7-2012 was Rs. 2,800. All these had been sold during the month.

Statement of Cost or Cost Sheet

Particulars

Amount

Amount

Raw Materials Consumed:

Opening Stock

Purchases

Less: Closing Stock of Raw Material

 

3,000

28,000

4,500

(a) Raw Material consumed during the year

Manufacturing wages

26,500

7,000

(b) Prime Cost

Work’s Overheads:

Factory rent & rates

Depreciation on plant

33,500

 

3,000

1,500

(c) Work’s Cost

Administrative Overheads:

Office rent

General Expenses

38,000

 

500

400

(d) Cost of production

Add: Opening stock of finished goods

Less: Closing Stock of finished goods  (38,900/3,000 = 12.97 * 400)

3,000

200

400

38,900

2,800

5,187

(e) Cost of goods sold

Selling & Distributive Overheads:

Advertisement Expenses

2,800

 

-

36,513

 

600

(f) Total Cost

Add: Net Profit

2,800

-

37,113

12,887

Sales

2,800

50,000

Working Note:  Total cost per ton = (Total Cost / Output during the year)

31. In a factory two types of radios are manufactured, viz, Orient and Sujon Models. From the following particulars prepare a statement showing cost and profit per radio sold. There is no opening or closing stock.

Particulars

Orient (Rs.)

Sujon (Rs.)

Materials

Labour

27,300

15,600

1,08,680

62,920

Works overhead is charged at 80% on labour and office overhead is taken at 15% on works cost. The selling price of both radios is Rs. 1,000. 78 Orient radios and 286 Sujon radios were sold.

Statement of cost or Cost Sheet

Particulars

Orient (78)

Sujon (287)

Unit

Total

Unit

Total

Material

Wages

350

200

27,300

15,600

1,08,680

62,920

(a) Prime Cost

Add: Factory Overheads (80% on labour)

550

160

42,900

12,480

 

50,336

(b) Work’s Cost

Add: Office & Administrative Overhead

710

106.50

55,380

8,307

(c) Cost of production

Profit

816.5

183.50

63,687

14,313

(d) Sales

1,000

78,000

32. Your company is an export-oriented organization manufacturing Internal-communication equipment of a standard size. The company is to send quotations to foreign buyers of your product. As the Cost Accounts Chief; you are required to help the management in the matter of submission of the quotation by the preparation of a cost estimate based on the following figures relating to the year 2012. Total Output (in units) 20,000

Expenses Incurred

Rs.

Expenses Incurred

Rs.

Local Raw Materials Consumed

Imports of Raw Materials

(actual consumption)

Direct Labour in Works

Indirect Labour in Works

Storage of Raw Materials and spares

Fuel

Tools Consumed

Depreciation on Plant

Salaries of works Personnel

10,00,000

 

1,00,000

10,00,000

2,00,000

50,000

1,50,000

20,000

1,00,000

1,00,000

Excise Duty on Production

Administrative Office Expenses

Salary of the Managing Director

Salary of the Joint

Managing Director

Fees of Directors

Expenses on Advertising

Selling Expenses

Sales Depots

Packaging and Distribution

2,00,000

2,00,000

60,000

 

40,000

20,000

1,60,000

1,80,000

1,20,000

1,20,000

Prepare a statement of Cost.

Cost Sheet

For the year 2012

Particulars

Amount

Amount

Raw Materials Consumed during the year

Add: Direct Wages

12,00,000

10,00,000

Prime Cost

Add: Factory Overheads:

Indirect Labour in works

Storage of raw materials and spares

Fuel

Tools consumed

Depreciation on Plant

Salaries of works personnel

Excise duty on production

 

 

2,00,000

50,000

1,50,000

20,000

1,00,000

1,00,000

2,00,000

 

 

 

 

 

 

 

 

8,20,000

Factory Cost/Work’s Cost

Add: Office and Administrative Overhead:

Administrative office expenses

Salary of Managing Director

Fees of directors

Salary of joint Managing Director

 

 

2,00,000

60,000

20,000

40,000

30,20,000

 

 

 

 

3,20,000

Cost of Production

Add: Selling and Distributive Overheads:

Expenses on advertising

Selling Expenses

Sales depots

Packaging and distribution

 

 

1,60,000

1,80,000

1,20,000

1,20,000

33,40,000

 

 

 

 

5,80,000

Cost of sales

Add: Profit margin (20% on sales or 25% on cost)

39,20,000

9,80,000

Sales

49,00,000

Working Note:

Selling Price per unit before subsidy by government = (49,00,000/20,000) = Rs. 245

Selling price per unit after subsidy by government = Rs. 245 – Rs. 100 = Rs. 145

IMPORTANT NOTE: Selling price to be estimated, we have to convert profit margin from sales to cost.

33. The Government of India has instituted the dual pricing system in the industry in which your organization operates. You are the head of the Costing Division of Raja Textiles Co. Ltd. Your company produces a standard type of cloth, 50% of which is procured by the Government at a price of Rs. 4 per metre. You are required by the Managing Director of your company to suggest a suitable price for the cloth to be sold in the open market. Production during 2011-12 has been 20,00,000 metres of cloth. Relevant information is given below:

Expenditure Head

Amount (Rs.)

Expenditure Head

Amount (Rs.)

Cotton Consumed

Direct Labour in Factory

Carriage Inward

Indirect Labour in Factory

Salary of Works Director

and other Staff in Factory

Water, power, Local Taxes (Factory)

Dyeing, Bleaching, etc.

Depreciation (Factory)

Excise and other Taxes on Production

Misc. Expenses (Factory)

Office Salaries

Salary of Managing Director

10,00,000

10,00,000

50,000

4,00,000

 

2,50,000

5,00,000

10,00,000

2,00,000

30,00,000

1,00,000

10,00,000

1,00,000

Expenditure on Sales Depot

Depreciation of Machines (Office)

Misc. Office Expenditure

Purchase of Computer for Office

Misc. Purchases of

Furniture and Machines for Office

Dividends paid

Director’s Fees

Advertising and Publicity

Commission paid on Sales

Commission paid to Foreign Buyer

Packing and Forwarding (on sales)

4,00,000

1,00,000

1,00,000

2,00,000

 

5,00,000

12,00,000

2,00,000

10,00,000

10,00,000

1,00,000

2,00,000

Following further information is made available: (i) The company expects a fair return of 20% on its paid-up capital which is Rs. 1,00,00,000, (ii) Marketing Expenses outstanding are Rs. 1,00,000. Suggest the open market price after preparing a Cost Analysis Sheet in columnar form.

Cost Sheet of Raja Textiles Co. Ltd.

For the year ended on 2011 – 12

Particulars

Amount

Amount

Cotton Consumed

Add: Carriage Inward

10,00,000

50,000

 

10,50,000

(a) Raw Material Consumed during the year

Add: Direct Wages

10,50,000

10,00,000

Prime Cost

Add: Factory Overheads:

Indirect labour

Salary of work director and staff in factory

Water, power and local taxes

Dyeing, Bleaching

Depreciation

Excise and other taxes

Misc. Expenses

 

 

4,00,000

2,50,000

5,00,000

10,00,000

2,00,000

30,00,000

1,00,000

20,50,000

 

 

 

 

 

 

 

54,50,000

Work’s Cost

Add: Office and Administrative Overheads:

Salary of Managing Director

Depreciation of Machines (Office)

Misc. Office expenses

Director Fees

Office salaries

 

 

1,00,000

1,00,000

1,00,000

2,00,000

10,00,000

75,00,000

 

 

 

 

 

15,00,000

Cost of production

Add: Selling & Distributive Overheads:

Advertising and Publicity

Commission paid on sales

Commission paid to foreign buyers

Packaging and forwarding

Expenditure of sales depot

Marketing expenses out

 

 

10,00,000

10,00,000

1,00,000

2,00,000

4,00,000

1,00,000

90,00,000

 

 

 

 

 

 

28,00,000

Cost of Sales

Add: Profit margin

(20% on paid up capital which is Rs. 1,00,00,000)

1,18,00,000

 

20,00,000

Expected Sales

Less: Sales to government (10, 00, 000 mtrs)

 

10,00,000

1,38,00,000

40,00,000

Expected sales in open market (10, 00, 000 mtrs)

98,00,000

Working Note : Estimated selling price per unit for the open market = (expected sales in open market/ no. of units to be sold in open market)  = 98,00,000/10,00,000

34. The cost of sale of product A is made up as follows:

Particulars

(Rs.)

Particulars

(Rs.)

Materials used in manufacturing

Materials used in primary packing

Materials used in selling the product

Materials used in the factory

Materials used in the office

Labour required in producing

Labour required for factory supervision

Indirect Expenses – Factory

60,000

10,000

1,500

750

1,250

10,000

2,000

1,000

Administration Expenses

Depreciation on

Office Building and Equipment

Depreciation on Factory Building

Selling Expenses

Freight on materials purchased

Advertising

1,250

 

750

1,750

3,500

5,000

1,250

Assuming that all the products manufactured are sold, what should be the selling price to obtain a profit of 20% on selling price?

Cost Sheet of Product A

Particulars

Amount

Amount

Materials used in manufacturing

Primary packing material

Freight on materials purchased

60,000

10,000

5,000

 

 

75,000

(a) Raw Material Consumed during the year

Add: Direct Labour

75,000

10,000

(b) Prime Cost

Add: Factory Overheads:

Material used in the factory

Labour required to factory supervision

Indirect Expenses

Depreciation on Factory Building

 

 

750

2,000

1,000

1,750

85,000

 

 

 

 

5,500

(c) Work’s Cost

Add: Office and administrative Overheads:

Materials

Administrative Expenses

Depreciation on office Building

 

 

1,250

1,250

750

90,500

 

 

 

3,220

(d) Cost of Production

Add: Selling and Distributive Overheads:

Selling expenses

Material used in selling price

Advertisement

 

 

3,500

1,500

1,250

93,750

 

 

 

6,250

(e) Total Cost

Add: Profit @ 20% on selling price [Note – 1]

1,00,000

25,000

Sales

1,25,000

Working Note: Since profit is 20% sales, therefore required profit is = 1,00,000 * 20/80 = 25,000

35. Vindhyachal Industries manufacture a Product X. On 1st January, 2012, there were 500 units of finished product in stock. Other stocks on 1st January 2012, were as under:

Particulars

Rs.

Work-in-Progress

Raw Materials

5,740

11,620

The information available form cost records for the year ended 31st December, 2012 was as follows:

Particulars

(Rs.)

Particulars

(Rs.)

Indirect Labour

Direct Labour

Freight on Raw Material Purchased

Stock of Raw Materials on 31-12-2012

Other Factory Expenses

12,160

32,640

5,570

9,640

31,730

Work-in-Progress on 31-12-2012

Sales – 15,000 units

Indirect Materials

Total Manufacturing Cost Incurred

7,820

3,60,000

21,390

1,94,080

There are 1,500 units of product in finished goods stock on 31st December, 2012. You are required to: (i) Prepare a statement of cost for 2012 giving all details of cost and their break up, and (ii) Determine the unit cost at which finished goods stock is to be properly valued at the beginning and at the end of 2012 (assuming the same cost used for both.)

Cost Sheet of Vindhyachal Industries

For the year ended on 31st December, 2012

Particulars

Unit

Amount

Opening of Raw Material

Add: Purchases of Raw material [Note – 1]

Freight on Raw Material purchased

11,620

88,610

5,570

 

Less: Closing Stock of Raw Material

1,05,800

9,640

(a) Raw Material Consumed during the year

Add: Direct Labour

96,160

32,640

(b) Prime Cost

Add: Factory Overheads:

Indirect Labour

Other Factory Expenses

Indirect materials

1,28,800

 

12,160

31,730

21,390

(c) Factory cost incurred

Add: Opening Stock of work-in-progress

Less: Closing Stock of work-in-progress

1,94,080

5,740

7,820

(d) Factory Cost or Cost of Production

Add: Opening Stock of finished goods [12 x 500]

Less: Closing stock of finished goods [12 x 1,500]

16,000

500

1,500

1,92,000

6,000

18,000

(e) Cost of goods sold

Add: Profit

15,000

1,80,000

1,80,000

(f) Sales

15,000

3,60,000

Working Note:

Note – 1: Calculation of Purchases:

Particulars

Amount

Factory cost incurred

Less: Factory Overheads:

Indirect Labour

Other Factory Expenses

Indirect materials

1,94,080

 

12,160

31,730

21,390

 

Less: Direct Labour

1,28,800

32,640

 

Less: Opening Stock of Raw Materials

Add: Closing Stock of Raw Materials

Less: Freight on Raw Material Purchased

96,160

11,620

9,640

5,510

Purchase of Raw Materials

88,610

 

36. The books of Adarsh Manufacturing Company present the following data for the month of April, 2012. Direct labour cost Rs. 17,500 being 175% of the works overhead; cost of goods sold excluding administration expenses Rs. 56,000. Inventory accounts showed the following opening and closing balances:

Particulars

April 1

Rs.

April 30

Rs.

Raw materials

Work-in-Progress

Finished goods

8,000

10,500

17,600

10,600

14,500

19,000

Particulars

Rs.

Selling expenses

General and administration expenses

Sales for the month

3,500

2,500

75,000

You are required to: (i) Compute the value of materials purchased, (ii) Prepare a statement of cost showing the various elements of cost and also the profit.

Cost Sheet of Adarsh Manufacturing Company

For the month of April, 2012

Particulars

Amount

Opening Stock of Raw Materials

Add: Purchases [Note – 1]

Less: Closing Stock of Raw Materials

8,000

36,500

10,600

(a) Raw Materials during the year

Add: Wages

33,900

17,500

(b) Prime Cost

Add: Factory Overheads:

51,400

10,000

(c) Work’s Cost incurred

Add: Opening Stock of work-in-progress

Less: Closing Stock of work-in-progress

61,400

10,500

14,500

(d) Work’s Cost

Add: Office and administrative Overheads:

57,400

2,500

(e) Cost of Production

Add: Opening Stock of finished goods

Less: Closing Stock of finished goods

59,900

17,600

19,000

(f) Cost of goods Sold

Add: Selling and Distributive Overheads:

58,500

3,500

(g) Cost of Sales

(h) Profit

62,000

13,000

Sales

75,000

Working Notes:

Note – 1: Calculation of Purchases of Raw Material

Particulars

Amount

Cost of goods sold

Less: Opening Stock of finished goods

Add: Closing Stock of finished goods

56,000

17,600

19,000

 

Less: Opening Stock of work-in-progress

Add: Closing Stock of work-in-progress

57,400

10,500

14,500

 

Less: Works/Factory Overheads (17,500*100/175)

61,400

10,000

 

Less: Direct Labour

51,400

17,500

 

Less: Opening Stock of Raw Materials

Add: Closing Stock of Raw Materials

32,900

8,000

10,600

Purchase of Raw Materials

36,500

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