Sunday, April 28, 2019

Cost Sheet Solved Practical Problems (2)


11. The accounts of the Steelways Engineering Co. Ltd. show for 2010:


Rs.
Materials used
Manual and machine labour wages directly chargeable
Works overhead expenditure
Establishment and general expenses
1,80,000
1,60,000
40,000
19,000
a)      Show the works cost and total cost, the percentage that the works overhead cost bears to the manual and machine labour wages and the percentage that the establishment and general expenses bear to the works cost.
b)      What price should the company quote to manufacture a machine which, it is estimated will require an expenditure of Rs. 8,000 on materials and Rs. 6,000 on wages so that it will yield a profit of 25% on the total cost or 20% on selling price.
Ans:
Cost Sheet or Statement of Cost
PARTICULARS
AMOUNT
Material used
Manual and machine labour wages (Directly chargeable)
1,80,000
1,60,000
Prime Cost
Work’s overhead expenditure
3,40,000
40,000
Work’s Cost
Establishment & General Expenses
3,80,000
19,000
Total cost
3,99,000

Percentage of works overhead to manual and machine labour = (40,000/1,60,000*100)
Percentage of establishment and general expenses to work’s cost  = (19,000/3,80,000*100)
25%
5%
Statement of Estimated Cost for the Manufacture of the Machine Enquiry from………….
PARTICULARS
AMOUNT
Cost of Materials
Direct wages
8,000
6,000
Prime Cost
Works overhead (25% of wages)
14,000
1,500
Work’s Cost
Establishment and general expenses (5% of work’s cost)
15,500
775
Total Cost
Profit (20% on selling price or 25% on cost)
16,275
4,069
Price to be quoted
20,344
12. From the following particulars prepare a statement in such from as you consider most suitable for showing clearly all element of cost:

Rs.

Rs.
Opening stock of raw materials
Purchase of raw materials
Raw materials returned to suppliers
Closing stock of raw materials
Wages paid to:
     Productive workers
     Non-productive workers
Salaries paid to office staff
Carriage on raw materials purchased
25,000
70,000
2,000
18,800

18,000
2,000
5,000
500
Carriage on goods sold
Rent and rates of workshop
Fuel, gas and water etc.
Repairs to plant
Depreciation on machinery
Office expenses
Direct chargeable expenses
Advertising
Abnormal loss of raw materials
1,500
2,500
1,000
600
1,400
1,500
800
1,200
1,200
Ans:
Cost Sheet or Statement of Cost
PARTICULARS
AMOUNT
AMOUNT
Material Consumed:
Opening Stock
Purchases
Carriage on Purchases

25,000
70,000
500


Less: Return
95,500
2,000


Less: Abnormal loss
93,500
1,200


Less: Closing Stock
92,300
18,800

73,500
Productive Wages
Direct chargeable expenses

18,000
800
Prime Cost
Work’s overheads:
Non-productive wages
Rent, rates of workshop
Fuel, gas, water etc
Repairs to plant
Depreciation on Machinery


2,000
2,500
1,000
600
1,400
92,300





7,500
Work’s Cost
Office overheads:
Salaries to Office staff
Office expenses


5,000
1,500
99,800


6,500
Cost of production
Selling & distributing Overheads:
Carriage on goods sold
Advertising


1,500
1,200
1,06,300


2,700
Cost of sales

1,09,000
Note: Abnormal loss of materials should be excluded from cost and debited to Costing profit and loss A/c, hence it has been deducted from material cost.        
13. The following data relate to the manufacture of a standard product during the four-week period to June 30th, 2011:
Particulars
Rs.
Raw materials consumed
Wages
Machine hours worked
Machine hour rate
Office overhead
Selling overhead
Units produced
Units sold
4,000
6,000
1,000
50 paise
20% on works cost
6 paise per unit
20,000
18,000 @ Re. 1 per unit
You are required to prepare a cost sheet showing the cost per unit and profit for the period.
Ans:
Cost Sheet or Statement of Cost
Output – 20,000 units
Period: 4 weeks ended 30-06-11
PARTICULARS
TOTAL AMOUNT
Rs.
PER UNIT
Rs.
Raw Material consumed
Wages
4,000
6,000
0.200
0.300
Prime Cost
Add: Work’s overhead:
1,000 hours @ Re. 50
10,000

500
0.500

0.025
Work’s Cost
Add: Office overhead:
(20% of Work’s Cost)
10,500

2,100
0.525

0.105
Cost of Production
Less: Closing Stock (2,000 units @ Re. 0.630)
12,600
1,260
0.630
Cost of goods sold (18,000 units)
Add: Selling overhead:
0.60 per unit on 18,000 units
11,340

1,080
0.630

0.060
Cost of sales
Profit (Balancing figure)
12,420
5,580
0.690
0.310
Sales
18,000
1.000
14. From the following particulars you are required to prepare a monthly cost sheet of a manufacturing company showing cost and profit per 1,000 units of production. Show also in the form of a summary the cost of sales, net profit and sales for the month. The company manufacturers only one type of product. The opening stock was valued at the same price per 1,000 units as the production of the month concerned.
Particulars
Amount
Materials:
     Basic raw materials
     Stores
Labour:
     Direct
     Indirect
Overheads:
     Works
     Office
Production for the month of November, 2010
Sales for the month
Stock at the beginning of the month
Stock at the end of the month

1,400 tonnes @ Rs. 5 per ton
Rs. 5,000

16,000
3,000

25% of direct labour
10% of works cost
10,00,000 units
9,00,000 units @ Rs. 50 per 1,000 units
2,00,000 units
3,00,000 units
Ans:
Cost Sheet or Statement of Cost
PARTICULARS
TOTAL AMOUNT
UNIT
Basic raw materials: 1,400 tonnes @ Rs. 5 per tones
Direct Labour
7,000
16,000
700
1,600
Prime Cost
Indirect materials
Indirect Labour
Work’s overhead (25% of direct labour)
23,000
5,000
3,000
4,000
2,300
500
300
400
Work Cost
Office overhead (10% of work’s cost)
35,000
3,500
35.00
3.50
Cost of production
Add: Opening Stock: 2,00,000 unit @ Rs. 38.50 per thousand unit
38,500
7,700
38.50

Less: Closing Stock: 3,00,000 unit @ Rs. 38.50 per thousand unit
46,200
11,550

Cost of goods sold (9,00,000 units)
Profit (Balancing figure)
34,650
10,350

11.50
Sales
45,000
50.00

15. The following figures for the month of April, 2011 were extracted from the records of a factory:

Rs.
Opening stock of finished goods (5,000 units)
Purchase of raw materials
Direct wages
Factory overhead
Administration overhead
Selling and distribution overhead
Closing stock of finished goods (10,000 units)
Sales (45,000 units)
45,000
2,57,100
1,05,000
100% of direct wages
Re. 1 per unit
10% of sales
?
6,60,000
Prepare a cost sheet for the month of April, 2011, assuming that sales are made on the basis of ‘first-in-first-out’ principle.
Ans:
Statement of cost
Output: 50,000 units (See Note – 1)
Period: April, 2011
PARTICULARS
TOTAL AMOUNT
Rs.
PER UNIT
Rs.
Raw Material
Direct Wages
2,57,100
1,05,000
5.142
2.100
Prime Cost
Add: Factory Overhead (100% of direct wages)
3,62,100
1,05,000
7.242
2.100
Work’s Cost
Add: Administration overhead (Re. 1 per unit)
4,67,100
50,000
9.342
1.000
Cost of production
Add: Opening Stock of finished goods
5,17,100
45,000
10.342

Less: Closing Stock of finished goods (10,000 units @ Rs. 10.342) (See Note 2)
5,62,100
1,03,420

Cost of goods sold (45,000 units)
Add: Selling and distribution overhead @ 10% of sales
4,58,680
66,000

1.467
Cost of Sales
Profit (Balancing figure)
5,24,680
1,35,320
11.809
2.858
Sales (See Note – 3)
6,60,000
14.667
Note – 1: Production during the month: [Sales 45,000 unit + closing stock 10,000 units – opening stock 5,000 units] = 50,000 units.
Note – 2: Since goods have been sold on FIFO basis the entire closing stock represents current production                  @ Rs. 10.342 per unit, because sales include all opening stock and part of current production.
Note – 3: Per unit sale Rs. 14.667 has been obtained by dividing Rs. 6,60,000 by 45,000 sales units.
16. The Tripati Electricals Ltd. manufacturers one product. A summary of its activities for 2010 is as follows:
Particulars
Units
Rs.
Sales
Material inventory:
     1.1.10
     31.12.10
Work-in-progress inventory:
     1.1.10
     31.12.10
Finished goods:
     1.1.10
     31.12.10
Material purchases
Direct labour
Manufacturing overheads
Selling expenses
General and administration expenses
80,000







16,000
24,000

8,00,000

40,000
32,000

55,000
72,000

64,000
-
1,52,000
1,45,000
1,08,000
50,000
40,000
Prepare a cost sheet showing:
a)   The total cost of goods manufactured (finished), the number of units manufactured (finished) and the cost per unit; and
b)   The cost of goods sold for the year presuming the company uses the LIFO inventory costing method for its finished goods inventory.
Ans:
Statement of cost
Output: 88,000 units (See Note – 1)
Period: Year ended 5/12/10
PARTICULARS
TOTAL AMOUNT
Rs.
PER UNIT
Rs.
Materials Consumed:
Opening Inventory                                                                                             40,000
Purchases                                                                                                         1,52,000
                                                                                                                           1,92,000
Less: Closing inventory                                                                                     32,000
Add: Direct labour




1,60,000
1,45,000




1.81818
1.64773
Prime Cost
Add: Manufacturing overhead:
3,05,000
1,08,000
3.46591
1.22727

Adjustment for work-in-progress
Opening                                                                                                               55,000
Closing                                                                                                            (-) 72,000
4,13,000


(-)17,000
4.69318


(-)0.19318
Work Cost
Add: General and Administration expenses:
3,96,000
40,000
4.50000
0.45455
Total Cost of goods manufactured
Add: Opening Stock (16,000 units)
4,36,000
64,000
4.95455

Less: Closing Stock (24,000 units) (See Note – 2)
5,00,000
1,03,636

Cost of goods sold (80,000 units)
Add: Selling and Distributive overhead
3,96,364
50,000

0.625000
Cost of sales
Profit (Balancing figure)
4,46,364
3,53,363
5.57955
4.42045
Sales
8,00,000
10.00000
Working Note: Note – 1: Production during the month: (Sales 80,000 units + closing stock 24,000 units – opening stock 16,000 units) = 88 units.
Note – 2: Value of closing stock on LIFO basis:

Rs.
16,000 units @ Rs. 4 per unit
8,000 units @ Rs. 4.95455 per unit
64,000
39,636

1,03,636

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:

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.
Ans:
Cost Sheet or Statement of Cost
PARTICULARS
TOTAL 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
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.
Ans:
Cost Sheet
Output: 1,000 units (See Note – 1)
Period: July, 2011
PARTICULARS
TOTAL AMOUNT
Rs.                      Rs.
COST PER UNIT
Rs.
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:

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.
Ans:
Cost Sheet or Statement of Cost
PARTICULARS
TOTAL 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

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