Friday, April 14, 2017

Cost Sheet and Its Preparation (Part 2)

Practical Problems
Q.1. The Tripathi electrical ltd. Manufactures one product. A Summary of its activities for 2015 is as follows:
Particulars
Units
Amount
Sales
Raw Material (Opening)
Raw Material (Closing)
W – I – P (Opening)
W – I – P (Closing)
Finished Goods (Opening)
Finished Goods (Closing)
Material purchases
Direct Labour
Manufacturing overheads
Selling expenses
General and administrative 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 total cost and profit made during the year.  Also show value of closing stock on the basis of LIFO and FIFO.

Cost Sheet of Tripathi Electrical Ltd.
PARTICULARS
AMOUNT
UNIT
Raw Material (Opening)
Add: Material purchases
Less: Raw Material (Closing)
40,000
1,52,000
32,000

(a) Raw Material consumed during the year
Add: Direct Labour
Add: Factory overheads
1,60,000
1,45,000
1,08,000

(b) Work’s cost incurred
Add: W-I-P (Opening)
Less: W-I-P (Closing)
2,68,000
55,000
72,000

(c) Work’s cost
Add: Administrative Overheads
2,51,000
40,000

(d) Cost of production
Add: Finished goods (Opening)
Less: Finished goods (Closing)
2,91,000
64,000
79,364
88,000
16,000
24,000
(e) Cost of goods sold
Add: Selling and distributive overheads
2,75,631
50,000
80,000
(f) Total Cost
(g) Profit (Balancing figure)
3,25,631
4,74,369
80,000
Sales
8,00,000
80,000

Q. 2. Following are the figures extracted from the books of an iron foundry after the close of the year: (Dibrugarh University – 2004)
Particulars
Amount
Raw Materials:
Opening Stock
Purchases of Raw materials
Closing stock of raw materials
Direct wages
Works overheads
Stores overheads on materials

14,000
1,00,000
10,000
20,000
50% of direct wages
10% on the cost of material
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 casting were found to be defective in manufacture and were rectified by expenditure of additional works overheads charged to the extent of 20 % on the proportionate direct wages. The total gross output of castings during the year: 2000 tons. Find out the manufacturing cost of the saleable casting per ton.                               
Ans:
Cost Sheet of an Iron foundry Ltd.
PARTICULARS
AMOUNT
UNIT
Materials used:
Opening Stock
Purchase
Less: Closing Stock

14,000
1,00,000
10,000



1,04,000
Add: Direct wages
          Prime Cost
          Work overhead: 50% of direct wages
          Stores overhead: 10% of material cost

20,000
1,24,000
10,000
10,400

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

1,44,400
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
1. Working Note: Cost of rectification of defective works per ton:
Direct wages per ton = 20,000/2,000 = Rs. 10 per ton
Rectification cost: 20% of Rs. 10 = Rs. 2.
Q.3. From the following information, prepare a cost sheet showing the cost and profit:  (Dibrugarh University – 2010)
Particulars
Rs
Opening raw material
29,500
Closing raw material
36,000
Opening work-in-progress :
     Material
     Wages
     Works overhead

13,600
11,000
6,600
Closing work-in-progress :
     Material
     Wages
     Works overhead

12,000
16,500
9,900
Opening finished goods – 200 units @ Rs 84
Closing finished goods – 1600 units
Purchase of raw material
1,90,000
Carriage on purchase
1,500
Sale of scrap of raw material
5,000
Wages
2,97,000
Works overhead @ 60% of direct labour cost
Administration overhead @ Rs 12 per unit produced
Selling and distribution overhead @ 20% of selling price
Sales – 7600 units at a profit of 10% on sales price.
Ans:
Statement of Cost or Cost sheet
PARTICULARS
Units
Amount
Amount
Opening Stock of Raw material
Add: Purchase of Raw material
Add: Carriage inward
Less: Sale of scrap of raw material
Less: Closing Stock of Raw material


29,500
1,90,000
1,500
5,000
36,000
(a) Raw Material consumed during the year
Add: Direct wages


1,80,000
2,97,000
Prime Cost
Add: Works overhead @ 60% of direct labour cost


4,77,000
1,78,200
Work’s Cost incurred
Add: Opening stock of work-in-progress
Material               
Wages
Works overhead
Less: Closing stock of work-in-progress
Material
Wages
Works overhead



13,600
11,000
6,600

12,000
16,500
9,900
6,55,200



31,200

38,400
Work’s cost / factory cost
Add: Administration overhead @ Rs 12 per unit produced (9,000 * 12)


6,48,000

10,800
(b) Cost of Production
Add: Opening Stock of finished goods (@84)
Less: Closing Stock of finished goods(658800/9000= 73.2)
9,000
200
1,600


6,58,800
16,800
1,17,120
(c) Cost of goods Sold
Add: Selling and Distributive overheads
7,600


5,58,480
1,59,566
Total cost of sales
(d) Add: Profit for the year
7,600

7,18,046
79,783
Sales
7,600

7,97,829
Production = Sales + closing stock – opening stock = 7,600+1,600 – 200 = 9,000
Working note:
Let the sales be                                                                       x
Less: Profit @ 10% on Sales                                               0.10x
Cost of sales                                                                         0.90x
Less: Selling and distribution expenses (20% on x)       0.20x
Cost of goods sold                                                               0.70x
Now,
Selling and distribution overheads = (5,58,480*0.20x)/0.70x = 1,59,566
Profit for the year = (7,18,046*0.10x)/0.90x = 79,783

Q.4. Following extract of costing information relates to a commodity for the year ended 31st March, 2012: (Dibrugarh University – 2013)
Stock on 1st April, 2011: Raw materials
5000
Finished product (1000 tones)
4000
Stock on 31st March, 2012: Raw materials
5560
Finished product (2000 tons)
8000
Raw materials purchased
30000
Direct wages
25000
Rent, Rates and Taxes
1000
Carriage inwards
360
Work in progress on 1st April, 2011
1200
Work in progress on31st April, 2012
4000
Cost of factory supervision
2000
Sales of finished goods
75000
Advertisement and selling expenses amounts of 0.25 paise per ton sold. 16000 tones were produced during the year. Prepare a statement showing:
a)      The value of raw material used;
b)      The cost of production;
c)       The cost of turnover for the year;
d)      The net profit for the year and net profit per ton.
Ans:
Statement of Cost or Cost sheet
PARTICULARS
Units
Amount
Opening Stock of Raw material
Add: Purchase of Raw material
Add: Carriage inward
Less: Closing Stock of Raw material

5,000
30,000
360
5,560
(a) Raw Material consumed during the year
Add: Direct wages

29,800
25,000
Prime Cost
Add: Work’s overheads:
Cost of factory supervision

54,800

2,000
Work’s Cost incurred
Add: Opening stock of work-in-progress
Less: Closing stock of work-in-progress

56,800
1,200
4,000
Work’s cost / factory cost
Add: Office and administrative overhead:
Rent, Rates and taxes

54,000

1,000
(b) Cost of Production
Add: Opening Stock of finished goods
Less: Closing Stock of finished goods
16,000
1,000
2,000
55,000
4,000
8,000
(c) Cost of goods Sold
Add: Selling and Distributive overheads (0.25*15,000)
15,000

51,000
3,750
Total cost of sales
(d) Add: Profit for the year
15,000
54,750
20,250
Sales
15,000
75,000
Profit per ton = 20250/15000 = 1.35
Q.5. Following details relate to ATEACO Ltd. for the year ending 31.03.2013: (Dibrugarh University – 2014)
01.04.2012
31.03.2013
Units
Rs.
Units
Rs.
Stock of Raw Materials
1000
12,000
800
10,000
Work-in-progress
800
16,000
1000
20,000
Stock of Finished Goods
6000
-
10000
-
Expenses during the year in Rs.
Direct Wages
6,00,000
Purchase of Raw Materials (97000 units)
11,14,000
Other Materials
36,000
Carriage Inward
5,640
Carriage Outward
3,000
Wages to Foremen
48,000
R & D Expenses
30,000
Other Wages
6,000
Manager’s Salary
72,000
Employee’s State Insurance
6,000
Power and Fuel
54,000
Office Expenses
36,000
Printing and Stationery
12,000
Counting House Salary
12,000
Sales of Scraps
1,640
Income Tax
22,000
Donation to Charity
5,000
Selling and Distribution expenses Rs. 1 per unit. Units manufactured during the year are 96000. Finished stock is valued at current cost. Prepare Cost Sheet showing the following:
a)      Materials consumed
b)      Prime cost
c)       Factory cost
d)      Cost of production
e)      Cost of goods sold
f)       Total cost of sales
Ans:
Cost Sheet of ATEACO Ltd.
PARTICULARS
UNIT
AMOUNT
Opening Stock of Raw material
Add: Purchase of Raw material
Add: Carriage inward
Less: Closing Stock of Raw material
1,000
97,000

800
12,000
11,14,000
5,640
10,000
(a) Raw Material consumed during the year
Add: Direct wages
97,200

11,21,640
6,00,000
(b) Prime Cost
Add: Work’s overheads:
      Other material
      Wages to foremen
      Other wages
      Power and fuel
Less: Sale of Scraps






(1,000)
17,21,640

36,000
48,000
6,000
54,000
(1,640)
Work’s Cost incurred
Add: Opening stock of work-in-progress
Less: Closing stock of work-in-progress

800
1,000
18,64,000
16,000
20,000
(c) Work’s cost / factory cost
Add: Office and administrative overhead:
R & D Expenses
Manager’s salary
Employees State Insurance
Office expenses
Printing & stationery
Counting House Salary

18,60,000

30,000
72,000
6,000
36,000
12,000
12,000
(d) Cost of Production
Add: Opening Stock of finished goods (20,28,000/96,000*6,000)
Less: Closing Stock of finished goods (20,28,000/96,000*10,000)
96,000
6,000
10,000
20,28,000
1,26,750
2,11,250
(e) Cost of goods Sold
Add: Selling and Distributive overheads
92,000
-
19,43,500
96,000
(f) Total cost of sales
92,000
20,39,500

Q.6. Following details have been obtained from the costing records of a manufacturing company:
Particulars
Amount
Stock of Raw material (Opening)
Stock of Raw material (closing)                                                                                                                     
Material purchased
Office salaries (Drawings)
Count house salaries
Carriage inwards
Carriage outwards
Cash discount
Bad debt written off
Repairs to plant and machinery
Rent, rates, etc. (Factory)
Rent, rates, etc. (Office)
Travelling expenses
Travelling commission
Productive wages
Depreciation on Plant and machinery
Depreciation on office furniture
Director’s fees
Gas and water charges: Factory
Gas and water charges: Office
General charges
Manager’s Salary
47,000
50,000
2,08,000
9,600
14,000
8,200
5,100
3,400
4,700
10,600
3,000
1,600
3,100
8,400
1,40,000
7,100
600
6,000
1,500
300
5,000
12,000
Out of 48 working hours in a week, the time devoted by the manager in the factory and office was on average 40 hours and 8 hours respectively throughout the accounting year. Prepare a statement of cost 
Ans:
Cost Sheet of a Manufacturing Company Ltd.
PARTICULARS
AMOUNT
AMOUNT
Stock of Raw material (Opening)
Add: Material Purchased
Add: Carriage Inward
Less: Stock of Raw material (Closing)

47,000
2,08,000
8,200
50,000
(a) Raw material consumed during the year
Add: Productive wages

2,13,200
1,40,000
(b) Prime cost
Add: Factory overheads:
Office salaries (Drawing)
Repairs to Plant and Machinery
Rent, rates etc. (factory)
Depreciation on Plant & Machinery
Gas and water charges: Factory
Manager’s salary (12,000*40/48)


9,600
10,600
3,000
7,100
1,500
10,000
3,53,500






41,800
(c) Work’s Cost
Add: Office and Administrative overheads:
Count house salaries
Rent, rates, (Office)
Depreciation on office furniture
Director’s fees
Gas and water charges: Office
General charges
Manager’s Salary  (12,000*8/48)


14,000
1,600
600
6,000
300
5,000
2,000
3,95,300







29,500
(d) Cost of production
Add: Selling and distributive overheads:
Carriage outward
Bad debt written off
Travelling expenses
Travelling commission


5,100
4,700
3,100
8,400
4,24,800




21,300
Total Cost

4,46,100

7. Production cost of VSK Ltd. a manufacturing company, for the year ending 31st March, 2011, are as follows:

Rs.
Direct wages
Direct materials
Drawing office salaries and expenses
Salary of general manager
Advertising display material
Wages of dispatch department
Salaries and expenses of directors
Travelers’ salaries
Depreciation of delivery vans
Chargeable expenses
Office overhead (5% of works cost)
Sales office expenses
Salary of sales manager
Rent and rates of warehouses
Catalogues and price lists
Rent and Rates of showrooms
Production overheads (10% of prime cost)
60,000
1,00,000
2,000
16,000
8,000
11,000
22,000
13,000
7,000
4,000

9,000
14,000
3,000
6,000
5,000
Draw up a cost statement from the above bearing in mind that goods are sold at a profit of 20% on selling price.
Ans:
Cost Sheet of VSR Ltd.
For the year ended on 31st March, 2011
PARTICULARS
AMOUNT
AMOUNT
Direct material
Add: Direct wages
Add: Chargeable expenses

1,00,000
60,000
4,000
(a) Prime Cost
Add: Factory Cost:
Production overhead (10% of Prime Cost)
Drawing Office salaries


16,400
2,000
1,64,000


18,400
(b) Work’s Cost
Add: Office & administrative overhead:
Office overheads (5% of Work’s Cost)
Salary of general manager
Salaries and expenses of directors


9,120
16,000
22,000
1,82,400



47,120
(c) Cost of Production
Add: Selling and distribution overhead:
Advertising display material
Traveler’s salaries
Seles office expenses
Salary of sales manager
Catalogues and price lists
Rent and rates of showroom
Wages of dispatch department
Depreciation of delivery van
Rent and Rates of warehouse


8,000
13,000
9,000
14,000
6,000
5,000
11,000
7,000
3,000
2,29,520









76,000
(d) Cost of sales
Profit

3,05,520
76,380
Sales

3,81,900
Working Note:  Sales price = 3,05,520*100/80 = 381900
8. A manufacturing company produces two commodities X and Y. Related data for the year 2010-11 are as follows:

Commodity

X
Rs.
Y
Rs.
Number of units produced
Direct expenses:
     Raw material used
     Wages
     Other direct expenses
Other expenses:
     Supervisor’s salary
     Selling and distribution expenses
     Administrative expenses
5,000

16,020
9,430
6,950

5,824
1,504
1,918
3,000

11,735
7,846
4,719
Prepare a cost sheet showing the cost of each commodity taking the following into consideration:
a)      Works overhead will be charged in the ratio of prime cost.
b)      Administrative expenses will be apportioned in the ratio that works cost of X bears to similar cost of Y.
c)       Selling and distribution expenses will be apportioned in production ratio.
Ans:
Cost Sheet of two commodities
For the year ended on 2010-11
PARTICULARS
X
(5,000)
Y
(5,000)
Raw Material used
Add: Wages
Other Direct Expenses
16,020
9,430
6,950
11,735
7,846
4,719
Prime Cost
Add: Work Overhead:
Supervisor’s Salary [32,400:24,300]
32,400

3,328
24,300

8,32
Work’s Cost
Add: Office and administrative overhead:
35,728
1,096
25,132
822
Cost of production
Add: Selling and distribution overhead
36,824
940
27,618
564
Total Cost
37,764
28,182

9. From the following particulars of Jackson and Company Ltd. prepare a cost sheet for the month of December, 2010:

Rs.
Stock on 1.12.10
     Raw materials
     Work-in-progress (valued at prime cost)
     Finished goods
Stock on 31.12.10
     Raw materials
     Work-in-progress (valued at prime cost)
     Finished goods
Purchased of raw materials
Chargeable expenses
Abnormal loss of materials
Insurance of raw materials
Remuneration of technical directors
Internal transport cost
Factory wages
Personnel department expenses
Depreciation of staff cars
Cost of free after-sales service
Insurance of finished stock
Warehouse wages
Sales
Professional fees
Market research expenses
Power and fuel
Works canteen and welfare expenses
Depreciation of delivery van

10,000
8,000
6,000

3,000
2,000
1,000
75,000
4,000
5,000
7,000
9,000
11,000
70,000
12,000
1,500
3,500
2,500
4,500
3,00,000
6,500
7,500
20,000
13,000
8,500
Ans:
Cost Sheet
For The Month of December, 2010
PARTICULARS
AMOUNT
AMOUNT
Raw Material Consumed
Add: Opening Stock
Add: Purchases
Add: Insurance of raw materials

10,000
75,000
7,000





Less: Abnormal Loss
Less: Closing Stock
92,000
5,000
3,000


84,000
Add: Factory wages
Add: Chargeable expenses

70,000
4,000

Adjustment for work-in-progress:
Opening
Closing


8,000
(2,000)
1,58,000


6,000
Prime Cost
Add: Factory overheads:
Remuneration of technical directors
Internal transport
Power and Fuel
Works canteen and welfare expenses


9,000
11,000
20,000
13,000
1,64,000




53,000
Work Cost
Add: Office and administrative overheads:
Personnel department expenses
Depreciation of staff cars
Professional fees


12,000
1,500
6,500
2,17,000



20,000
Cost of production
Add: Opening Stock of finished goods
Less: Closing Stock of finished goods

2,37,000
6,000
1,000
Cost of goods sold
Add: Selling and distribution overhead:
Market research expenses
Cost of free after sales service
Insurance of finished goods
Warehouse wages
Depreciation of delivery van


7,500
3,500
2,500
4,500
8,500
2,42,000





26,500
Cost of sales
Profit (Balancing figure)

2,68,500
31,500
Sales

3,00,000

10. ARB Ltd. furnished the following information for the year 2010-11:

Rs.
Stock of raw materials on 1.4.10
Stock of finished goods on 1.4.10 (500 tons)
Freight paid
Prime cost
Stock of raw materials on 31.3.11
Stock of finished goods on 31.3.11 (750 tons)
Direct Labour:
     60 skilled labourers @ Rs. 50 per day for 250 days
     200 unskilled labourers @ Rs. 30 per day for 250 days
Indirect wages
Factory rent, rates and power
Salary of managing director
Office rent and taxes
Donation
Advertisement
Income tax
Depreciation of plant and machinery
Selling overhead
Packing and distribution expenses
Fuel
1,00,000
8,00,000
2,00,000
44,50,000
3,00,000
?



40,000
30,000
50,000
1,00,000
30,000
4,50,000
60,000
35,000
5,00,000
85,990
65,000
Other information:
a)      During the year 2010-11 2,250 tons of finished goods were sold.
b)      The company valued the closing stock of finished goods under FIFO basis.
c)       The company maintains profit @20% on sales.
On the basis of abovementioned data, you are required to prepare a detailed cost sheet for the year 2010-11.
Ans:
Cost Sheet of ABC Ltd
Period: Year ended 31-3-11
Output – 2,500 tons
PARTICULARS
TOTAL
PER TON
Raw Materials consumed:
Stock on 1-4-10
Purchases (see note 2)
Freight

1,00,000
22,00,000
2,00,000


Less: Stock on 31-3-11
25,00,000
3,00,000


Add: Direct Labour
Skilled: 60 x Rs. 50 x 250 days
Unskilled : 200 x Rs. 30 x 250 days
22,00,000
7,50,000
15,00,000
880.00
Prime cost
Add: Work overhead:
Indirect Labour                                                                                               40,000
Factory rent, rates, and power                                                                    30,000
Depreciation of Plant & Machinery                                                            35,000
Fuel                                                                                                                   65,000
44,50,000




1,70,000
1,780.00




68.00
Work’s cost
Add: Office and administrative overheads:
Salary of Managing Director                                                                         50,000
Office rent and taxes                                                                                  1,00,000
46,20,000


1,50,000
1,848.00
Cost of production (2,500)
Add: Stock of finished goods on 1-4-10
47,70,000
8,00,000
1,908.00

Less: Stock of finished goods on 31-3-11
55,70,000
14,31,000

Cost of goods sold (2,250 ton) (See Note – 3)
Add: Selling and distributive overhead:
Advertisement                                                                                             4,50,000
Selling overhead                                                                                          5,00,000
Packaging and distribution expenses                                                         85,990
41,39,000



10,35,990
1,839.56



460.44
Cost of sales
Profit (20% on sale i.e. 25% on cost)
51,74,990
12,93,748
2,300.00
575.00
Sales
64,68,730
2,875.00
Note 1: Production during the year:  (Sales 2,250 tons + closing stock 750 tons – opening stock 500 tons) = 2,500 tons
Note 2: Calculation of Purchases:
Prime Cost
Less: Direct Labour
Add: Closing Stock of Raw material
Less: Freight
Less: Opening Stock of Raw material
44,50,000
22,50,000
3,00,000
2,00,000
1,00,000
Purchases
22,00,000
Note 3: Per unit cost of goods sold Rs. 1,839.56 has been obtained by 44,39,000 by 2,250.
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

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