## Friday, April 14, 2017

### Cost Sheet and Its Preparation (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:
 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
20. From the following particulars prepare a Cost Sheet showing the total cost per tone for the period ended 31st Dec, 2012.
 Rs. 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.
Ans:
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:
 Rs. Rs. 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.
Ans:
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:
 Rs. Rs. 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.
Ans:
Cost Sheet of sunshine Industries Ltd.
For the year 2012

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

24. The Modern Manufacturing Company submits the following information on 31st March, 2012:
 Rs. 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.
Ans:
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:
 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 Rs. 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;
Ans:
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 Rs. 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.
Ans:
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 (15,030+13,500+2,000)                                           30,530                                                          Selling and Distribution overheads (1,200+7,650)                                                                  8,850 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 Rs. 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
Ans:
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.
 Rs. 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
Ans:
In the books of a Manufacturing firm
 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.
Ans:
Statement of Cost Sheet
 PARTICULARS UNIT 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.
Ans:
Statement of Cost
 PARTICULARS UNIT 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.
 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.
Ans:
Statement of 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. 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.
Ans:
Cost Sheet
For the year 2012
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.
Ans:
Cost Sheet of Raja Textiles Co. Ltd.
For the year ended on 2011 – 12
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:
 (Rs.) (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?
Ans:
Cost Sheet of Product A
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:
 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:
 (Rs.) (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.)
Ans:
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:
 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 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.
Ans:
Cost Sheet of Adarsh Manufacturing Company
For the month of April, 2012