403 cost CLASSIFICATION According to CAS-1 by the Lexy, Me manufacturing process lewa, Costs are also classified on the basis of ) Batch Cost isthe aggregate nck maintain iis iden ie {lated toa cost unit which consist of ‘agroup of si > oughout one or more stages of product 3 When the prelction proces is such that poole een elon, repttive eperations oF presses, the Cost, The process cost perunitis derived in the process duri ng the perio, 4, Operation Cost is the cost spec astivity, When there; are distinctly separ istound out for effective control mech 5. Operating Cost is the eo the cost of undertakings lar articles, Boos are produced from a sequence of conti incurced during a period is considered as Process ¥ dividing the process cost by numberof units produced Operation involved in a production process or business ate operations involved in a process, cost for each operation hanism, yet in conducting a business activity. Operating costs refer to ich donot ‘manufacture any product but which provide services, 6 Contract Cost is the cast of contract with ie with some terms an jon of adjustment agreed up Sectoce the cntracteeand the contracton, nd Soto aajustment agreed upon Jeint Costs are the common cost of facilis or services employed inthe output of two oF more sh easly Produced or otherwise closely related operations canmolitie owen [Tutorial Note eave already studied Cost Classification on different basis such as Behaviour, Time, Decisions, Elements ete. in Chapter 1] re TEREST Collection of Costs from different sources such as Stor. department; (2) Classification of Costs into Mat (6) Ascertaining Cost Per Unit by (a) Allocation of Direct Costs (b) Apportionment of Costs to Cost Centres, and finally (©) Absorption of Overheads by individual unis, ETT ne Ditlerent methods of costing are used in different industries. The method of casting used depends, ‘pon the nature of industry. Thus, for example, the costing method employed by a eausteuction Company building different types of bungalows will be different from the costing, method employe ‘chemical company manufacturing a standard drug. aS ESS The construction company is interested in deten Costing method will treat each bungalow as u cost eine tungaow-wise Th mth of ating wed in ly recall ting Met cable where work consis of separate jobs or orders, enttct or ‘ders. Lis employed in industries where separate records can be kept in respect of each order from the beginning to the end, The main object of Job Costing is to ascertain the cost (and protit or loss) Labour Department, Accounts |, Labour and Overheads; and ceost of each bungalow separately. Its costs will be callecte ‘Scanned with CamSeannerCost Acconmting .¥.n,¢, a4 hy, n 4, pie execution. Job Corting gy My 4 ete,, and control its Albin It, + Terminal Costing, Specific Com of cach Job, Cont ‘Job Order Costin, ’ atch Costing, Chay, Gosting (1) Job Order Costing, (2) Contract Costing ach anita vn ee isda Order Costing as: that form of specific Se ED of thor durattey fier customer's special requ ements and each order ts com “fined fs "ou by with ‘hose isa hich Eom casting applies). \CMA has defined Watch Conting yy! uy, tas icetfic onder costings which consists of a group of similar articles which matrtain yf, throughout one or more stages of production, M ES fee Ce The chemical company, on the other h nese in Fig on tect fy Mae THe Produced, The Production of drupssn however, involve three prox ne hing in Capnules, The company will be interested in awer cont of + than of each unit of drug. Its costing method will proce: Cont unit, The costs will be collected, classified and determined method of conting Such caves is known as Proc “onting, of) OE METHODS) Job Costing and Process ‘ture Of industry. Job Cos construction prewe “ling are the two bavic methods of eating, employed depending y Sting. bs used vere the cont units are diffrent ur distinct from yey Jobs, printing. jobn, batches ee, Proce Consing. is used where the ont units gens, in the prenduction involves tyoor mare pase Ics Operations, ci, Cheanival ies Service Industries ee, All ther methods ay Urting, are Yypes of combination of the methods. The ¢ ‘hart below shows the different met methods, os Of corsting falling. under i Sc WATS TTA COSTING METHODS OF CosTING PROCESS CosTING 1. Process Contry 2. Unit Costing 3, Operating C0" COMBINATION 2. _OUTPI UT COSTING & UNIT COSTING wT When the concern preauves only a singe item the cay it “NY Inethe 1% Called wi ce or utp which is a form oF type of Unit Cant Unit Costing nha called single vant Continuous and the units produced are nt Hoa inethed fee ee he fivcertai 8 MEF unit preduced, Unit Cunting is ppc ‘may industria ah ‘he pat exp /Avere the utp ‘Scanned with CamSeannerop costs and Cost Sheets atl! ; has Numbers, Tonnes, Kilograms, Litres, Metres and soon. THs jicable to indust as Stecl, Mines, Quarries, Collieries, Brick our Mills, Breweries, Paper Mills, Textiles, also appl n the concern produ automobil equipments cl osting since in both methods an identical or stand s Unit Costing Making. Kilns+ Mills and so 0n- tor in assembly Init Costing is also ea 8 lard item is produced it Costing the output is measured in ‘natural units’. Following 18 alist of arious industries employing Unit Cos 1 ee cs PAncan eS 4 Industries Product it a Steel Steel Bars, Ingots mF Collieries Coal Quarries Stone ‘Mines Mineral Ore Kilns, Lime Stones Sugar Mills, Sugar Cement Cement ie. Paper Mill Paper _|__ Spinning Mills Yarn Seks Flour Mills Flour Barels Breweries Beer, Wines 1900No. Brick Making Bricks [Metre Yards [ Textile Mills Cloth’ Ria The Cost Per Unit at each stage is obtained as follows: vineCoa Pe Unin = TOL Prime Cost nit Total Units Produced es Coat Per Unin = E21 Works Cost Total Units Produced ‘Total Cost of Production Total Units Produced Thus Ca eos upto the stage of production are divided by ‘Total Units Pt nit 24 TSN Nea sl PRES r "Tota . a TaN. of Units produced are ther fer adjusted for U and closing stock of ‘ive at the Quantity of Units Sold. Thus, Gstorp, ‘of Production Per Unit = ‘roduced to determine the ished ‘Scanned with CamSeannerCost Accounting (LY.B.Com, : 306 — EN, Cl MCLUSU Ea NS) FINISHED) Eich a Que Particulars x > No. of Units Produced % Add: No. of Units in Opening Stock = Less: No. of Units in Closing Stock oy = No. of Units Sold on Total Cost of Goods Sold Cost of Goods Sold Per Unit = Ty ia1 No.of Units Sold Total Cost of Cost of Sales Pet Unit = TN. of Units S Total No. of Units Sold Thus, the costs pertaining to Sales are divided by Units Sold to arrive at the Cost Per Uni, Note : Ifthe value of closing stock of finished goods is not given, it is to be determined by , following formula: Units of Closing Stock x Cost of Production Per Unit. Thus, Closing Stock of Finished Goods has always to be valued at the cost of production, aS SS Sao oO eL Purely financial items (incomes / expenses /losses / appropriations) such as interest, loss on set fixed assets, dividends paid etc. are not shown in the cost sheet. (see Chapter 6, Para 3 for del list of such items). Ess Profit centres are similar to cost centres but are accountable for costs and revenues. We have ee that a cost centre is where costs are collected. Some organisations, however, work on a profitcent: basis. Profit centre managers should normally have control over how revenue is raised and hv costs are incurred. Often, several cost centres will comprise one profit centre. The profit cat manager will be able to make decisions about both purchasing and selling and will be expected to both as profitably as possible. A profit centre manager will want information regarding both reven»® and costs. He will be judged on the profit margin achieved by his division. In practice, it may bet! there are fixed costs which he cannot control, so he should be judged on contribution, which $ revenue less variable costs. In this case he will want information about which products yield highest contribution. ° PEAS sees An investment centre is a profit centre with additional responsibilities for capital investm"=™ * possibly for financing, and whose performance is meas fi a centre manager will take the same d sured by its return on investment, An inves cisions as a profit centre manager as pene d ager but he also has addin" Ferre rastment. So he wil be judged additionally on his handiing of e388 S¥", nies eee 'y those investments which yield a higher percentage than thee"), e gera ad ion he: equit i aa sosible invest he will require quite detailed appraisals of possible it. and information regarding the results of i esults of investments alre: we 1 cady undertaken, He will have ly undertaken, He will have © decisions regarding the purchase r ¢ oF lease of non-current asser 4 Most of these decisions involve large sums of money. ntasetsand the investment ofsh 7 2:8EDIFFERENTICOST SHEETS: Accost sheet prepared for a cost centre will sh 7 ot . ed | profit centre will also show the sales and the'‘pro Fr Ine 2st of sales, A cost sheet PEP rofit’. - nt may show financial costs actual as well as netionsi eae jhe prepared for an invest” of finds, ’ ‘Scanned with CamSeanner_pestion of Cts ard Cost Sheers COSTACCOUNTING, SUES . f Production (CAS. 31 gosto” 4) | Manufacturi (Cost of Production) /CAl ring Cost (CAS-22) (Mar Wbving guidelines for computing Total eo és ef got Production : Cost of product gt of Pr Production shall consi dares, Direct Expenses, Works Overheads, Qral fos Packing, cost, Administrative Overheads rehaine” i ction, adjustment for stock of work-in-process, finished ee eetoms 9 8 ete shall bemade. Theterme etic abd goods recoveries fr sles oseap, ya interchangeably. To determine the ¢ mm Manufac ing Cost’ and 'Cost of Production’ is Staponents and adjustments are explained bloc reno calculations of different cost of Cost) iss ~ 1g Total / Per Unie ee sauce bythe ICWA, India contains Cost of Product below: L er ae + Material Consumed shall include materials directly identified for production (1) Indigenous materials (2) Imported Materials (3) Bought out items (4) Selfmanufactured items (5) Process materials and other items. Cost of materials consumed shall consist of cost of material, dutics and taxes, freight inwards, insurance and other expenditure directly attributable to procurement. Trade discount, rebates and other similar items will be deducted for determining the cost of materials. Cenvat credit, edit for countervailing customs duty, Sales Tax set off, VAT, duty draw back and other similar duties subsequently recovered / recoverable by the enterprise shall also the deducted. 4. Direct Wages and Salaries : Direct Wages and salaries shall include house rent allowance, overtime and incentive payments made to employees directly engaged in the manufacturing tstivities, Direct wages and salaries include fringe benefits such as : (1) Contribution to provident fund and ESIS. (2) Bonus / ex-gratia payment to employees. ‘i (3) Provision for retirement benefits such as gratuity and superannuation. (4) Medical benefits (5) Subsidised food (6) Leave with pay and holiday payment (7) Leave encashment ‘allowance which are e , llowance, conveyance allowance which are payable (8) Other allowances as children's educator all ey ay tc. nal course of bUSINESS eC. : : toemployees im the nore ges are the expenses other than direct material cost and direct 4 Direct Expenses Pr en ‘Perentified with the product, Direct expenses includ employees costs whiel , steam ete (Ty Cent ot wiies such as fuel power, water steam ie on. (2)Royalty based 07 Lapeer ~how fees. 2) Technical Assist aa patterns, patents ete, (4) Amortized cost of OUT” (6) Job charges. eeet | @bire charges 1° ee aaa designing ete. | @) Charges for # PAHO overheads are the indirect costs incurred in the production process. 8. Works Overheads? WC" Overheads, Factory Overheads, Work Overheads and Production The terms Manu me meaning and are used interchangeably. Work overhead include the e " Overheads have ™" following expens®>* | yo ‘Scanned with CamSeanner308 Cost Accounting (L¥.R.c, ™. Sp, (1) Consumable stores and spares. (2) Depreciation of plant and machinery, factory building etc. (3) Lease rent of production assets. (4) Repair and maintenance ofplant and machinery, factory building ete. (5) Indirect employees cost connected with production act (6) Drawii igning department cost, (7) Insurance of plant and machinery, factory building, (8) Amortized cost of jigs, fixtures, tooling ete, (9) Service department cost such as Tool Room, Engineering & Maintenance, Pollution , ole Quality Control Cost : The Quality Control Cost is the expenses incurred Telating to eg control activities for adhering to quality standards. iy Research and Development Cost : The Research and Develo; development and im of production, 8. Administrative Overheads : Administrative overheads needs to be divided Production activities and other activities. Administrative overheads in relation activities shall be included in the cost of production. Administrative o activities other than manufacturing activities e.g. marketing, projects management, cops, office expenses ete. shall be excluded from the cost of production. [Tutorial Note : In absence of specific instruction / details in an examination Administrative Expenses are assumed to relate to production and included in Cost of P Absorption of Overheads : Overheads shall be anal overheads. Variable Overhe: ities. Stock ofraw material & Wap, te PMmeNt Cost inearey provement of the process or the existing product shall be f includedinec? in teatin to produc verheads in relation Problen, rodutn} 9. apacity utilisation, The fel Production overheads and other similar item of fixed costs such ‘as quality control cost, research ane development costs, administrative overheads relating to manufacturing shall bs aboates the production cost on the basis of the normal ca apacity or actual capacity utilization of theplan, whichever is higher. : 10. Valuation of Stock of work-in-progress and fi Bf valued at cost on the basis of stages of completion as per the Cost sorountine ents Similarly, stock of fnished goods shall be valued at cost, Opening and closing stork of Wk : Progress shall be adjusted for calculation of cost of goods produced and similarly open! closing stock of finished goods shall be adjusted for calculation of goods despatched, nc cost ofa shorter period is to be determined, where the figures of opening and closing stock** not readily available, the adjustment of figures of opening and closing stock may be ign 11. Treatment of Scrap or Waste : The production process may generate scrap or waste. Rel’ oF realizable value of scrap or waste shall be credited to the cost of production. In case Ca 3 TARE does not have ready market and itis used for reprocessing, the serap of wast taken at arate of input cost depending upon the stage at which sect serap of waste is 9 ‘The expenses incurred for makin; e cted fet 8 the scrap suitable for reprocessing shall be dedust®) value of scrap or waste. inished goods : Stock of work-in-progress sil 12. Miscellaneous Income : Miscellaneous income : calculation of cost of production for example, income from cole of empty containess despatch of the goods produced under reference 13, Interest and Financial Charges : Interest and financial ch not be considered to be a part of cost of production. 14, Abnormal and Non-recurring Cost : Abn; or unexpected occurrence of events, stch as h restricting sales below normal level, abnor ae esi relating to production shall be adjuste# J est al chare™ larges being a financi 0! oA | sae | y ‘Scanned with CamSeannerfeo of COSI and Cog Sheets 7 gail 9S16,Paymeny anand wastag Slike Rs | si pat of cost OF Production, *NChmey " Fs Mt Compensation lay-on | 1 Material Cost (CAs. 6) ° . 309 Wagesete, shall not _ i laterial Cost ina etoan item ket as material cost), byt shall “ADitalized with foe be a {inventory (i.e shall not be 188 ilage Of material © COSt of the specif . sormal loss OF spoilage of ‘Material Pecitic equipment, f ance materials, Prior to reaching hy 1 Factory shal toes de 10 shrinkage or ey poration and pai es before the material is roa shall ane oe tation oF absrpin of moisture sa With corresponding adjustnent in quanty, |" "Mil cost tothe extent they are « Tiefreign exchange comp eae saeofthe transaction, Any subsequence ati sech ail be converted atthe rateon the sllnot form part of the matey ial cost nBe rate till payment or otherwise be absorbed in the cost of demurrage or detention charges, enalty | fam part ofthe cost of materials. Penalty levied bys § Subsidy/GrantIncentive Payment recived Salle reduced from eoot = 1 Any abnormal cost shall be ex ‘The material cost of normal fet! defectives which are rejects shall be included in the Iaterial cost of goods manufactured. 4. Thematerial cost of actual Sctap/ defectives, not exceedi ‘material cost of good production, ‘nsport or other authorities shall not ‘cluded from the material cost Specifications provided by third party shall be treated as Part of the material cost, "Wherever part of the manufacturing operations / a charges related ‘to materials shall be treated as direct |The cost of materials like catalysts, ‘© Production over a period of time sh Sch cost, ctivity is subcontracted, the subcontract expenses, dies, tools, moulds, patterns ete, which are relatable all be amortized over the production units benefited by The cos of indirect material with {fe exceeding one year shall be inchuded in cost over the Useful life of the: ‘material. inder suitable hea 'S Diet Material shall be lassfedin he ost statement th Components, (ii) Semi finished yoods and (iv) Sub-assemblies, 83 Employee cost Icas ids eg. (i) Rawmaterials, 7 7 for measurement and presentation of ollowing rules are aid down in CAS-7 for mea Employee Cost in *€O8 statement, i € grass pay’ includiny ployee Cost shall be ascertained taking into a the gross pay including Payable along with the cost lotncemploer a one oe Fons whether payableas a Statutory Minimum o s2astaring te ors in Tevten nado Bons sal be ee as Path emploessn oo rial Personnel including Executive the Remuneration payable to Manage ler statute wil be considered as prt of the Employee Sota eee aga cone np ‘ofthe year under reference Petcentage of profits. all allowances —_ ‘Scanned with CamSeanner310 Cost Accounting (T.¥.B, Cy Remuneration paid to non executive directors shall not form part of Employee Cost by, form part of Administrative Overheads, ct ctrencl ination etc, shall he Separation costs related to voluntary retirement, retrenchment, terminatic te. shall be Morty Over the period benefiting from such costs. 6. The amortized separation costs related to voluntary retirement, retrenchment, and ter Cte. for the period shall be treated as indirect cost and assigned to the cost objects manner, My, sh Min, inan ADpropr However unamortize shall not be treated as, MPIoe, 'damount related to discontinued operations, cost, Employee cost shall not include imputed costs. 9. Where Em 12. Penalties, damages paid Employee cost, or treated as overheads causing such idle time. Cost of idle time for Teasons anticipat te. s normally loaded in the Employee cost while arriving “Broup of Employees whose time is attributed direct to co: Direct Expenses [CAS-10] The following rules are lai in a cost statement, 1. Direct expenses ted like normal lunchtime, holid3 At the cost per hour of an Employe® st objects, shall be determined at invoie ture directly attributable there be credited. z dies and tools wilt include dit: Factory overheads including she § S relating to pro “mprising factory management * » and other expendit S, taxes and duties refi indable or to 3. In the case of research and develo development and ‘pment cost, the amo Direct Expenses. ot fo Unt traceable 10 the cost objet for th i Improvement of the process for ih existing product shall be inclu’! ot © 1 'P-SuM or Which are in “one —time’ pay™ {hall be amortized on thebasis ofthe ine cy output or ene et one fiom such de Borah Henle: Royalty or Technical knove ha? fees, or drawing or designing fees. oe for which the benefit will arse inthe une ree Insuch case, the producer ce vl ‘Scanned with CamSeannerion op costs and Cost Sheets . 3 timated for the effective period be esti period and based on vol jeved duri tn period, the charge for amortization shall be termined. es wie of Direct Expenses isnot material, itcan be treated as part of overheads. "sts incurred in connection withthe self generated or procured resources shall not nance fina rt of Direct Expenses. gem F pet expenses shall not include imputed costs. Te ybsidy/Grant/Incentive of any such payment i i te shall be reduced. pay received/receivable with respect to any _ yabnarmal portion of the direct expenses where it is material and quantifiable shall not form a guhe Direct Expenses. R sronalis, damages paid {0 statwory authorities or other third parties shall not form part of sheDirect Expenses. ; packing Material Costs (CAS-9] coving rules are laid down in CAS-9 for measurement sind presentation of Pa icking Cost ina pesatement Jsare materials used to hold, identify, describe, for, protect, dis 1, Pocking Material promoteand make the product mnarketable and communicate with the consumer + packing Materials are classified into primary and secondary packing materials. + Primary Packing Material is the packing material which is essential 0 hold the product and ine it toa condition in which it can be 8 by or sold toa customer. For example: Pharmaceutical industry: » industrial gases: Cylinders / bottles used for fi » Confectionary Industry: Butter paper and wrappers. ig chall form part ofthe cost afproduction- Cost of primary packing material is the packing material that enables (0 °° transport, inform the Secondary Packing Material rsomer, promote and otherwise Make he product marketable. For example: ‘¢ Pharmaceutical industry: Cartons ved for bolding strips oftablets and card oard boxes used for holding:cartons. ©. Textile industry: Card poard boxes used for holding cones on which yarn is woven. © Confectionary Industry: J2r5 for holding wrapped ‘chocolates, Cartons containing packs of biscuits. 6. Cost of secondary packing materials shall fo 1. Reusable Packing Material is he paki nu The ching repr ver wn stration 1 : play, transport, Foils for strips of ablets/eapsules, vials ling the gaseous products. em part of distribution overheads. terials that are used more than once to pack the King shall be assigned tothe cost object taking ted to be reused. 100 sachets are packed in each milk depots in airconditioned and packed in halt Het sachets. 1 st under which the factory Mak is pre i watt ouseble a ser an achrtainers are wansported {0 tucks refrigerated in the dePols and sold in retail. State the ‘element of cos hast clasaty the foiowing ems oS ‘per Cost Accountancy Standards, Cost of the Sachets Cost of the Containers . Transportation Costs Refrigeration Costs . Depot's Expenses ~ lke rent, Cotot agverising rortne = salary of staff, ete. (ICWA Inter, Dec. 15, adapted) ML ae ‘Scanned with CamSeanneryy 312 Cost Accounting (LY.B.Com Solution : A B c 1. Cost ofthe Sachets | Primary Packing Material Production Overhead 2. Cost of the Containers | Secondary Packing Material Solling and Distribution Overhg, 3. Transportation Costs | Relates to Finished Goods Distribution Overhead 4. Refrigeration Costs _| Storage of Finished Goods Distribution Overhead 5. Depot's Expenses Marketing Cost Solling and Distribution Overhe, 6. Advertisement Cost__| Selling Expense Solling and Distribution Overhes ROUSSE OS SSN Kole SU A cost sheet has the following uses / purposes / advantages : 1, Total / Per Unit Cost : It reveals the cost of total output and the cost per unit for the period Element-wise Cost : It discloses the break-up or components of the total cost, elements or items of cost comprised in the total cost. Percentage-wise Cost : It discloses the extent to which each expenditure (i.e, item of cost contributes to the total cost of the product. In other words, it reveals the percentage of each iten of cost to the total cost. This information is very usefull for comparison between the cost » different periods and between costs of different firms within the same industry. Selling Price : Selling prices can be fixed more accurately on the basis of the cost data provided by the cost sheet. Selling prices can be regulated more casily and accurately on the basis of the cost data provided by the cost sheets prepared regularly at shorter intervals, . . Cost Estimates : Cost estimates can be made more accurately and more easily on the basis o cost data provided by the cost sheet, and the cost estimates can be used profitably for the preparation and submission of tenders or price quotations. 6. Cost Comparisons : Cost sheet facilitates the comparison of current costs with the costs of previous periods or with the pre-determined standard costs, and such a comparison will enable the management to ascertain the variations, inefficiencies or wastages, ifany, and take remedial measures to remove the variations or inefficiencies and control costs, OS ar eee The pro-forma Cost Sheet based on the latest, mandatory Cost Accounting Standards would appest as follows : COST SHEET [STEP ELEMENT OF CosT A. Direct Materials : Opening Stock of Raw Materials Add: Purchases of Raw Materials Expenses on Freight etc. Less: Closing Stock of Raw Materials Net Materials Consumed B. Direct Wages Cc. Direct Expenses D. PRIME COST [A +B +C] E. Works Overheads F Less: Sale of Scrap / Waste / Recoveries G._—_ Work in Progress : Add: Opening Stock Less : Closing Stock H. WORKS COST [D +E-F+G] eal L Quality Control Costs J. R & DCosts o ‘Scanned with CamSeannerretin of COStS ANd COSt Sheers wo Office/Administray ‘Add: Opening Stock Less: Closing Stock x cost OF GOops , __ Sales/Distribution Overh | 5 COST OF SALES [Na oO | a #) PROFIT/(-) Loss (a SALES[P+Q] tive Overhead: COST OF PRODUCTIO . K Finished Goods: | NH +! +4 +k) SOLD [L+ my 33 20% 00 xx (xx) wk _ 10K, eK, 144, Kh, ILLUSTRATIONS nustration 2 : (Stock of Materials) Fomthe books of accounts of M/s. Avdhoot Enterprises, srthe Quarter Ending 31-3-2014 : the following details have been extracted eulars z ck of Materials - Opening 2,70,000 Sock of Materials - Closing 3,00,000 Puchases of Materials . |12.48,000 Drect Wages 3,57,600 Drect Expenses 1,20,000 bedrest Wages 24,000 Salaries to Administrative Staff 60,000 Camiage inwards 48,000 Ceriage Outwards “ enon Menager's Salary " aon General Charges | : Soicos Legal Charges for Criminal Suit pana ffarmission ‘on Sales 96,000 72,000 ‘ctricity Charges (Factory) 36,000 Drectors’ Fees 63,000 Repairs to Plant and Machinery 18,000 Rent, Rates and Taxes - Factory ‘91600 Pent, Rates and Taxes - Office 45,000 ®teciation on Plant and Machinery 3,600 epreciation on Furniture 50,000 alesmen's Salaries 18,000 Aust Fees (The Manager's time is shared (2) Carrig ids inclu riage outwards beer {3) Seting Price is 120% of the cost pric From the above details prepare 0°" Sales, petween the factory and the office in the ratio of 20 : 80. ido @ 7,500 boing carriage inwards on Plant and Machinery. ailed cost sheet for the quarter ending 31-12-2014 and ascertain (T¥.B.Com,, March 2006, adapted) ‘Scanned with CamSeannerCost Accounting (T¥.B.Com,: py, 4 3i4 Solution : M/s. Avdhoot Enterprises Cost Sheet [For the Quarter Year Ended 31-3-2014) = ‘STEP ELEMENT OF COST. £ ‘A. Direct Materials : 2,70,000) Opening Stock c " 42.48,000 Purchases 48,000 Carriage Inwards —— amas ¥5,66,000 Less : Closing Stock penance Net Direct Materials Lyd B. Direct Wages 120,000 C. Direct Expenses 1205 D. PRIME COST[A+B+C] 17,43,600 E. Works Overheads : Indirect Wages 24,000) Manager's Salary (20%) 14,400 Fuel 96,000 Electricity 72,000 Repairs - Plant 63,000 Factory Rent etc. 18,000 Depreciation - Plant 45,000, Total Works Overheads 3,32,400 F. WORKS COST [D +E] 120,76,000 G. Administrative Overhead: Salaries to Staff 60,000 Manager's Salary (80%) 57,600 General Charges 37,200 Directors Fees 36-000 Office Rent etc. 91600 Depreciation - Fumiture 3,600 Audit Fees 18,000 Total Administrative Overheads H. COST OF PRODUCTION [F + G] 1. Sales / Distribution Overhead: Carriage Outward (37,500 - 7,500) Commission on Sales eed Satonens Stas 2,00 Total Sales / Distribution Overheads : 4,08.002 J. COST OF SALES [H +1] E08 K. PROFIT (Bal. Fig.) es L. SALES (120% x 24,06,000) [J + K] ares Working Note (1) Legal charges for criminal suit & 20,000) will be , nored (2) Carriage on machinery will be capitalised and ea De grageraparing cost shoot Mustration 3 : (Stock of RM) ‘Snored in cost sheet. The following particulars have boen extract for the year ended 31-03-2014 : ed tom thebooks oft, Sohan Manutactuing 2 Particulars ‘Opening Stock of Raw Materials Y Closing Stock of Raw Materials Raw Materials Purchase Drawing Ottice Salaries S\.. See ‘Scanned with CamSeannerion of Costs and Cost Sheets BIS sfc ips production | n 70,000 val) on ards 41,000 [Be et allowed 17/000 eee plant & Machinory 59,000 08 es & Taxes (Factory) 15,000 |e Fates 4 Taxes (Office) 2 900 ft ance 5 (oo Salaries & Commission 42,000 sieve Wages: 7,00,000 | itt on on Plant & Machinery 35,500 | Feeciation © ; terion on Office Furniture 3,000 es Fees 30,000 see water Charges (Factory) 7,500 38a Water Charges (Office) 1,500 eget Salaries 60,000 ati Catalogues Printing 10,000 eae Tools Writen off 8,000 jade-Fait Expenses os 10,000 ¢uto!48 hours in a week, Manager devotes 40 hours for factory and 8 hours for office per week for ewhole year. ‘the Management has fixed the selling Price @ 110% of cost. Pepare detailed cost statement for the year ended 31-03-2014. (T.¥.B.Com., Mar. 08, adapted) Solution : BOOKS OF M/S SOHAN MANUFACTURING COMPANY COST SHEET FOR THE YEAR ENDED 31-03-2014 STEP ELEMENT OF COST Be) = ‘4. Direct Materials Opening Stock [Raw Materials] 2,35,000 Purchases 10,40,000 Carriage Inwards 41,000, 13,16,000 Less: Closing Stock [Raw Materials} (2,50,000 Net Direct Materials 10,66,000 8. Direct Wages Productive Wages 7,00,000 ©. Direct Expenses 1, Royalty on Production 70,000 ¢ PRIME Cost 18,36,000 * Works Overheads Drawing Office Salaries 48,000 Repairs to Plant & Machinery 53,000 Factory Rent, Rates & Taxes 3 15,000 Depreciation on Plant & Machinery 35,500 Factory Gas and Water Charges 7'500 Uenagers Salary 50,000 8@ Tools Written Off Total Works OH —B8.009 ¢ WORKs cost |-2.17,000 "Admin. Overheads 20,53,000 @ Rent, Mice Conveyance, °° 8,000 Depreciation - Office Fumiture 15,500 Directors Fees 3,000 Office Gas and Water Charg 30,000 Manager's Sala 4, TotalAdmn. on” * COST OF PRODUCTION |—_68,000 21,21,000 ‘Scanned with CamSeannerCost Accounting (T.Y.B.Com, ; 316 I SalosiDict Overheads ‘alesmen Salary & Commission 42, Catalogue Printing ioo0e Trade Fair Expenses 10,000 Total S & D OH - J. COST OF SALES ar e3000 K. PROFIT (10% of Cost) oe 09 L. SALES (110% of Cost) a Working Notes : — 4. Cash Discount is Financial Expense. 2. Drawing office is an Engineering office, hence part of factory. 3. Manager's Salary Total for 48 Hours per week 60.00 For Factory (40/48 x 60,000) soon For Office (8/48 x 60,000) 100% Ilustration 4 = - The following data have been extracted from the books of Shri Ganesh Industries Ltd. forthe yea 17 = Particulars é z Opening Stock of Raw Materials Purchases of Raw Materials Closing Stock of Raw Material Carriage Inwards Wages (Direct) Wages (Indirect) Other Direct Charges Rent and Rates : - Factory - Office indirect Consumption of Material Depreciation on Plant Depreciation on Office Furniture Salary : > Office - Salesman Other Factory Expenses Other Office Expenses Managing Director's Remuneration Other Selling Expenses Travelling Expenses of Salesman Carriage Outwards sales Savance Income Tax Paid ‘Advertisernent | The Managing Directors Te to be allocated % 4,000 10 factory, ¢ and % 6,000 to selling departments. From the above information prepare a state! | (a) Prime Cost: (b) 19 etfs Cost; (c) Cost of Production; (d) Cost of Sales; (2) Not Prolt: pl | solution = (SYBAF, Oct. 2005 2008; # | BOOKS OF SHRI GANESH INDUSTRIES LTD. COST SHEET FOR THE YEAR 2017 ‘Scanned with CamSeanner2. gion of Costs and Cost Sheets fe M 317 ‘ rds 0 carfage inven 8.000 Closing Stock [Raw Materi 1,15,000| 125 peat Materials mu —t40,000) wet rages 75,000) |g. Cher Direct Charges 75,000 ‘ mM: cost 15,000 1,65,000 4. Factory Overheads bb & indirect Wages 10,000 ent and Rates 5,000 frdirect Material Sead Depreciation on Plant eco other Factory Expenses 5.700 | Managing Director's Remuneration 4,000 Total Factory OH 26,700 ,, WORKS COST 7,91,700 § Administrative Overheads Rent and Rates Depreciation on Office Furniture $00 Salary Other Office Expenses 00 Managing Director's Remuneration 2,000 Total Admn. OH 6,000 4, COST OF PRODUCTION 1,97,700 Sales / Distribution Overheads Salary 2,000 Managing Director's Remuneration 6,000 Other Selling Expenses 4,000 Travelling Expenses of Salesman 1,100 Cartiage Outward 1,000 fouls. ON 7098) 9.100 4. COST OF SALES 2,10,800 t PROFIT (Balancing Figure) 39,200 SALES (Given) Woking Note : Advance Income Tax is @ cial item so it will not included in cost sheet. stration § : ™ the following particulars you are required : 'P btepare a statement showing the total cost. 0 state what facturing cost (ii) the managem ii : Percentage - (i) the manu! 'gement oncost (ii) the sellin S"°0st bear to the total cost of the goods sold. 2 ete TL. * Vann Stock of Direct Materials 61,700 Fuchaet (29"@ss at Commencement 1,21,700 ree rh of Direct Materials 2\86.500 Raat ages 3.87.00 Sain’! © Cost 1,89,500 Nang o% Cost 70,000 Saee2?™ent on Cost 1,10,000 ee 12.50,00% Sod Stock of Direct Materials 75400 Sie gf glk in Progress 1,35,600 Lage one 1,350 n Direct Material 5.950 (SYBAF, Oct. 2014, 2018, adapted) i ‘Scanned with CamSeannerCost Accounting (T.¥.B.Com, Sein, COST SHEET & ? STEP ELEMENT OF COST ‘A, Direct Materials 61,700 Opening Stock 2,886,500 Purchases 5.950 Carriage Inward 3,54,150, 75,400) Less: Closing Stock 2.78.750 Net Direct Materials -3'57,000 B. Direct Wages 6.57. ¢. PRIME Cost a D. Work Overheads 1,99,500 Factory oncost 11350 Less : Sale of Scrap 1,98,150, Work-in-Progress ; 1,21,700 ‘Add : Opening Stock 319/850 Less : Closing Stock 41.26,600 Total Factory OH 4.84259 E, WORKS Cost 8.20000 F. Administrative Overheads Management oncost [110.000 G. COST OF PRODUCTION 9,30,009 H. Sales/Distr. Overheads Selling oncost |__70.000 |. COST OF SALES 70,00,000 J. PROFIT 2,50,000 K._ SALES 72,5000 Working Notes : 8,20, 1. Percentage of Manufacturing Cost to Total Cost = ee x 100 = 82% 4,10,000 2. Percentage of Management Oncost to Total Cost = ime x 100 = 11% 70,000 3. Percentage of Seling Oncost to Total Cost = o,00,000 * 100 = 7% Mlustration 6 : (Stock of RM + FG + W-1P) From the folowing partculars prepare cost sheet showing various elements of cost : Particulars z Opening Stock of Raw Materials 7, 10,000 Purchases of Raw Materials 8.25.00 Carriage Outwards "28.500 Direct Wages 1,400 Direct Power s one Technical Directors Salary 20.590 Factory Rent, Rates & Insurance 10,140 Sale of Factory Scraps 4,460 Depreciation on Factory Buildings 75,200 Closing Work in Progress 20260 Factory Stationary 1340 Opening Stock of Finished Goods 5 260 Closing Stock of Raw Materials gee0 Foes to Brand Ambassador 900% Stationery and Printing Pp200 Staff Salaries 630.0 ‘Scanned with CamSeanner\ psifetion oS COM ard Cost Sheen qe Discount ar ‘108 Rent cues ‘ano S09 Stock of Finished Goods 20,320 50,240 sponte made 10 €aM Prof @ 1055 on Gog Price, tion ¢ se (7XB.Com, Oct. 06, §.¥.8.611, Au 8, adapted) Cost Sheet ime, p ELEMENT OF COST ie Direct Materials: © u * Opening Stock Purchases 1,10,000 Less: Closing Stock 9,35,000) 5. Direct Wages 868201) 2.98.080 . Direct Expenses (Power) b. PRIME COSTIA sp Cc} = 2a.840 £, Works Overheads: 13,45,320 Technical Directors Salary Factory Rent, Rates and Insurance. Aoaa Depreciation on Factory Building 75.200 Factory Stationery joao 738,270 Less : Sale of Scrap ‘Thdeo ai F. Work in Progress: ee eee Less: Closing Stock of Wa-P 1,20,260) 6. WORKS COST [D +E4F] '19,61,870 H. Office/Administrative Overheads: Printing and Stationery 12,200 Office Rent 60,000 Staff Salaries ~8.30,000]__7,02,200 | COST OF PRODUCTION [G + H] 20,64,070 4. Finished Goods: Add: Opening Stock |_45.280 27,09,350 Less: Closing Stock | (60.240) kK. COST OF GOODS SOLD [I+ J] 20,59,110 \ Sales / Distribution Overheads: Cartiage Outward Fees Paid to Brand Ambassador Free Samples 248.820 MM. TOTAL COST / COST OF SALES 23,07,930 N. PROFIT (10% x 23,07,930) aeseres 0. SALES (M+ NJ 8 Notes. \") Quantity Produced = Quantity Sold Trade discount is not recorded as cost. stration 7 : (Stock of AM + FG + W-+P) {iomthe following particulars, prepare a cost sheet showin; ‘tthe year ended 31st March, 2014. z ig the components of total cost and profit ticulay = S p= _ 6,000 Sok of finished goods on 1-4-2013 4 $0 of nished goods on 31-3-2014 es S008 of raw materials on 1-4-2013 py ack of raw materials on 31-3-2014 ie oe! In progress on 1-4-2013 Ho cce! Buik'in progress on 31-3-2014 renee “chases, of raw materials — ‘Scanned with CamSeanner320 Carriage inwards Wages Works Manager's Salary Factory Employee's Salaries Factory Rent, Taxes & Insurance Power expenses Other production expenses Sales for the year Income tax. Dividend received Interest on debentures Transfer to Sinking Fund Goodwill written off Selling Expenses General Expenses Solution : Cost Sheet [For the Year Ended 31-3-2014] STEP ELEMENT OF COST i z A. Direct Materials : Opening Stock 40,000 Purchases 4,75,000 Carriage Inward 12.500 5,27,500 Less: Closing Stock 50,000 B. Direct Wages C. PRIME COST [A + 8} D. Works Overheads : ~ Works Manager's Salary Factory Employee's Salary 30,000 60,000 Factory Rent, Taxes & Insurance 7,250 Power Expenses 9'500 Other Production Expenses 43.000 E. Work in Progress: 7,49.750 Add: Opening Stock 15,000 Less: Closing Stock 4 1,54. F WORKS COST [C+D + &] Ser 807.250 G. Office/Administrative Overheads: General Expenses _32.500 H. COST OF PRODUCTION [F + @} 439.750 1. Finished Goods: Add: Opening Stock 000 2,45,750 Less: Closing Stock 5,000) 2: $OST OF Goons soLo [H + 1 30,759 K. Sales/Distribution Overheads: Selling Expenses ie COST OF SALES [J + K] M. PROFIT N. SALES [L + Mj Particulars z Opening Stock - Raw Materals 200) - Finished Goods 3008) Purchases of Raw Materials 5.00005 Direct Wages 12.00 ‘Scanned with CamSeannerrion of Costs and Cost Sheets 321 sift ® : 99,500 ot on Purchase of Raw Materials 20,000 tte Special Design 50,000 wt ‘and Octroi on Raw Materials 60,000 oa Oe 50,000 cad Rates Office 50,000 Factory ea noo ore 45,000 pet oeory 30,000 jnery Lost in Fire 4,00,000 vethintion ~ Plant and Machinery {80,000 Le = Delivery Van 20,000 ye TAX 1,20,000 wes + 2,50,000 portions "70,000 geublishment Expenses 1 90,000 pent of Showroom CSO host on Loan ‘ gale of Factory: Scrap 7,500 Dividend Received 17,500 pvectors Fees 60,000 taiing Charges of Sale Literature 40,000 Closing Stock - Raw Materials 1,85,000 = Finished Goods 30,000 Other Information : {@) 60% of Telephone Expenses relate {t) Salaries to be allocated to the Factory, Office an ‘es are 10 be apportioned equally between 1% on Selling Price. (¢ Establishment Expensi (6) Sales are made to eam Profit @ 20' Solution : to Office and 40% to (SYBAF, Mar. Sales Department. \d Sales Department in the ratio of 1 : 2: 1. Office and Sales Department. 19, TY.B.Com., Oct. 10, adapted) COST SHEET STEP ELEMENT OF COST £ enone ‘A. Direct Materials Opening Stock 20,000 Purchases oe Carriage Inward 20,000} Custom duty & Octroi 0 16,00,000) a, 288: Closing Stock (1,85,000)| 14,15,000] 8. Direct Wages 12,00,000 D Direct Expenses (Special Design) PRIME COST '26,65.000 - Works Overheads: Power Factory Rent Factory Electricity Depreciation on Plant & Machinery Factory Salaries 3,42,000) ss : Sale of Scrap | —(7.500)| _3.34,51 & WORKS cost 35.89-500 Office/Administrative Overheads Office Rent 50,000) Telephone 18,000] Office Electricity 15,000} Salaries 1,285,000 _ Establishment expenses '50,000| Directors fees 80.000 |-3.18,000 i, ‘Scanned with CamScannersunting (TY.B-Com. : SExy, Cost Acco! 33,17,599 H. cosTOF PRODUCTION 20.009 . Goods 33.47.50 i. Finished 509 ga: opening St0ck 2.5 17,504 Less: Closing Stock F GOODS SOL! « eerie & Sistribution overheads 75.000) ~ isement ’ avert «Delivery ah 2.500 Salaries “ Saapyehment expenses 25.000 Showroom Rent . Telephone ag 10.009) 36, fa ‘000 jing charges 12 u Tora Gost / COST OF SALES 9,03,000, M. PROFIT (20% on SP) |45,15,000 N._SALES IMustration 9 : details have been extracted forthe From the books of accounts of Viburaj Enterprises the following year ended 31st March, 2014. TE Particulars eae Corporate Manager Salary 127,500 Rent of Plant Ae Sale of defective Raw Material fim Hire charges for special equipment sro Office Rent ; Purchase of Raw Materials 495.200 Carriage Inwards 24,305, Indirect Materials 235,600, Office Expenses 41,000 Insurance premium for stock of Raw Material 22,600 Insurance premium for computer 2,700 Insurance premium for Delivery van 41500 Opening stock of Raw Material 78175 Closing stock of Raw Material 75290 Sale of factory scrap Te00 Carriage outward too Depreciation on Delivery van p00 Depreciation on Computer an Salaries to office staff rn Salaries to Drawing and Designing department 1.189 Opening work in progress 1,88." Closing work in progress pe Brand Ambassador Remuneration Direct wages - Skilled labour - Unskiled labour Cost of catalogue printing Opening stock of finished goods Closing stock of finished goods. Repairs to Delivery van formation 1. The corporate Manager's salar E ry to be apport of 1:9. PPortioned between the factory and the office in th® ai? 2. Selling price is 120% of Cost Price. z - tom the above details prepare Cost Sheet showing various o) 'S elements of co: st. ‘Scanned with CamSeannerwsifestion of Costs and Cost Sheets : 323 tion = out re -Y.B.Com., Oct. cost sHEET et. 2012, adapted) (UENT OF COST Direct Materials = 7 * Qpening Stock Add: Purchases 78,175) Add: Carriage inwards 4,85,230) Less: Sale of defectives 24,325] Less: Closing Stock (8,500) Direct Wages - {76,230)] 5,03,000 Skilled Labour Unskilled Labour 3,15,500| ¢, Direct Expenses 124,500] 4,40,000 Hire charges - Sp. Equipment od p. PRIME COST Aoja0.005 £. Works Overheads Corporate manager salary (1/10) 4,11,000 Rent of plant $127,500 Indirect Material 235,600, Insurance - raw material stock 22,600) Salary - drawing & design 1,85,700) Less: Sale of Scrap (16,800) WAP. Add: Opening Stock 94,300 Less : Closing Stock (96,500)| 6,63,400 F WORKS COST 16,63,400 G. Admin. Overheads Corporate manager salary (9/10) 8,99,000 Office rent 4 1000) Office expenses aaa Insurance - computer ay'200 Depreciation - computer 4.15,300) Salary - office staff A800 40.000 Total Admn. OH |13,40,000, }30,03,400 H. COST OF PRODUCTION |. Finished Goods ‘ 6,40,000 ‘Add: Opening Stock . |(z.80,000) Loss: Closing Stock of Finished Goods en J. Cost OF GOODS SOLO K. Sales/Distr. Overheads 11,500 Insurance - delivery Ya" 1,10,000 Carriage outwars ery ven 4 a Depreciation - del " 80, Depreciation . brand ambassedo 57,500 Printing - catalogue 35,500] Repairs - delivery Va" 7,22,500 Total $ & D OH [36,15,900 COST OF SALES 7,23,180 PROFIT [20% Of © [43,39,080 SALES on) PN ‘Scanned with CamSeanner324 Cost Accounting (T.¥.B.Com. : SEM Mustration 10 : (Hidden Information) From the following information, prepare a cost sheot for the month of December, 2014, Particulars Stock on Hand - 1st Dec. 2014 = Raw Materials Work-in-Progress Finished Goods Raw Materials consumed during Dec, 2014 orks Cost for the month (after adjusting work-in-progress) Cost of Production of Goods sold Purchase of Raw Materials Carriage on Purchases Sale of Finished Goods Direct Wages Direct Expenses Factory Overheads Administration Overheads Selling and Distribution Overheads Solution : Cost Sheet for the Month of December 2014 STEP ELEMENT OF COST = i A. Direct Materials Opening Stock of Raw Materials 25,000 Add : Purchase of Raw Materials 21,900 Add : Carriage on Purchases 1,100 . 48,000 CASS : Closing Stock of Raw Materials (Bal. Fig,) (48,000 21 1800) _26.200 Cost of Raw Materials consumed . . 21,800 B. Direct Wages é 17,200 C. Direct Expenses 1200 D. PRIME cost 40,200 E. “Factory Overheads 91109 Gross Works Cost 49,300 F. Work-in-Progess Add : Opening Work-in-Progress 3200 : B75 Less : Closing Work-in-Progress (Bal Fig.) (57,500 - 48,400) 9.100 G. WORKS cosT se . 48,400 H. Administrative Overheads a 3.200 I. COST OF PRODUCTION Se 51,600 Add : Opening Stock of Finished Goods 2 : 68.94 Less : Closing Stock of Finished Goods (Bal. Fig.) (68,900 - $3,200) 15200 J. COST OF GOoDs SOLD . 153,200 K. Selling and Distribution Overh 200 L. COST OF SALES 57,400 M. PROFIT (Bal, Fig.) 14,900 N. SALES 72,300 Note : Since closin, the question, they must be found as. ‘Balan ya it icing Figu information given like mat at es’ at the respactiva stages in the cost shee lerial cons aol ae ‘sumed, works cost and cost of producto! }oods sold, ‘Scanned with CamSeannerww sification of Costs and Cost Sheets Teese 35 jystr@tion % ‘ey s , Works OH @ Machine Hour) td, Started a factory in i out sci during the oar ene timbal on 1st Apri 2013, Folowing deta are tunished meatal consumed 40,000 units @ €7 per unit. prect Wages = stiled worker © 9 per unit, 0 pskled worker & 6 per uit. praty (on raw material consumed) @ € 9 per unit fioxs overheads @ € 8 per machine hour. Ntchine Hours worked : 25,000 bce Overheads at 1/3rd of Works cost gales Commission @ © 4 per unit. nits produced 40,000. stock of Units at the end : 4,000, units to be valued at cost of production per unit. sale price is € 50 per unit. Prepare cost sheet showing the various elements of cost both in total and per unit. Solution : (SYBAF, Nov. 2017, adapted) DUNKEL LIMITED Cost Sheet For the Year Ended 31-3-2014 [Output : 40,000 Units] ‘STEP ELEMENT OF COST ‘Total Cost] Units | Unit Cost z z No. © ‘A. Direct Materials Raw Materials (40,000 x 7) 2,80,000| 40,000) 7.00 B. Direct Wages = Skilled Workers (40,000 x 9) 3,60,000 = Unskilled Workers (40,000 x 6) 2.40,000| 6,00,000| 40,000 ©. Direct Expenses Royalty on Raw Materials (40,000 x 3) 120,000] 40,000 D. PRIME COST H0,00,000} 40,000 E. Works Overheads (25,000 x 8) | 2.00.00] _40,000 F. WORKS COST /12,00,000) 40,000 G. Office Overheads (1/9 of Works Cost) 4,00,000} _ 40,000 H. COSTOF PRODUCTION | 116,00,000] 40,000 1. Less: Stock.of Finished Goods (4,000 x 40) |_1,60,000] __4,000 J. COST OF GOODS SOLD 14,40,000] 36,000 K. Sales Overheads: 7 Sales Commission (36,000 * 4) |1.44,000] 36,000 L. Cost OF SALES |15,84,000| 36,000 M. PROFIT |-2.16,000] 36,000 No SALES {18,00,000] 36,000 Mustration 12 : From the following particulars prepare 8 Cost Sheet showing the cost per item and total cost per ton forthe period ended 31st March, 2018 Particulars & | Particulars e '33,000| Wator Supph Raw Mi Supply 1,200 Unproductive Wages 10,500] Office Insurance soo Factory Rent and Taxes 7,500] Legal Expenses ‘400 Factory Lighting 2,200| Direct Expenses 3,000 Factory Heating : 1,500 | Rent of Warehouse aod __ ‘Scanned with CamSeanner326 ‘Motor Power Haulage Directors Fees ~ Works Director Fees - Office Factory Stationery Office Stationery Loose Tools ont and Taxes - OME fe The total output for Ne period has: peen 15,000 tons: roh, 2018 Not solution © cost Sheet For the Year enane tet Ma i= —— STEP ELEMENT OF COST eat | z z Tons: z 7. Direct Material 93,000 2,200 B. Direct Labour 35,000 2,333 C. _Direct Expense |___3,000 0.200 D. PRIME COST 71,000 4.733 P! factory Overheads : Unproduetive Wages . | 10,600 0.700 Patory Rent and Taxes 7,500 0.500 Factory Lighting 2'200 0.147 Factory Heating 4,500 0.100 Motor Power 4;400 0.294 Haulage 3,000 0.200 birector’s Fees (Works) 4,000 0.067 Factory Cleaning "500 3 Factory Stationery 750 he Loose Tools written off 600 0.060 Water Supply 4,200 O60 Factory Insurance 4,100 he Factectation of Plant and Machinery 0.073 F. WORKS COST ae au G. ee overh ds: ” 7.150 irector's Fees (Otfice) Sundry Expenses d oF Office Stationery ee ent and Taxes B00) , Office Expenses pon Legal Expenses 500 Bank Charges 400 Depreciation of Ortice Bull ee |H. COST OF PRODUCTION ing | 1.000 7 I. Sales Overheads : | 9370 Fen of Warehouse coe Jepreciation of Deli ~ 300 Ca vans 200 Advertsing ~ 400 sei Deparment Salaries ror we wo 300 Upren of Deven Vane vow | 1,500 mmission on y. fomeeosr 1.00 4,600 | 030 1:17.40 7621 Maren 1 Cony etal and prone exe ‘sheet showir wis Ld ‘the month of Roe onteattoeeeaioee of paper profit eamed by the company. The details ere were 26 working ‘days a fecued by Times pape inder :- @ month, Also fin tt Le ‘Scanned with CamSeannercssifenion of Costs and Cost Sheets = Raw materials: paper PUP 6,000 tons @ % 900 tonne. rect labour: skiled workmen % 250 per day so semiskiled workmen 150 per day ounskilled workmen % 100 per day pieot expenses: gpecial equipments hire charges % 12,000 per day special dyes . 250 per tonne of total raw material input work overheads: Variable @50% of direct wages Fixed % 2,70,000 p.m. administration overheads 012% of works cost seling and distribution Overheads 80 per tonne sold. ‘pening stock of paper 500 tonnes valued @ & 2,501.60 per ton Closing stock of paper + 300 tonnes valued at cost of production. The paper is sold @ € 3,000 per tonne. 'SYBBI, Oct. 2017, adapted) « solution : TIMES PAPER MILLS LIMITED Cost Sheet For the Month Ended 31-3-2014 STEP ELEMENT OF COST Total Tons | Cost per Cost ton z z. : fe ‘A. Direct Materials: = Raw Materials (6,000 x 900) 54,00,000| 6,000 900 B. Direct Wages : "Skilled Workmen (260 x 250 x 26) 18,20,000 7 Soin skilled Workmen (300 x 150x 26) | 1 °70,000 ~ Grekilled Workmen (470 x 100 x 26) '12:22.000] 42,12,000] 6,000 702 ° oe trate Charges (12,000 x26) | 312,000 Special Dyes (250 x 6,000) 15,00.000 ziasz.ane 6,000 =a D, PRIME COST ar i +904 E. Works Overheads WYariable (50% of Direct Wages) poe ocdl zao00| 8.000 A - Fixed 2:70,000| —23.76. . — 308 7,38,00,000] 6,000} 2,300 F. WORKS COST . . G. Administrative Overheads _16.56,000| _ 6,000 276 (12% of Works Cost) H. COST OF PRODUCTION pesca 1,54,56,000| 6,000] _2,576 I. Add: Opening Stock of Fin! (600 x 2,501.60) one ae 4. Less: Closing Stock of Finished goods “"T72\800| __300 (300 x 2,576) K. Cost oF GOODS SOLD 4,59,34,000| 6,200] 2,570 LL Selling & Distribution ‘O/H (80 x 6,200) _4.96,000] _6,200] 80 i. Gost OF SALES Teco e200] 80 N. Me cecal 786.0000] 6.200] 9,000 Note: The rate for Equipmen computed only for 26 working days: ilusteation 14 : (Dual Pricing) The State Government grant stipulation that 40° % 9,000 per ton and the balance tho details of Sweet Sugar Ltd: red licence to Sweet Sugar Lid. to manufacture ment Bra gutput should be sold to the State Government ata controlled price of ‘Sutput can be sold in the open market at any price. Following are “or the year ended 31st March, 2014. pare charges has been given on per day basis. Hence they have been and sell sugar with a ‘Scanned with CamSeannerParticulars Direct Expenses Telephone Charges Office Computer purchased Factory Rent and insurance Machinery purchased Machinery Repairs Commission on Sales Factory Salaries Carriage Outward Packing Expenses Bank Interest Factory Electricity Delivery Van Expenses Coal Consumed Depreciation on Machinery Depreciation on Computer Depreciation on Delivery Van ‘ Office Salaries Printing and Stationery During the year 2,400 to The Company’ sheet, is up Capital of 7 1,42,56,000, ne find various components of total cost and per unit cost and suggest the Selling Price for Open-Market. (T¥B.Com., April 2000, SYBAF, Oct. 2012, stapled Solution : ‘SWEET SUGAR LIMITED Cost Sheet For the Year Ended 31st March 2014 [Output : 2400 Tons] STEP ELEMENT OF COST Total Cost. Cost Per Ton = Tons £ A. Direct Material : Sugarcane a 36.00.00] ~ 2.200] — 109 8B. Direct Labour 18,80,000} 2,400] C. Direct Expense 420.000} 2.400] 118 D. PRIME COST 160,00,000] 2,400] 25 E. Factory Overheads : Factory Rent 3,54,760 Coal Consumed 3,80,125, Factory Salary 2,19,588 Machinery Repairs 98,847 Factory Electricity Machinery Depreciation F. WORKS COST G. Office Overheads : Salary Printing and Stationery Telephone Depreciation on Computer 68 2,400 e 2,400 Mi 2.04.180| 859.200] 2,400] 35 COST OF PRODUCTION 184,24,000 2,400] Sales Overheads : Commission 3,37,650, Carriage Outward 1,54,090 Packing Expenses 1,94,450 ‘Scanned with CamSeannerSS a gestion of COStS and Cost Sheets peivery Van Expenses ca Depreciation on Vans aa 1,08,850. cost OF SALES 7 -1.87.380|-9.50,400] 2,400] {ess : Sold to Govt. (960 tons x 3000) 193,74,400| 2,400] 28,80,000| 960) 164.04,400| 7,440 14.25.60 = [73.20,000] 7,440] pROFIT (10% of & 1,42,56,000). © gAaLeS (Open Market) ppateation 18 : (Working back sales) coning details are fumished by K.K. Ltd. of expenses incurred during the year ended 31st March, nt. z wages ces of Raw materials . 110,000 ny Rent '35,000 of Catalogues 7 47,100 sur Expenses “| 48'500 reciation on Plant and Machinery 49,000 Opening stock of Raw materials 25,000 papaits to office furniture 42.500 Ceniage outwards 25,650 nest on Loans ety Cosing stock of Raw materials 15,000 Distribution of Free samples 13,775, Audit Fees 11,500 Demonstration Expenses 13,300 Fumiture Loss by Fire 8,000 indirect Materials: 26,000 Oice Salaries 27/500 Store keeper's salary 9,000 Depreciation on Office Equipments 10,000 Commission of Sales 15,675 Direct Expenses 90,000 Material Handling Charges 11,000 Machinery Purchased a 1,40,000 Other information : (2) Stock of finished goods at the end 500 units to be valued at cost of production. (b} Number of units sold during the year were 9500. (¢) Profit desired on sales is 20% Prepare Cost Sheet showing the various elements of cost both in total and per unit and also find out he total profit and per unit profit. (LY.B.Com., April 2010, adapted) Solution : COST SHEET STEP ELEMENT OF COST Total @ [Units [Per Unit © A Direct Material Opening Stock of Raw Materials Purchases of Raw Materials ; Less ; Closing Stock of Raw Materials .. Net Direct Materials 10,000 25.00 B. Direct Wages 10,000 71.00 ©. Direct Expenses 10,000 9.00 0. PRIME COST 450,000] 10,000" 45.00 Works Overheads Factory Rent . 35,000} 10,000 3.50 Depreciation - Plani & Machinery 19,000] 10,000] 7.90 Indirect Materials 26,000] 10,000] 2.60 — a ‘Scanned with CamSeannerCost Accounting (T.¥.B.Com, 11,000 10,000 | 9,000] 10,000 10,000[-— 10,000, ~—% 10,000) 10,000 & 330 Material handling Charges Store Keeper's Salary Total Works OH F. WORKS COST G. Admin. Overheads ‘Sundry Expenses Repairs to Office Fumiture Audit Fees Office Salaries Depreciation- Office Equipments Total Admn. OH H. COST OF PRODUCTION : 1. Less: Closing Stock of Finished Goods .. J. COST OF GooDs soLD 5 K. Sales/Distr. Overheads Cost of Catalogues Carriage Outward Distribution of free samples Demonstration: Expenses Commission on Sales Total S & D OH L. COST OF SALES M. PROFIT (25% on Cost) N. SALES 5,50,000 18,500 12,500 i 31,500} 10,000] | 27,500] 10,000] 15 10,000 10,000} #5 80,000] 10,000 m9 6,30,000| 10,000 (31,500)| (500) 5,98,500| 9,500 17,100] 9,500 25,650] 9,500 13,775] 9,500 13,300] 9,500 15,675| 9,500 85,500] 9,500 6,84,000] 9,500 1,71,000] 9,500 8,55,000| 9,500 Note : Financial items - Interest on Loan, Furniture lost by fire, Machinery purchases are to bs ignored. Ulustration 16 : Following details are fumished by MBA Lid. of expenses incurred ‘during the year ended 3tst Mar’ 2014. Particulars v Direct Material 3,40,000 Opening Stock of Finished Goods (1,000 units) 195,250 Closing Stock of Finished Goods (2,000 units) 1 Depreciation on Plant and Machinery Loss on Sale of Machinery Trade Fair Expenses Direct Expenses General Manager's Salary Dividend Paid Direct Wages Advertisement Depreciation on Computers Drawing and Designing Expenses Purchase of Machinery Depreciation on Delivery Van Office Maintenance Charges Factory Rent Sales (19,000 Units) Closing Stock of Finished Goods to be valued at Goat or Production, at You are required to prepare Cost Sheet showing vari i er and also find out Total Profit and Per Unit Profit“ ® ents of cost both in total and Scanned with ComScannery | °S¢ Sheet, on: my wi! ‘8. | Com, March : 331 1 Oct. 2014 | 6 AMEN OF Soap Costs " SYBAF, March 2018, adapted) Direct Materials Units] Rate Per] Total > \* pirect Wages. : unite |g | lrect Expenses wile [20007 00) sao PRIME COST . 20,0001 13.00) 2.50,000 Works: Overheads 20,000| 00] 1'60,000 Depreciation - Plant ang 20,000 | 38.00} 7,60,00 Drawing and Designing atctiney i co Factory Rent engeg Oo 20.000) 400) se aca 000 Toa Works Overheads 2000| 720) 150000 WORKS Cost i E OneeAdninstatve 0 20,000 75.00] 3.00000 * Gael Managers SCY" ~ 20.000 ~s3.00]0,60,000 and > Office Equipments 20,000 | 19.00) 3,80,000 Office Maintenance 20,000] 8.60] 1.72000 Total Administrative Overnea 20,000] 9.40] 1/¢8,000 x. 0087 OF PRODUCTION 20,000 [7.00] 7,40,000 Finished Goods 20,000 90,00]78.00,000 ‘Add: Opening Stock : a Less: Closing Stock 1,000] 25.25] a5,250 f Seting asec? ‘ent| es . istribution Oy t 75}17,05,, Trade Fair Expenses "eats pe a Advertisement 19,0¢ 50) 85,500 Depreciation - Delivery Van : 19.000 ars 399250 "Sg & Dn Oni oon ee L. TOTAL COST/ Cost oF saLeg 19,000] 110.00}20,50,000 Ml. PROFIT 19,000| 10.00) +1,80,000, SALES 19,000 | 720.00]22, See | 000] Hotes: 1 Franca ltems - Loss on Sale of Machinery, Dividend Paid, Machinery Purchases are tobe i~ 2 Drawing and Designing Expenses are treatod as Works Overheads as per CAS-4, Istration 17 + folowing detals are furnished by NY Ltd. of Expenses incurred during the year ended 3tst March, ‘4, ease Hee evn EIR EELS SEHSEE LIE B Particulars Salesman Salary Opening Stock of Finished Goods (2000 units) Oiector's Fees Indirect Wages Repairs to Office Furniture Works Managers Salary room Expenses. eciation on Computer ct Materials Preciation on Plant and Machinery retisements, @ Salary ca 47,500 7,60,000 9,73,700 9,76.300 4,01,700 11,94,700 10/68,750 12,12,900 7131,900 4.77100 15,33,750 7,91,700 10,01,000 ect Wages Drect Materials ‘Scanned w 18,82,400 ith ComScannercont Accounting (T.Y.B.Com, Direct Expenses Closing Stock of ished goods (3000 units) Other Information : 1 production. 1. Closing stock of finished goods to be valued at cost of P' 2, Proft ested on saos 20%, er . Number of units sold during the year was ey ‘cost both in woul and pe unit and agg fg Prepare Cost Sheet shoving the various elements oF on, 20) ty the total proft and per unit profit forthe year ended S 7 B.Com, Mor. Solution : eg, cost SHEET units_| Rate Pe; Total Unt STEP ELEMENT OF COST 7 7 iw 26,000] 72.40 ‘A. Direct Materials 182,400 26,000| 3850 B. Direct Wages 10,01,0 26,000) __19.19 ©. Direct Expenses | 4.26600}. o.000 1 D. PRIME CosT 39.604 30m E. Works Overheads 000] 375 Indirect Wages 9,76,300 pol ase Works Manager's Salary 11,94,700 26,000} 28.15, Indirect Materials 7,31,900 26.000] 18.35 Depreciation - Plant & Machinery | 4,77,100| 26,000 Total Works Overheads 33,80,000) | 26 | Sa F. WORKS cost 57-60,000] | 26,000 28055 G. Office/Administrative Overheads Director's Fees 9,73,700 » 25900) srs Repairs - Office Furniture 4,01,700) 26.000] 154 Depreciation - Computer 12,12,900 26.0 7 Office Salaries | 7.91,700 26,000) __ 30.45} Total Administrative Overheads [s3,80,000] 26,000 ‘3009 H. COST OF PRODUCTION 1,01,40,000] 26,000 3900 Finished Goods ‘Add: Opening Stock 7,60,000] 2,000 Less: Closing Stock (11,70900)] (8,000)} 380.00 J. COST OF GOODS SOLD ls7,30,000} 25,000 389 K. Selling & Distribution Overheads Salesman Salaries 6,47,500] 25,000] 25.90 Showroom Expenses 25,000| 42.75; ‘Advertisements }15.33.750) 25,000] _61.35 Total Seling & Distribution {32,50,000] 25,000 13000 L. TOTAL COST/ COST OF SALES 2880000] 25,000 383 M. PROFIT [25% of Cost] [32,45,000] 25,000 12881 N._ SALES j.a225000| 25,000 em Note : Direct Material Units = Production + Closing Stock ~ Opening Stock = 25,000 + 3,000 ~ 2,000 = 26,000 Mlustration 18 : From the details given below, prepare a comparative cost sheet forthe fist and second half of té year 2014, showing cost per unitin each case, at all stages te Particulars Half year ended 30-614 Direct Materials Consumed : 50,000 Wages Loken 60,000 Chargeable Expenses, 10,000| ‘Scanned with CamSeannergotion P COX ona 3 Sheer {Pio ot FAIOY Maing wages in Factory es 333 factory I Fact 16,000) 20,000 | orice : Wt 20,000] 30,000 : ~ | “5;000] “4/000 8.000] 8,000 6,000] 4,000 9,000] 2.000 16,000] 20,000 20,000] 25,000 Units] "Units =, = ‘Hall year ended | Hail year endod «gf ELEMENT OF Cosy 206-14 31-12-44 # 20,000 Units 25,000 Units Total T Per Ut | Total | Por Unt {Diet Material Consumeg — £ , Profton sale * inthe cost sheet, susttlon 25 : (ncome Tax pai rotowing Particulars have be fed Stet March, aon Pe" Nom the books oti ction) — /estment ani 2.000 (Closing Stock) 1d interest received are na Manufacturing Co.Ltd forthe year Purchases of Raw Materials z Direct Wages vo 4,50,000 Power vec meen | 3,00,000 Depreciation on Plant 50,000 Rent on Factory Building 20,000 Sales 25,000 Opening Stock of Raw Materials '30,00,000 Opening Stock of Finished Goods (1,000 units) a Office Salary 2,50,000 Depreciation on Office Buildings oer e00 Offce Sundry Expenses sooo Purchase of Plant 10,00'000 Interest Received on Investments “50,000 Expenses on Delivery Van 80,000 Cost of Catalogues 13500 Income Tax paid 20,000 Showroom Expenses 22,500 Closing Stock of Raw Materials smn | 25,000 Srena the year 10,000 units were produced out of which 2,000 units remain uncoll Prepare Cost Sheet and show total and per unit Cost, Also show total profit and per unit profi, (TY.B.Com.,, Nov. 2017, HEENA MANUFACTURING CO. LTD. Cost Sheet For the Year Ended 31st March 2017 [Production : 10,000 units) Solution spted) STEP ELEMENT OF COST Total Cost Per Unit = = a 7 A. Direct Material Opening Stock [RM] vv neswow | 20,000) Purchases. Less : Closing Stock (RM) 4450 Raw Materials Consumed B. Direct Wages 2000 ©. PRIME Cost ° fom nents “ 0,000 ‘Scanned with CamSeannerCost Accounting (LYM 302 (000 Depreciation - Plant e000 Factory Rent | 28.0%) 95,000] 10,0000 ;40,000] 10,000 —. FACTORY / WORKS COST 7 8, F. Administration Overheads i Otfce Salaries we | 800.000 Depreciation - Otce Bulking ee 5,71,000 ] 10,000 Office Sundry Expenses 44,11,000] 10,000 G. COST OF PRODUCTION “tng H. Finished Goods 4,000 ‘Add : Opening Stock ea eae | 50,000) 20% Casing Stock of Hes Gove «4392 2000] no |e | COST OF GOODS SOLD . 113,78, Ma 183.5 | Sales / Distribution Overheads 9,500 Catalogues ae Beto ‘Showroom Expenses " 90,006 ‘Van Expenses 90,000 126,000 000| tes, 5,04,800] 9,000 K. COST OF SALES be an PROFIT / (LOSS) SALES oe fa0,00,000) 9,000] 333.33 Working Note : ‘Sales = 1,000 (Opening Stock) + 10,000 (Production) — 2,000 (Closing Stock) = 9,000 Iustration 26 : Following information relate to a manufacturing concem for the year ‘ended 31st March, 2018 Particulars x Raw Material (Opening) 2,28,000, Raw Material (Closing) 3,05,000 Purchases of Raw Material 42,25,000 Freight Inwards 1,00,000 Direct Wages paid 12,56,000 Direct Wages - Outstanding at the end of the year 1,50,000 Factory Overheads 20% of Prime Cost Work-in-Progress (Opening) : 1,92,500 Work-in-Progress (Closing) 1,40,700 Administrative Overheads (related to production) 1,73,000 Distribution Expenses 216 perunt Finished Stock (Opening) - 1,217 units 6,08,500 Sale of Scrap of Material 8,000 The fim produced 14,000 units of output during the year. The stock of finished goods at the end ot the years valued at cost of production. The firm sold 14,153 units ata price of €618 per unit duis the year Prepare cost sheet of the firm, (CA-Inter, May 2018, adapted) Solution : Cost Sheet For the Year Ended 31st March, 2018 [Production : 14,000 units and Sold : 14,153 units] Parioulars ‘Add : Freight Inward 400,000 ‘Add : Opening Value of Raw Materials : 228,000 Less : Closing Value of Raw Materials SII (9.08.00) 42,40,000 Less: Sale of Scrap of Material e000 Materials Consumed 42,40,000 “ ‘Scanned with CamSeannerpean F Cons ana c,., Sheet pirect Wages, 7 (125, « bceaeges 000 4 1,80,000) s © gactory Overheads (20% of ve p ‘Add: Opening Value Work.i ine Met Workin eee *4,06,000 tess : Closing Vay 56.46.00 FACTORY Cost Add : Administrative ¢, COST OF PRODUCTIgy add: Value of Opening pin COST OF GOODS soup "4 Stock (wn Distribution Expenses @ 16 x 14 Detain Espen 153 units) PROFIT (Balancing Fj {SALES © 618 x 144, working Note : igure) 53 units) casing Finished Stock = fe 599 (217 5,32, loKy iiustration 27 : (Working back sa les) Ws Vishal Manufacturing Company m: a she year endes on star ara ce 1° YP0s of products viz Aand B. The information Partculars| Products A B Direct material per unit £ £ Direct labour per unit $9 [1/220 rece a] '@ Additional information : (1) Factory expenses are charged at 20% of prime cost. (2) Office expenses are charged at 25% of works cost. (9) 2,000 units of product A were produced of which 1,500 units were sold and 000 uns of product B were produced of which 4,500 units were sold, (4) Seling expenses are ® 15 per unit for product A and & 20 per unit for product B. (5) Company charges a profit at 20% on sales for both the products, Prepare a cost sheet showing the cost and profit in total as well asin per unit. Solution ; (SYBAF, Oct. 2016, adapted) M/S VISHAL MANUFACTURING COMPANY Cost Sheet For the Year Ended 31-3-2014 PRODUCT A PRODUCT B ELEMENT OF CosT| Working] Total | Units] Unit |Working | Tota’ | Units | Unit . Cost Cost Cost Cost z ¢ No. z z z No. ¢ 0 Dir teri 1x2, 2,00,000] 2,000] 100.00]120x5,000} 6,00,000} 5,000) "1: Obes Mame’ [Ege] enone] Sonn] “aoe ere fens 23 ae C. Direct Expenses 40x2,000] __80,000] 2,000] _ 40.00] 80x5,000) 200000 S000 | 5000 D. PRIME COST 4,00,000] 2,000} 200.00) 12,50, oom a E. Factory Overheads —80,000] 2,000} _ 40.00) | -2.80,000) 54 (2s tro Cos) 1500000] 5000] sooco KR 4,80,000] 2,000] 240.00 9,00. G. Once Ovens nam) 200 “enc0] | “s7scoo) 5000] “7s0 (as a Won Cos) ‘Scanned with CamSeannerFast Accounting (TV.B.Com,« 34g Cost Se 4. cost oF PRODUCTION Less: Closing Stock of Finished Goods '. Cost oF Goons Soto J. Seling Overheads K. COST OF Sates. sl 50g \ PROFIT (20% on Sales = =4.44.975 25% on Cost) 22,21,875 M.SALES Produced +5000 units Sold : 2000 units Sold : 4000 Units Total Cosi] Total Cost] Units | unk Gow z No. < A. Direct Material (Note 7 ) 100] 2,50,000 5,000) 50 B. Direct Wages (Note 2) 50] 1,00,000) — S,o00| a ©. Direct Expenses 10) 50,000] 5 000} __10 D. PRIME cost 180] 4,00,000| —s'099| > a E. Factory Overheads 2} __ 80.000 5,000 — RKS COST 1921 4,80,000] 5 ‘000 96 G. Administrative Overheads ~ 25] 50.000] 5.000; 10 4. COST OF PRODUCTION 2171 530,000] 5 o09| 106 Less : Closing Stock of Finished Goods 1.06.000/ 1,900] _= '. COST OF Goons sop 217! 424,000] —4'o00 Selling Overheads 8) __36. 000 4,000 = J Tora cost 225) 4,60,000| —a‘oo9 iF K. PROF 25! _ 40.000] __4'o00 25 —4.000| 250] .00,000 [5 ‘Scanned with CamSeannerusifeation of Costs ana c,, ) Sheets | tes | caleulation of Direct Material MS UM [etthe cost of materiay Per unit uettne 6081 of material per yn Sharad +. (6090) + 2m (2.5990 iN Vivoka to {0.000 = §00,999°°) * 00.009 m=50 2 Viveka = 850 per unit snarada = © 100 por unit (2 x 50) q\Galeulation of Direct Wages) aoa /ages Let ect Wages per unit in “Sharaga? « Diect wages per unit in vive as ¥ 2500) + 0.4 w (6,000) - a 9 yoo 2500 W + 2000 w = ee 4500 W = 2,25,000 w=50 Wages in Sharada = % 59 Wages in Viveka = & 29 0% OF Ew = OL4y Per unit tustration 28 : (Rectification of p ‘super Vision Com, defective Work) any fumishes y sunlactured and sold during the yaa, te flowing information about is 4000 Tw sets Pariculars| =|] Particulars z Haterials Noon aoe | Olice ang Administration Expenses) Gmoa0o Direct Wages '9:90,000| Seling & Distibution Expenses | 20000 Power and Stores 2,40,000| Sale of Scrap 40,000 hndirect Wages 3,00,000] Sale of 1000 TV sets 62,00,000 Factory Lighting 1,20,000] Repairs and depreciation of Cost of rectifying defective work 60,000] “Machinery 2,00,000 Prepare the cost sheet for the above Year, showing the elements of cost per u estimated cost sheet for the next year assuming that 1) Materials cost and direct wagos cost wil increase by 10% and 18% respectively (2) Factory overheads will be recovered as a percentage of creet wages, as last year, (9) Office overheads and selling overheads will be recovered as Percentage of works cost, as last year, and (6) 1800 TV sets will be Solution : Prepare also the Produced and sold at & 6,600 each in the next year, (T¥.B.Com., April 02, SYBAF, Oct. 08, Fob. 09, SYBBI, Aug. 06, Cost Sheet For the Year Ended ... [Units Produced / Sold : 1,000) lapted) STEP ELEMENT OF COST | ‘Note | Total Cost] Por Unit No. « © 16,00,000] 1,800.00 10,00,000| 1,000.00 28,00,000] 2,800.00 ‘A. Direct Materials B. Direct Wages ©. PRIME COST [A+B] 180,000] _'a80.00 0. Works Overheads 1 ziasnong -yieae —. WORKS COST [Cc + D} — : 6 0 aH F. Office and Administration Expenses £:0.000| 690.00 G. COST OF PRODUCTION [E + See 3 aso.c0 H. Selling and Distribution Expenses 120,000] 120.00 — ‘Scanned with CamSeanner346 Cost Accounting (T.¥.2.Com Sheet For the Year Ended [Units Produced / Sold : 1,500} ‘STEP ELEMENT OF COST Direct Materials Direct Wages PRIME COST [A + B] Factory / Works Overheads WORKS COST [C + D] Office Overheads COST OF PRODUCTION [E + F] Selling Overheads COST OF SALES [G +H] Profit SALES [k - I] Working Notes : (1) Works Overheads Power and Stores AerxrOmmoog> 249, on Indirect Wages 3,00.0¢9, Factory Lighting 1.2009) Repairs and Depreciation of Machinery 2.0009) Cost of Rectitying Defective Work — £0,009 9.2009 Less : Sale of Scrap 40.009 “ag (2) Direct Materials Cost per unit will rise by 109% Cost per unit previous year 4,800 Rise by 10% a Increased Cost 13 (3) Direct Wages Cost per unit will rise by 15% Cost per unit previous year 1,000 Rise by 15% 1 Increased Cost As) (4) Works Overheads Taken as a percentage of Direct Wages = Total cost of work overhea \ds previous year Total cost of Direct Wage: S previous year * Tal cost of Direct Wages current year 8,80,000 ~ Foo ap *17:25.000 = 15,18, ¥0,00,009 *17-25.000 = 18,18,000 (5) Office Overheads Taken as a percentage of Works Cost = Totalcost of office overheads Previous year Total Works: Cost Previous year ~~ *Toal Works Cost curen year 6,80,000 ~ Sapo pam * 6213.00 = 11,480 36,80,000 * © is ‘Scanned with CamSeannersification of Cosy, ayy Cost sh, Sheets (0 S8ll09 Overheads Taken as a Percentage Nt 1,20,000 Te a7 orks Cost 36,80,000 * 62.13.00 _ 202,599 station 3: (Changes i oy Rates) sP8Ct Of a facto n10sp "Ye folowing guy "V0 00m ebay costol Matos 41" ho yoar 201g factory Overheads i seling Overheads 120,000 Dstibution Overheads 8.0000 prect Wages 3000 Administrative Overheage ae _ ; 8,72.000 Avork or has been executed n 201 Mates 16,000 ang vn ang 8.40.000 ; 2988 0,099," l'Owng exsences navy been incu Astin that in 201 the rate o es have gone down by 109% and sc the increased by 20%, wat pice should the i. 1d eoministrative g \istbution overheads i old aso ean ve ovthonds f2V8 each gone upby tean ss 218? Factoy overheage se foal amc ot on the seling once os cost. '8ed on direct wages While all other overheads are based on factory vad (¥B.Com., Oct. 2002, adapton) Cost Sheet For the Work Order Executed in 2014 , ‘STEP ELEMENT OF CosT z ave A. Direct Materials . Direct Wages ©. PRIME cosy ~Be000 D. Add : Factory Overheads (wn gj 72 E. WORKS cost : 3300 F Add : Administrative Overheads (wn 4) 964 G. COSTOF PRODUCTION ) wie H. Add: Sales / Distribution Overheads Seling Overheads (wn's) Ich 5976 Distribution Overheads: (WN 6) - m 2,988) COST OF SALES oe 51,128 J. Add: Profit (1/5th on Cost of Sales) . 10.226 K. SALES ooh ove 81,354 ee Product shouldbe sold for 61 354 team {he same rate of proft on he seling price asinine year 2013 i. 1/6th on sales Working Notes. t Oy Cost Sheet For the Year 2013 STEP ELEMENT OF COST e 7 A. Direct Materials : B. Direct Wages. Cc. PRIME Cost irene D. Add: Factory Overheads 128,00,000 =. WORKS cosT |_6.72.000 RF Add: Administrative Overheads: 134,72,000 G. Costor PRODUCTION H. Add: Sales / Distribution Overheads 4,48,000] Selling Overheads 2,80,000|_7,28.000 Distribution Overheads: |42,00,000 | Cost or SALES. 40,00 K. SALES a ‘Scanned with CamSeanner348 Cost Accounting (T.¥.B.Com (2) Calculation of Percentage of Profit Cost of Sales Protit “om Sales soe 8,40,000 0 +. Profit as a percentage of sales [eee x 109] 16.67% oF 1/6th on sales oF 1/5 op, i sales. ct (8) Calculation of Factory Overheads (Based on % to Direct Wages) 28.00.0001 109 = 60%, Rate of Overheads in the year 2013 = eon % Rate of Overheads for the year 2014 60% + 20% of 60% 72% on direct wages :. Factory Overheads 72% x 10,000 = % 7,200 (4) Calculation of Administrative Overheads (Based on % to Factory Cost) %6,72,000 Rate of Overheads as a proportion to Factory Cost = ap.o9,999 * 100 = 24% +: Administrative Overheads for the year 2014 @ 24% on Factory Cost ++ Administrative Overheads for 2014 % 93,200 x 24% = 2 7,968, £7,968 + 12.5% of & 7,968, no 8.964 (6) Calculation of Selling Overheads (Based on % to Factory Cost) SAMB.000. 100 = 16% Rate of Overheads as a proportion to Factory Cost = Fap-gegop * 100 = Selling Overheads for the year 2014 @ 16% on Factory Cost % 33,200 x 16% =%5,312 Selling Overheads for 2014 5,312 + 12.5% of € 5,312 5,976 (6) Calculation of Distribution Overheads (Based on % of Factory Cost) %2,80,000 =a £100 = 10% Rate of Overheads as a proportion to Factory Cost = %28,00,000 Distribution Overheads for the year 2014 @ 10% on Factory Cost Distribution Overheads for 2014 % 33,200 x 10% = & 3,320 = %3,320- 10% of & 3,320 = %2,988 Mlustration 31 : The Trading Profitand Loss Account of Vijaya Manufacturing company forthe year ending 31-12-2013 was as follows : Dr. Trading Profit and Loss Account For the Year ended 31-12-2013 Cc. Particulars € Particulars z To Raw Material Purchased 80,000] By Sales (2500 units) 2,50,000 To Direct Wages 30,000] By Closing Stock of Raw Material | 5,000 To Direct Expenses 25,000 To Factory Expenses 40,000 To Gross Profit c/d 80,000 2,585,000 2,58,000 To Office Salaries + 25,000 By Gross Profit b/d 80,000 To Office Rent 12,000 By Dividend Received 10,000 To Selling Expenses 12,500 By Discount Received 7,500 To Preliminary Expenses Written-off 2,500 To Goodwill Written-off 5,500, To Net Profit c/d 40,000 bo 97,500 9750) ‘Scanned with CamSeanneruasification of Costs ang Cours the year 2014, jt j em unis produced are ted that. ww a) Prices of Raw Materia) sw "Se by 20%, Direct Wages per yng pet Mi a) Direct Expenses wit ingen "280 by 5) Factory Expenses per The Ofce premise © stich depreciation w a80 by 250," Was on 25% Ould bee eel ba in 2013 A Sire meta 0 noe ‘Would be purchased by the company, on You are requited t0 prepare a giant Samo, 7 : 8 statem, 31422014 considering that comma" Showing est : pany shai ‘mated cost and profit for th Solution : Charge a profit at 20% on eet sales, (T¥.B.Com., March 03, 19, adapted) ae VIUAYA MANUFACTURING Be ‘eet Showing Present and Estimated Cost STEP ELEMENT OF cogy ae a wi 2500 Units 3000 Units 4 Total Cos] Unit Cost} Total eo Unit Cost ‘A. Direct Material - : £ £ B Direct Wanee . 75,000] 30.00 99,000 33.00] 2 C. Direct Expenses D. PRIME Cost E. Factory Expenses F. FACTORY cost 30,000] 12.00 45,000] 15.00] 3 25.000] __10.00] __30,000| __10.00 130,000] 52.00] 7,74,000] 58.00 49,000) __16,00| _ 60,000} __20.00] 4 G. Office & Administration Expenses.” | "7°:000] 68.00 2,34,000| “7.00, Office Salaries 25,000 lls 5 Office Rent 12,000} ( Depreciation 000 ‘ 8 I H. COST OF PRODUCTION = it.000] —14.80| 31,000] __10. Leen coe 2,07,000| ~ #2.80| °2,65,000| 88.33 7 —12,500) EX 15,000} 5.00 J. COST OF SALES 2,19,500| — 87.80) 2180,000| — 93.33, K. PROFIT '30.500| 1220] 70.000] __ 23.33] 9 L_SALES 2,50,000] 100.00) 3.50,000| 116-66 Notes : (1) Units to be produced in 2014 will rise by 20% i.e. 2,500 + 500 = 3,000. (2) Per unit cost of Raw Material in 2013, will increase by 10% in 2014 i.e, 30 + 10% of 30 = 33. (3) Per unit direct wages will increase by 25% ie. 12 + 25% = 15 (4) Per unit cost of factory expense will increase by 25% in 2014 ie. & 164 1/4 of € 16 = 20. (6) Salary is assumed to be the same in 2014 as in 2013. (6) The premises which was on rental basis in 2013 is assumed to be purchased in 2014 and hence office rent will not appear in 2014, Instead depreciation of & 6,000 would be charged. (7) Preliminary expenses written off and goodwill written off are financial expenses / losses and hence will not be shown in the cost sheet. (8) Dividend received and discount received are financial incomes and hence will not be shown in the cost sheet. (8) Profit for year 2013 is a balancing figure. For year 2014 profit is 20% on sales i.e. 80 (cost) + 20 (profit) = 100 (S. P.). Profit is 1/4 or 20% of cost in 2014. ‘Scanned with CamSeanner0 Cost Accounting (TYB.Com. spy, Mustration 92 : Or. Tracing and Proft and Loss Accounts of MK & Co. For the Year Ended 31st March 20 Particulars © _| Particulars : To Materials Consumed 3.75,000] By Salos (15,000 units) To Direct Wages prayed To Factory Overheads 3,00,000 To Gross Profit old 6,00,000 ¥5,00,000) To Ottice Rent To General Expenses ‘To Management Expenses To Goodwill wot To Advertisement To Salesmen Commission To Interest on Loan To Net Profit c/d By Gross Profit bid By Dividend Received By Interest on Investment For the year ending 31st March, 2014 following estimates have been made : {@) Production and sales units will be doubled. {b) Direct material cost per unit will ise by 20%. (c) Direct wages per unit will increase by 40%. (6) OF the factory overheads, 1,50,000 are Fixed and would remain at the same level but varab, thereof would be in same proportion to direct wages as in 2012-13. {¢) Total office and administrative overheads would increase by 40%. (f) Selling and Distribution overheads per unit will increase by 20%. (g) Selling price per unit would rise by 10%. You are require to prepare : (i) Cost Sheet for the year ended 31st March, 2013 showing cost per unit and total cost and (i) Projected cost sheet for the year ending $1st March, 2014 showing cost per unit and total cos, Solution : (LY.B.Com., Oct. 2011, adapted) COST SHEET z 313-2013 31-3-2014 ‘STEP ELEMENT OF COST Units: 15,000. Units : 30,000 ogi 28: Rate f Rate Per Unit Per Unit A. Direct Materials 3,75,000 25.00] 9,00,000 30.00 B. Direct Wages 2,25,000 15.00} 6,30,000 21.00 C. PRIME COST 6,00,000 40.00 }15,30,000 51.00 D. Add : Factory Overheads Fixed 1,50,000 10.00} 1,50,000 5.00 Variable 1,50,000 10.00} 4,20,000 14.00 Total Works Overheads 3,00,000 20.00] 5,70,000 19.00 E, WORKS CosT nv oe 1 9,00,000] —60.00[21,00,000] 70.00 F. Add : Office/Administrative Overh ds, Office Rent * 90,000 General Expenses 75,000 Management Expenses: 7 60,000 Total Administrative Overheads... 2,25,000| 15.00 oo] 1050 G. COST OF PRODUCTION "1.25.000| 75.00 [24,15,000] 6050 ‘Scanned with CamSeannersein ef Cos, ange St Sheer lin 4. Selling & Dist Utlon ©, Advertisement Verheads 351 cata Commission Total Sel TOTAL cost Fettton ove the 1000] se Qte] 1980 1 "heads 10} 3.60,000} 12.0 {PROF /COST op SALes 1075 675. 000[ as SALES 93.75 [30,90,000 103.00 7 625] 2.10.00] "7.00 yates ¢ i toes PerUnt sos, 00.00 33.00.00 110.00 p, Wages Per Unit: 15), 40%, 30 per unit 5. Factory Overheads « Ter unit © Fixed : Remain same ig. Variable : in propo 80,000 POTtiON to Total Administrative Over “= Selling Overheads - ay. °808 : 2 6 Selling Price = 199 , 7 re wustration 33 : Fixed an x1 manufactung company g sales during the year wag ig¢ ves yoy : 000 urs"? flowing parteutars for the year 2014, Production and Pariculars Materials: id Direct Wages 2,50,000, Anita overhead (xed) 1.50,000 Sales 4,00,000 Proft +2,00,000 Factory Overheads 2,50,000 Fixed Variable 309000 Selling and Distribution Overheads ;- : Fed Variable coon The company has worked to its maximum has decided to incre: for the year 2015 that: () There will be allround rise in all variables expenditure by 10%. {© There will be increase of 20% in all fixed overheads (ii) There will be no need to ‘capacity of 10,000 'aSe production capacity to 15,000 units lunits during 2014. ‘The management and itis estimated *hange the seling price for the year 2016, Prepare a statement showing showing estimated profit for 2 Solution : {otal as well as unit cost and profit for 2014. Also prepare a statement 015 taking into consideration the changes in 2018 (T¥B.Com. Oct. 2008, Nov. 2018, SYBAF, Oct. 2015, adapted) Ws. KT MANUFACTURING COMPANY Cost Sheet For the Year Ended 31st March 2014 & 2015 | 2014 2015 WN STEP ELEMENT OF COST 10,000 Units 15,000 Units Total Cost] Unit Cost| Total Cosi] Unit Cost| t t e z j 25.00] 4.12500] 2750] 1 ‘A. Direct Material soo] zzsol C. PRIME COST DL Factory Overheads Hamo| ang) cele aea |= eats —20.00| 330,000] __22.00| 4 —_ ‘Scanned with CamSeannerCost Accounting (LYB.Com,: Spy E. FACTORY cost F. Administrative Overheads. G. COST OF PRODUCTION .... H. Sollng Overheads : 7,00,000) 70.00] 11,10,000] 74.9 100,000] __10.00]_1,20,000| __a,99 8,00,000] ~ 80.00]12,90,000] ~~ 2.99) 5 = Fixed 60,000] 6.00 72,000] 4.00] + Variable 90,000] __8.00}_1,48,500] __9199] © |. COST OF SALES 9,50,000] 00] 14,50,500| 96.79 J. PROFIT sss sno |2,60,000] 25,00] 3,49,500] __23.39 K. SALES sznene cee ]12,00,000] — 120.00]18,00,000| ~ 120-09 Working Notes ; (Changes In 2015) Assumption : Incroas in “al viable “expenditro” moans incronso in avon dioct matoay direct labour cost in addon to ‘overheads’ as ‘oxpondituro' covers both ‘costs’ and ‘overhead? Altematively, it may be assumed that only Factory Variable Expenses and Sales Variable Expenses increase by 10% (1) Material Unit Cost = 25.00 + 2.50 = % 27. 50; Increase = 10% of 25 = 2.5 (2) Wages Unit Cost 5.00 + 1.50 = % 16.50; Increase = 10% of 15 = 1.50 (S) Factory Overheads (Fixed) = 1,00,000 + 20,000 = & 1,20,000; Increase = 20% of 1,00,095 : 20,000 (4) Factory Overheads (Variable) = Unit Cost = 20 + 2.00 = 22 Unit Cost = 2,00,000 + 10,000 = 20 Increase = 10% of 20 = 2 (5) Administration Overheads (Fixed) = 1,00,000 + 20,000 = 1,20,000 Increase = 20% of 1,00,000 = 20,000 (6) Selling Overheads (Fixed) = 60,000 + 12,000 = 72,000 Inctease = 20% of 60,000 = 12,000 (7) Selling Overheads (Variable) = 9 + 0.90 = 9.90 Unit Cost = 90,000 + 10,000 = Increase = 10% of 9 = 0.90 Mlustration 34 : (Working Back Sale Price) Following information is available from cost records for the year ended 31st March, 2014 Direct Material 36 Per Unit Direct Labour 28 Per Unit Chargeable Expenses @11 Per Unit Factory Overheads +d € 15,00,000, Variable % 10 Per Unit Office Overheads Fixed @ 12,50,000 Selling Overheads Fixed & 5,00,000, Variable % 25 Per Unit Units Produced and Sold 50,000 Selling Price Per Unit % 210 Following changes are anticipated during the year ended 31st March, 2015. (1) Production and Sales will increase by 60% (2) Direct Material cost per unit will increase by 12.5%. (3) Direct Labour per unit will decrease by 5%, (4) Chargeable expenses per unit will decrease by 10%. (5) Variable factory overheads per unit will increase by 25%. (6) Variable selling overheads will decrease by 25%. (7) Allfixed overheads will increase by 20%, (8) 75% of the output will be sold in Domestic Market at a profit of 20% on sales. (9) Balance 25% output will be sold in Export Market at a profit of 50% on sales. You are required to : (1) Prepare a Cost sheet for the year ended 31st March, 2014 and estimated cost sheet for the yea" ended 31st March, 2015, showing total and per unit cost. (2) Calculate total and per unit profit for the year ended 31st March, 2014, (8) Calculate total sales and profit for Domestic Market and Export Market. ‘Scanned with CamSeannerpsieston Cos 008 Cost Sheen gution ¢ as (T¥B.Com, Oct. 2005, 2019, adapted) TTT ttt gf ELEMENT OF Cost 28 2S WN 50.000 Units 80.000 Units Total Cos] Unt Cosi Tonal Cos] Unit Cost g. Direct Labour aoe 48.00.00] 36,09) 32,40,000} 40.50] 1 ¢, Chargeable Expenses” *4,00.000] 28,09) 21:28,000] 26.60) 2 p. PRIME COST $50,000] 14.00] 7192.00] 9.90] 3 £,_ Factory Overheads : $7.80,000] 75.09) 61,60,000] 77.00 =Fred = Variable *5.00,000] 30.00] 18,00,000] 22.50] 4 «WORKS COST $.00.000] 10.09} 10,00.000] __12.50|_5 * otfce Overneads "= (87.80.00) —115.09)0,60,000) 112.00 =Fixed g. COST OF PRODUCTION H. Selling Overheads : 12.50,000] 25.00/15,00,000] 18.75] 6 }70.00,000] 140.00}1,05,60,000] 190.75 ioe 28a) SESS] a8 G 4 cost oF SALES {87.50,000] 175.00]1,28.80.000] 187.00] . 17,50,000] 35.00] 54,95,000) K_SALES .08,00,000| _ 210.00]1,80.85.000} 9 Working Notes : (1) Direct Material Cost Per Unit in 2015 : 36x 112.5% 40.50 (2) Direct Labour Cost Per Unit in 201 x9 6.60 (3) Chargeable Expenses Per Unit in 2015 : 11 x 90% = 9.90 (#) Fixed Factory Overheads in 2015 : 15,00,000 x 120% = 18,00,000 (6) Variable Factory Overheads in 2015 : 10x 125% = 12.50 (6) Fixed Office Overheads in 2015 : 12,50,000 x 120°: (8) Variable Selling Overheads in 2015 : 25 x 75° Unit sold in 2015 50,000 x 160% = 80,000 Domestic Sales in 2015 = 80,000 x 75%. Exports in 2015, 80,000 x 25% = 20,000 Sale price per Domestic unit : 100 80 "0 * 100 = 196.25 Sale Price Per Export Unit : Exports, = 20,000x314 = — 62,80,000 ~ ‘ $= ‘Scanned with CamSeanneras Cont Accounting TXB-Com.: Spy, Muustration 35 : (Fixed and Varlable OH) The Management of a manufacturing concem has approached the Costing Department jn 7 the cost of 6,000 units. The cost analysis of 4,000 units gives the following ns Materials % 90,000, Labour ® 50,000, Direct Expenses & 1,000, Factory Overneads ¢ 200, Administration Overheads % 1,600 and Selling and Distribution Overheads The further detais in this connection are as follows: ; (a) An increase of 10% is expected in the cost of raw material and 5% in the cost of labou, {b) 70% ofthe factory overheads are fixed and 30% are variable. 7 {c) The ratio of fixed and variable part of Administration overheads is 60 : (2) 50% ofthe Seling and Distribution overheads are fixed The Management desires to charge 25% profit on sale price. EL Prepare cost statement with maximum break up of cost and ascertain selling price forthe produ 7 of 6000 units. (B.Com. Mat 07, adage Solution : Cost Statement fal 6,000 Units ELEMENT OF CosT Total Cost] Unit Cost] Working | Unit Cost £ £ Si A. Direct Materials 90,000] 22.50] 22.50+10% | 24.75 B. Direct Wages 12.50] 12.50 + 5% 13.13 C. Direct Expenses 0.25] Same 10.25 D. PRIME CosT 7.47,000 E. Factory Overheads 2,000) + Fixed 2,000 x 70% = Variable 0150 x 30% F WORKS cost 7,43,000| 35.75 G. Admin, Overheads 1,600] 0.40 ~ Fixed 1,600 x 60% 0.16] 960 + Variable 0.40 x 40% 0.16] 960 H. COST OF PRODUCTION 144,600) 36.15 |. Sales/Distr. Overheads 800] 0.20 Fixed 400 = Variable 0.20 x50% 600 J. COST OF SALES 1.45400] 36.35 234,000 K. PROFIT 119 on Cost 78,000 L. SALES ae] 3,12,000 Mustration 36 Swadeshi Electronics Ltd tumishes to you the following information for the year ended 31st March, 2014: Production and Sales 15,000 units Sales % 12,75,000 Direct Wages % 2,70,000 Direct Materials % 3,30,000 Factory Overheads % 225,000 ‘Administrative Overheads % 1,085,000 Sales Overheads % 90,000 (rn aecount of intense competion folowing changes are estimated in the subsequent year (1) Production and sales (2) Direct wages cost would be reduced by 20% due to automation (4) Outofthe above factory overheads, £45,000 are off 0 ixed nature, The remaining factory expenses ‘te variable in proportion to the number of units p eee roduced. Scanned with ComScanner| STEP ELEMENT OF Cosy Working Notes : 1 2 0100 9F Cost, ang C O81 Shee 4198! AIHA oy, Sheet gales overheads pop unin e981 bo lowor gy, 1 sale price por unit wa id bo Femain te 8Y 40% prepare @ statement of co 2 lowor by na? 8a, en ma po ‘OSE tor both c ms le dotnet vem getutlon = SWADES SOS Sheet For the SEP ELEMENT OF COSp Direct Materials Direct Wages PRIME COST Factory Overheads WORKS cost Administrative Oy, COST OF PRoDucmaGs Sales Overheads COST OF SALES PROFIT K._SALES er zommooee Estimated Cost Sheet Foy the 8 ondiny "40 M18 Mare, 2014 an (TY, ELECTRON Ics Your En UmtteD 355 1d 3154 March, 2015 M., Dec. 2017, adapted) 3-3-2014 foutput 15,000 Units} Total Cosi] Unit Cost zc 3,30,000/" 22.00 |_2.70,000] _ 18.90 6,00,000] 40.00 |~2.25.000] _ 15.09 25,000] 55.00 |1.05.000) _7,09 9,20,000| 62.00 | 90.000) __6.00 10.20,000| “68.00 255,000] ‘17.09 42,75,000| 85.00 A. Direct Materials B. Direct Wages ¢. PRIME COST D. Factory Overheads E. WORKS Cost Administrative Overheads G. COST OF PRODUCTION H. Sales Overheads |. COST OF SALES J. PROFIT SALES Production & Sales (Units) Add: 1/3 increase Material Unit Cost Less: 25% reduction in price ‘Add: 20% inerease in consumption Direct Wages Unit Cost Less: 20% reduction Factory Overheads Feed Variable (Per Unit & 12 x Units) Total Administrative Cost Less: 40% reduction Sale Overheads Per Unit ® 6) is same for both the years, Sale Price Less: 20% reduction + 20,000 Units) Total Cost] Unit Cost (Note) | z (2) | 396,000] 19.80 (@) | 288,000] _14.49 6,84,000| 34.20 (4) |_2.85,000] _1425 9,69,000| 48.45, - 6) 5 63,000) _3.1 40,32,000] $1 1.20.00] __6.00 11,52,000| 57, 60 2.08.00] _10.49 13,60,000 68.00 2014 2015 15,000 5.000 20,000 22.00 550 1650 330 19.80 18.00 3.60 14.40 45,000 45,000 1,80,000 2,40,000 2,25,000 2,85,000 105,000 42,000 63,000 85 7 68 ‘Scanned with CamSeanner356 Cost Accounting (LY.B.Com, : ling OH) Mustration 37 : (Working back Sales and Sel factures Prossuro Cookors. For tho yoar onding 315t Marc, Domestic Appliances manu "9. Fo a expenses incurred are as follows for an output of 2,000 units Particulars Raw materials consumed Direct wages Factory overheads 0 Administrative overheads ‘en Selling overheads (10% of sales value) ‘ Distribution overheads. During the year, 200 units were unsold. For the year 2014, the following changes were estimated : (2) Raw materials pice would rise by 10% but consumption per unit would decrease by 5, (0) Direct wages would rise by 3.5%. (©) Ofthe factory overheads % 60,000 are fixed and would remain at the same level but th thereof would be in same proportion to Direct wages as in 2013, (4) Administrative overheads would rise by 20%. {e) Seling overheads as a percentage of sales value would remain at the same level and Aisthbutgg overheads would remain same per unit as in 2013. (The output and sales would be 3,000 pressure cookers. (9) Expected profit in the year 2014 is 40% of sales. From the above information prepare : (1) Gost sheet ofthe year 2013 and projected cost sheet ofthe year 2014 showing per unt and toa, cost. (2) Working notes for the projected cost sheet. (G) Projected sales price. (¥.B.Com., April 2001, adapteg Solution ; 1° Variable M/s. DOMESTIC APPLIANCES Cost Sheet ELEMENTS OF COST. Sold : 3,000 Units © [fetal Cost] Units [Unit Cost Total Cost] Unis | unt Goa pt ‘No. = z No. = 7 Direct Material 2,00,000 2,000] 100.00 3,13,500 3,000} 104.50 . Direct Wages -1,00,000 2,000 50.00 | _1,55.250 3,000 51.75 C. PRIME COST 3,00,000 2,000) 150.00 4,68,750 3,000} 156.25 D. Factory Overheads : ony 60,000 2,000, 30.00] 60,000 3,000 20.00 fariable 1,00,000 2,000 50.00] 1,55, 250 5 51.75 E. FACTORY cost son ° FOR COST 460,000 2,000 230.00] 6.84.000| 3'000| deuine 3. COST OF wc ovetheads | _ 46,000] 2,000] “23.00 55.200] 3,000] _18.40 6. Cost oF PRODUCTION | 508,000 253.00) 7,39,200 246.40 H. Less : Closing Stock of Finished Goods 50,600 200} = -| _-= !' COST OF Goons soto | Zs5-400 1,800 7,39,200] 3,000) 246.40 ¥. Selling Overheads 70,200] 1,800 lin 1,59.840} 3,000] 53.28 K. Distribution Overheads 36,000, ‘Bo i L. COST OF SALES a 1.800 =p i2i000} 3,000] 20.00 moe 1,800 00} 9,598,040] 3,000] 3194 ALES 1.40400) 1,800] _78.00] 6: 39.360} 3,000] 213.12 7, 1,800] _ 390.00}15.98,400] 3'000| 5a: re is B ‘Scanned with CamSeannercssifeation 8 Costs any St Sheer tes: Sheers (1) Raw Material Cosy, in 2013 Add: Increase by 199, Less : Decrease by 59, in 2018 ises by 9, (a) Factory Variable Overt ae s% 1 4 Cr propor Wages tm 2003 1,00,000 Variable Overheads In 2004 1,55,250 1,00,000 Total (1,55,250 4 6 2 ” 10,000) 4) Administrative 215,250 () Administrative overheads wit inveage (6) Selling overheads a: sa Letsales be 199, Percentage of «Selling overheads (10% of 190) 10° Total cost excluding saling overheads wi be 50, Cost Sales 50 100 464 +2000) 26640» a0) +. Selling price per unit 532.80 Sales = 532,80 x 3,000 Mustration 38 : Sagar manufacturing company gives yo sales during the year was 20,000 unit 15,98,400 Selling overheads = 10% of 15,98, 400 = 1,59,840 387 the folowing particulars for the year 2012. Production and. Particulars @_ | Particulars z Material 5,00,000| Factory Overheads: Direct Wages 3,00,000] - Fixed 2,00,000 Administrative Overheads (Fixed) 2,00,000| - Variable 4,00,000 Sales }24,00,000] Selling and Distribution Overheads Profit: 5,00,000| - Fixed 1,20,000 ~_Variable 1,80,000 The company has worked to its maximum capacity of 20,000 units during the year 2012. The ‘management has decided to increase production capacity to 30,000 units forthe year 2013 and itis estimated that (a) There will be all round rise in all variable expenditure by 10%. (b) There will be increase of 20% in all I fixed overheads. (6) There will be no need to change the seling price for the year 2013. Prepare Cost Sheet for the year 2012 Sheet for the year 2013 with cost per unit column. cot per unt column and aso prepare estimated Cost rs (7¥.B.Com, April 2014, adapted) a ‘Scanned with CamSeanner358 Cost Accounting Solution ; COST sHeeT STEP ELEMENT OF cosT Y.B.Com Production Sales a 20,000 units 00 unis } 20.000 r | cost p er A. Direct Materiats coun 5,00,000 250 aug = eae CS. PRIME cosy oe 00,00 13.20, 7 D. Add: Factory Overheads |e 7 | “ser Fixed 2.00.0001 10.00] 2.40,009 an Variable 400,000] 20.00 sean) an Total Works Overheads 6.00,000| "30.00 9,00.000 =, E. Works cosy ne 14,00,000[ 70.00 (22.20,000 | ec Fo add: Office/Administrative Overheads” | 2.00.00] too 240.000] 7390 90ST OF PRopucTion ~» ]'6.00,0001 80.00 f4,60,000 eagp H- Selling & Distribution Overheads Fixed : 120.000) 6.00] 1.44.00], 2 Variable "= | 480,000] 8.00] 2's7;000] 2 Total Selling & Distitution Overheads 2.00,000]" 15.00] 4,63,000) 7s 70 | TOTAL Cost / cost op SALES "2.00,000 | 85.00 f29,01,000 75 J. PROFIT ee $00,000] 25.00] 6,99,000| 950 K. SALES oe 4.00.00] 120.00 36.00.00 120.09 Mlustration a9 ; polowing particulars are revealed "rom the costing records of Mis Jupiter & Co, Li, inthe year 2014: Production ~ 15,000 Units Pantcuiars : E Z : Raw Material Cost ‘oe Labour Cost 1120,000 Factory Overheads ‘ “so,000 Office Overheads 15,000 Selling Expenses : Rate of profit 25% on selling price, There will be no change in rate of profit Prepare Cost Statements for both the years 2014 and 20165. (ICWA Inter, Dec. 15, adapted) Solution : Ended 31-3-2014 t and Profit (Cost Sheet) For the Year tle: [Output : 15,000 Units) Total Cost] Unit Cost STEP ELEMENT OF COST is iS 3,00,000] 20.00 ‘A. Raw Materials tite | fen B. Labour sean} 1200 C. PRIME cost peep amr D. Add : Factory Overheads [1.20,000 ‘Scanned with Camseannercsifation oF Cots ang o st SI g. WORKS Cosy = Add: Office Oy f Verhead, z Serres, oe | Ser are ha J Sates OF 34%, x Cosy | tS.000 K 75,000 Stater |.2,25,000 ment of Cost and 9,00,000) Tati (Cost, SI the Ye utput ; ie Year Ended 31-3-2015 Se? ELEMENT OF Cosy 20,000 Units) Tolal Cost] Unit Gost ‘ Ce iaterats (Note) e z c. PRIME Cost () [500,000 25.00 ; 2 6. 3.80 FORKS cose tetescs © Fireoo0] “tas - (3) Al 7. F. Add: Office Overheads ®) Asn.g00| 7.09 6. poets PRODUCTION (4) "79,000| __3.50 He ee aling Expenses 9,86,000| ~ 49.30 | GOST OF SALES (©) |_ 15000} _075 J. Aad : PROFIT (331, x Cost) Ho,01,000) ~ 0.08 K._ SALES 333,600 16.68 Working Notes ; fia,a4,600] 66.73, 4. Raw Materials = % 20 x 105 5% x 20, 2, Labour= 8 12x 118% x 20,0000 5,00,000 2,76,000 1,20,000 3. Factory Overheads = [esto ie. xenon} + Fk Oo 20, oonte.zen00| 15,000" : =%1,40,000 x 20,0002. & «oo Mustration 40 : ML Auto Lid. is a manufacturer of auto components and the details ofits expenses forthe year 2014 are given below Particulars = 1. Opening Stock of Material 1,50,000, 2. Closing Stock of Material 2,00,000 3. Purchase of Material 18,50,000 4, Direct Labour 8,50,000 5. Factory Overhead 3,80,000 &_Administrative Overhead 250,400 During 2015, the company has received an order from a Car Manufacturer where it estimates that the Cost of Material and Labour wil be &8,00,000 and & 4,50,000 respectively. ML Auto Ltd. charges Factory Overhead as a Percentage of Direct Labour and Administrative Overhead as a Percentage Of Factory Cost based on previous year’s cost. Cost of delivery of the components at Customer's Premises is estimated at & 45,000. You are required to - 1. Calculate the Overhead Recovery Rates based on actual costs for 2014. 2, Prepare a detailed Cost Statement for the order received in 2015 and the price to be quoted i the company wants to eam a profit of 10% on sales. (CA Inter, Nov. 15, adapted) ‘Scanned with CamSeanner360 solution ¢ ( overnead F cove’ Facto Ove" o rin 20" ory overnends Oe Facto cost n 204 Labour vest pirect UL! = AOR OO yer 4 7 mnoadsin 2014 x 100 = Faia ‘paminstatve : istrative O¥ _ Aaigeatece 14 iN) 7 ost overy Rate 100 Factory ‘Overhead Factory Cost during 2015 ‘Auto Ltd. during (ip Detailed Cost ‘Statement for the Order re ived from z Particulars Soo Material + 4,50,000 Labour : Facto ‘Overhead (40% of € 4,50,000) aatoe Factory Cost 1 ee) ‘Administrative Overhead (8% of @ 44,30,000) "Ne 00 Cost of Delivery |__45.009 Total Cost 15,89,400 cost or 1/9 of 15,89,400 1.76.60 17,68,000 ‘Add: Profit @ 10% of Sales or 11.11% of der) (@ 15,89,400/0.9) Sales Value (Price to be quoted forthe on ‘000 ifthe company wants to earn a profit of 10%6 on sales Hence the price to be quoted is & 1 FF SAL ea SSUES Iustration 41 Vainath Polymers manufactures and sels a typical brand of tifin boxes under its own brat ind name. paerrtd canacty ofthe pant 4 “20,000 units per year, distributable evenly over each month far year. The Cost Accountant of the company has i Steere he Cos Ae pany has informed you about the cost structure o law Materials ¥20 per unit Direct Labour & 12 per unit Direct Expenses ® 2 per unit Variable Overheads & 16 per unit Fixed Overheads for the year ® 3,00,000. Semi-Variable Overheads are as follows : ® x 75004 beret pt 0% capaciy and al 2,500 per month for e i LSprauynieen very additional 25% capacity utilisat Tha Stroomscpeatin at 80% capacty dung the fist seven ioe et eee Trea ape ithe reaining months of he yea eer eee eee 2 period fr ; from 1st January 2013 10 31st July, 2013 was fixed at € 69 per unit at € 69 per ur Te frm has been mont target at 8 ea Montorng the proftabilty and revising the selling pi 'g price to meet its annual prott ‘Scanned with CamSeanner