COST SHEET & SINGLE OR OUTPUT COSTING

Q 1. Calculate the Prime Cost, Factory Cost, Total Cost of Production and Cost of Sales from the following
particulars :
Rs. Rs.
Raw materials consumed 4,000
Wages paid to labourers 1,000
Directly chargebale expenses 200
Oil and Waste 10
Wages of foremen 100
Storekeepers' wages 50
Electric Power 20
Lighting : Factory 50
Office 20 70
Rent : Factory 200
Office 100 300
Repairs & Renewals : Factory Plant 50
Machinery 100
Office Premises 20 170
Depreciation : Office Premises 50
Plant & Machinery 20 70
Consumable stores 100 Salesman's commission & salary 50
Manager's salary 200 Travelling Expenses 20
Directors Fees 50 Advertising 50
Office Printing and Stationery 20 Warehouse charges 20
Telephone charges 5 Carriage outward 15
Postage & Telegrams 10
(Ans : Prime Cost Rs. 5,200; Factory Cost Rs. 5,900; Total Cost Rs. 6,375 Cost of Sales Rs. 6,530)
Q 2. From the following particulars prepare a cost sheet showing the total cost per tonne for the period ended
31st Dec. 1998 :
Particulars Rs. Particulars Rs.
Raw materials 3,300 Director's Fees (Office) 200
Productive wages 3,500 Factory cleaning 50
Direct expenses 300 Sundry office expenses 20
Unproductive wages 1,050 Estimating 80
Factory rent and taxes 750 Factory stationery 75
Factory lighting 220 Office stationery 90
Factory heating 150 Factory insurance 110
Motive power 440 Office insurance 50
Haulage 300 Legal expenses 40
Director's fees (Works) 100 Rent of warehouse 30
Depreciation of :– Unkeeping of delivery vans 70
Plant and Machinery 200 Bank charges 5
Office Building 100 Commission on sales 150
Delivery vans 20 Loose tools written off 60
Bad Debts 10 Rent and taxes (Office) 50
Advertising 30 Water supply 120
Sales Department salaries 150

The Total output for the period has been 1,000 tonnes.
(Ans : Cost per tonne 11.82; Prime Cost Rs. 7,100; Works Cost Rs. 10,805; Office Cost Rs. 11,360;
Total Cost Rs. 11,820)

1
Q 3. Calculate the Prime Cost, Factory Cost, Total Cost of Production and Cost of Sales from the following
particulars :
Particulars Rs. Rs.
Raw materials consumed 24,000
Directly chargebale expenses 1,000
Wages paid to labourers 5,000
Grease, Oil, cotton waste etc. 50
Salary of factory manager and clerks 3,500
Insurance of stock or raw materials 600
Consumable stores 800
Printing & Stationery : Factory 100
Office 400
Sales department 200 700
Rent of office building 300
Depreciation : Factory premises 400
Office furniture 100
Delivery vans 150 650
Power and fuel 1,000
Contribution to provident fund of factory employees 2,000
Salaries of administrative directors 200
Bank charges 150
Cost of samples 500
Salaries of sales manager 600
Advertising 1,000
Packing material 700
Shortage in stock of finished goods 40
(Ans : Prime Cost Rs. 30,000; Factory Cost Rs. 38,450; Total Cost of Production Rs. 39,600;
Cost of Sales Rs. 42,790)
Q 4. The cost of sale of Production 'A' is made up as follows :
Particulars Rs.
Materials used in manufacturing 11,000
Materials used in packing materials 2,000
Materials used in selling the product 300
Materials used in the factory 150
Materials used in the office 250
Labour required in production 2,000
Labour required for supervision of the management for factory 400
Expenses — Direct — Factory 1,000
Expenses — Indirect — Factory 200
Expenses — Office 250
Depreciation — office building and equipment 150
Depreciation — Factory 350
Selling expenses 700
Freight on materials 1,000
Advertising 250
Assuming that all products manufactured are sold. What should be the selling price to obtain a profit of 25%
on selling price?
(Ans : Prime Cost Rs. 17,000; Factory Cost Rs. 18,100; Sales Rs. 26,666; Total Cost of Sales
Rs. 20,000; Total Cost of Production Rs. 18,750)

2
Q 5. Calculate (a) Cost of raw materials consumed; (b) Total cost of production; (c) Cost of goods sold and
(d) The amount of profit from the following particulars:
Particulars Rs. Particulars Rs.
Opening Stock : Raw Materials 500
Finished goods 400

Closing Stock : Raw Materials 400

Finished goods 500 Sale of wastage of materials 20
Raw Materials purchased 5,000 Office management salaries 400
Wages paid to labourers 2,000 Office printing and stationery 20
Chargeable expenses 200 Salaries of salesman 200
Rent, rates and taxes 500 Commission of travelling agents 100
Power 240 Sales 10,000
Factory heating and lighting 200
Factory insurance 100
Experimental expenses 50

(Ans : Prime Cost Rs. 7,280; Total Cost of Production Rs. 8,790; Cost of Sales Rs. 8,990; Profit 1,010;
Works Cost Rs. 8,370)

Q 6. The following particulars have been extracted from the books of ZEE Manufacturing Co. Ltd., Calcutta for the
year ended 31st March, 1995:

Particulars Rs.
Stock of Materials as on 31st March, 1994 94,000
Stock of Materials as on 31st March, 1995 1,00,000
Materials purchased 4,16,000
Drawing Office Salaries 19,200
Counting House Salaries 28,000
Carriage Inwards 16,400
Carriage Outwards 10,200
Cash Discounts allowed 6,800
Bad Debts written off 9,400
Repairs of plant, machinery and tools 21,200
Rent, rates, taxes and insurance (Factory) 6,000
Rent, rates, taxes and insurance (Office) 2,000
Travelling Expenses 6,200
Traveller's Salaries and Commission 16,800
Productive wages 2,80,000
Depreciation written off on Machinery, Plant and Tools 14,200
Depreciation written off on Furniture 1,200
Director's fees 12,000
Gas and Water Charges (Factory) 3,000
Gas and Water Charges (Office) 600
General Charges 10,000
Manager's Salary 24,000

Out of 48 working hours in a week, the time devoted by the manager to the factory and office was on average
40 hours and 8 hours respectively throughout the accounting year.
Prepare a statement giving the following information:
(a) Prime cost; (b) Factory overheads and the percentage on production wages;
(c) Factory cost; (d) Office overheads and the percentage on factory cost; (e) Total cost.

(Ans : Prime Cost Rs. 7,06,400; Factory Overheads and percentage on produciton wages 29.85%
Factory cost Rs. 7,90,000; Total Cost of Production Rs. 8,47,800; Cost of Sales Rs. 8,90,400)

3
Q 7. Prepare a statement of cost from the following trading and profit and loss account for the year ending 31st
March, 1995:
Particulars Rs. Particulars Rs.
Opening Stock : Sales 10,000
Materials 800 Closing Stock :
Finished goods 2,500 Materials 1,500
Purchase of materials 7,000 Finished goods 3,000
Direct labour 1,000
Grease, oil etc. 50
Salary of storekeeper 70
Power and fuel 80
Gross profit c/d 3,000
14,500 14,500
Lighting : Gross profit b/d 3,000
Office 50 Dividends received 200
Sales department 65 Interest on loan 60
Depreciation : Transfer fees received 140
Office premises 100
Delivery vans 75
Fees of office manager 200
Bank charges 150
Selling expenses 150
Sales commission 50
Preliminary expenses 300
Packing expenses 110
Dividends paid on share
Capital of company 100
Discount on debentures 50
Net profit 2,000
3,400 3,400
(Ans : Prime cost Rs. 7,300; Work Cost Rs. 7,500; Total Cost of production Rs. 8,000 ;
Cost of goods sold Rs. 7,500; Cost of sales Rs. 7,950; Profit Rs. 2,050)
Q 8. Prepare a statement of cost from the following trading and profit and loss account for the year ending 31st
December, 1994:
Particulars Rs. Particulars Rs.
Opening Stock : Sales 1,00,000
Materials 6,000 Closing Stock:
Finished goods 20,000 Materials 10,000
Purchase of materials 60,000 Finished 25,000
Direct labour 15,000
Cost of moulds 1,500
Salary of factory managers 500
Machine depreciation 400
Gross profit c/d 31,600
1,35,000 1,35,000
Salaries : Gross profit b/d 31,600
Office 4,500 Interest from bank 400
Selling 3,000 Dividends received 600
Insurance : Office premises 500 Rent received 450
Godown 400
Directors fees 1,000
Telephone charges 350
Showroom expenses 600
Expenses on delivery vans 750
Preliminary expenses 1,000
Interest on Debentures 350
Marketing Research Expenses 300
Underwritting Commission 300
Net profit c/d 20,000
33,050 33,050

(Ans: Prime cost Rs. 72,500; TCOP Rs. 79,750 ; Cost of Sales Rs. 79,800; Profit Rs. 20,200)
4
Q 9. The Inter Co. Ltd., has received an enquiry for the supply of 20,000 steel folding chairs. The costs are
estimated as under;
Raw materials — 2,00,000 kgs at Rs. 2 per kg.
Direct wages — 20,000 hours at Rs. 4 per hour.
Variable overheads :
Factory Rs. 4.80 per labour hour.
Selling and distribution Rs. 32,000.
Fixed Overheads :
Factory Rs. 12,000
Selling and distribution Rs. 28,000.
Prepare statement showing the price to fixed which result in profit of 20% on selling price.
(Ans : Selling Price Rs. 40.50 per chair)
Q 10. You are the chief of the Cost Accounting Department of Divya Products India Ltd. Your organisation
manufactures shoes. The following figures have been extracted from the account books relating to the
production of shoes for the year 1994:
Expenditure Head Amount (Rs.)
Raw materials consumed (including abnormal wastage of Rs. 1,000) 51,000
Direct wages paid 40,000
Factory overheads 10,000
Tools consumed 1,000
Depreciation of machines (Factory) 500
Machines imported 10,000
Works Expenses (Misc.) 5,000
Office Expense 2,500
Overheads for office 4,000
Managing Director's Salary 5,000
Stationery and Printing etc. (Office) 500
Depreciation of Machines (Office) 100
Selling and Distribution expenses 2,500
Entertainment of buyers 2,000
Advertising 3,000
Dividends paid 10,000
Prepare a cost analysis statement (in columnar form) after considering the following :
(i) The profit rate is 20% on sales. (ii) Wages outstanding Rs. 2,500.
(Ans. : Sales 160750; Profit Rs. 32150; Cost of Sales Rs. 1,28,600; Prime Cost Rs. 92,500;
Official Cost Rs. 1,21,100; Factory Cost Rs. 1,09,000)
Q 11. Prepare cost sheet showing the cost per tonne of paper manufactured by Suri Paper Mills in January 1995,
under the different elements of cost:
Direct Materials :
Paper pulp 2,000 tonnes @ Rs. 100 per tonne
Other miscellaneous materials 400 tonnes @ 60 per tonne
Direct Labour :
440 skilled men for 50 days @ Rs. 10 per day
220 unskilled men for 50 days @ Rs. 8 per day
Direct Expenses :
Special equipments Rs. 20,000
Special Dyes Rs. 10,000
Works overhead :
Variable @ 100 per cent on direct wages
Fixed @ 50 per cent on direct wages
Office and administrative overhead @ 10 per cent on works cost
Selling and distribution overhead @ 20 per cent on total cost of production
Finished paper manufactured 2,000 tonnes
Credit on account of sales of waste Rs. 4,000
The scrap value of the special equipment after utilisation in manufacture is nil.
(Ans : Cost of Sales Rs. 13,46,400; Cost per tonne 673.20)

5
Q 12. In a Brass Foundary, three types of Building accessories, namely A, B and C are manufactured involving
complicated designs. Each type is manufactured from the same mixture of molten brass but requires skilled
labour and care in moulding each type. Draw up a cost sheet in appropriate form, A, B and C with reference
to the following data:
Direct Material :
(a) Brass ingots — 400 quintal at Rs. 1,600 per quintal.
(b) Coke — 100 quintals at Rs. 30 per quintal.
(c) Cupola labour — 40 men at Rs. 10 per day for 1 day.
(d) Depreciation on melting furnace equipments at Re. 2 per quintal of ingot melted. Molten brass taken out
of the cupola is distributed 50% to A, 30% to B and 20% to C.
Direct Labour :
A — 400 men at Rs. 10 per day for 1 day.
B — 500 men at Rs. 14 per day for 1 day.
C — 300 men at Rs. 16 per day for 1 day.
Factory Overhead :
A — 200 per cent of Direct Labour.
B — 400 per cent of Direct Labour.
C — 600 per cent of Direct Labour.
General Overhead :
10 per cent of works cost.
Assume no loss in melting and no rejection in moulding.
(Ans : A : Rs. 3,67,510; B : Rs. 2,51,086; C : Rs. 1,78,684)
Q 13. The following extract of costing information relates to commodity 'A' for the half-year ending 31st December,
1994:
Particulars Rs. Particulars Rs.
Purchase of Raw Materials 12,000 Stock (31st Dec., 1994)
Factory rent, rates, insurance 800 Raw Materials 2,224
Carriage Inwards 144 Finished products
Other factory overheads 4,000 (200 tonnes) 3,200
Direct Wages 10,000 Work-in-progress
Stock (1st July, 1994) (1st July, 1994) 480
Raw Materials 2,000 Work-in-progress
Finished products (31st Dec., 1994) 2,000
(100 tonnes) 1,500 Sales — Finished products 29,900
Administrations overheads 400
Advertising, discounts allowed and selling costs are Re. 1 per tonne; 1,600 tonnes of commodity were
produced during the period.
You are to ascertain (i) the net profit for the period; (ii) the net profit per tonne of the commodity; (iii) the total
cost of output for the period; (iv) the value of raw materials used; (v) the value of the turnover of the period.
(Ans: Cost of Turnover Rs. 25,400; Value of Raw Material Rs. 11,920; Net Profit Rs. 4,500;
Net Profit Per Tonne 3; Total Cost of Output : Rs. 25,600)
Q 14. Prepare the cost sheet to show the total cost of production manufactured by a company for the month of July
1994. Also find out the cost of sales.
Particulars Rs. Particulars Rs.
• Opening stock of raw materials 6,000 Raw Materials purchased 56,000
• Closing stock of raw materials 9,000 Manufacturing wages 14,000
Depreciation on plant 3,000 Loss on sale of a part of plant 600
Factory rent and rates 6,000 Office rent 1,000
General Expenses 800 Discount on sales 600
Advt. expenses to be charged fully 1,200 Income tax paid 4,000
The number of units produced during July 1994 was 6,000. The stock of finished goods was 400 and 800
units on 1-7-94 and 31-7-94 respectively. The total cost of units on hand on 1-7-94 was Rs. 5,600. All these
had been sold during the month.
(Ans : Prime Cost Rs. 67,000; Works Cost Rs. 76,000; Total Cost of Production Rs. 77,800;
Cost of Goods Sold Rs. 73,027; Cost of Sales Rs. 74,827)

6
Q 15. A factory produces a standard product. The following information is given to you from which you are required
to prepare "Cost Sheet" for the period ended on 31st July, 1995: and a Statement of Selling Price.
Particulars Rs.
Consumable Materials :
Opening Stock 20,000
Purchases 1,70,000
Closing Stock 8,000
Direct wages 40,000
Other direct expenses 20,000
Factory overheads 100% of Direct labour
Office overheads 10% of Works Cost
Selling and distribution expenses Rs. 4 per unit sold
Units of finished product :
In hand at the beginning of the period 2,000 (Value Rs. 32,000)
Produced during the period 20,000
In hand at the end of period 4,000
Also, find out the selling price per unit on the basis that profit margin is uniformly made to yield a profit of 20%
of the selling price. There was no work-in-progress either at the beginning or at the end of the period.
(Ans: Prime Cost Rs. 2,42,000; Factory Cost Rs. 2,82,000; Cost of Sales Rs. 3,52,160; Selling Price
Rs. 24.46, Sales Rs. 4,40,200; Total Cost of Production Rs. 3,10,200 ; Cost of Goods Sold Rs. 2,80,160)
Q 16. From the undermentioned particulars of the Bombay Brick Works, you are required to prepare a monthly
Cost Sheet of bricks made in January 1990, showing cost and profit.
Rs.
Materials :
Coal 31,500
Royalty 5,550
Stores 15,000
Labour :
Direct 15,000
Brick Making 50,000
Overhead :
Works – 25% of prime cost
Office – 10% of works cost.
Production per month – 7,400 bricks. Sales @ Rs. 27.50 – 7,000 bricks.
Stock : 1st January, 1990 – 200 bricks. Stock 31st January, 1990 – 600 bricks.
You have to assume that stock was valued at the same rate per brick as the production for January 1990.
(Ans : Prime Cost Rs. 1,17,050; Works Cost 1,46,312; TCOP 1,60,943; Profit Rs. 40,257)
Q 17. The following extract of costing information relates to a commodity for the half year ended, 30th June 1987:
Particulars Rs.
Purchase of raw materials 1,32,000
Direct wages 1,10,000
Rent, rates, insurance and works overhead 44,000
Carriage inward 1,584
Stock on 1st January, 1987:
Raw materials 22,000
Finished products (1,600 tonnes) 17,600
Stock on 30th June, 1987
Raw materials 24,464
Finished products (3,200 tonnes) 35,200
Work-in-progress on 1st January, 1987 5,280
Work-in-progress on 30th June, 1987 17,600
Cost of Factory Supervision 8,800
Sales : Finished products 3,30,000
Advertising, discount allowed and selling cost 75 paise per tonne sold. 25,600 tonnes of commodity was
produced during the period.
You are required to ascertain: (a) Value of raw materials used; (b) Cost of output for the period; (c) Cost of
turnover for the period; (d) Net profit for the period; and (e) Net profit per tonne of the commodity.
(Ans: Prime cost Rs. 2,41,120; Cost of Sales Rs. 2,82,000; Profit Rs. 48,000;
Cost of goods sales Rs. 2,64,000)

7
Q18.(a) Prepare Cost Sheet from the following data:
Total cost of production Rs. 80,000

Direct Labour Rs. 36,000 (180% of Factory Overheads)

Stocks Raw Material 5000 (Opening) 7000 (Closing)
Finished goods 15000 (Opening) 20000 (Closing)
Selling Expenses Rs. 6,000; Office Expenses Rs. 7,000; Carriage Inwards Rs. 3,000; Sales Rs. 90,000.
(Ans : Raw Materials Purchased Rs. 16,000; COS Rs. 81,000; Prime Cost Rs. 53,000)
Q18.(b) The books, and records of the Sony Manufacturing Co., present the following data for the month of August,
1993:
Direct labour cost Rs. 1,600 (160% of factory overheads)
Cost of goods sold Rs. 5,600
Inventory accounts showed these opening and closing balances:
August 1 August 31
Raw Materials 800 860
Work-in-progress 800 1,200
Finished goods 1,400 1,800
Other data
Selling expenses 340
General and administration expenses 260
Sales for the month 7,500
You are required to prepare a statement showing cost of goods manufactured and sold and profit earned.
(Ans : Profit Rs. 1,560; Prime cost Rs. 5,140; Cost of production Rs. 6,000; Cost of goods sold
Rs. 5,600; Value of raw materials consumed Rs. 3,540; Cost of sales Rs. 5,940)
Q 19. From the following data prepare a cost of production statement of Suri Books of Manufacturing Co., for the
year 1994.
Stock of material on 1-1-94 35,000 Stock of materials on 31-12-94 4,900
Purchase of materials 52,500 Factory wages 95,000
Factory expenses 17,500 Establishment expenses 10,000
Completed stock in hand 1-1-94 Nil Completed stock in hand 31-12-94 35,000
Sales 1,89,000
The number of books manufacturing during the year 1994 was 4,000. The company wants to quote for a
contract for the supply of 1,000 books during the year 1995. The books to be quoted are uniform quality and
make and similar to those manufacturing in the previous year; but cost of material has increased by 15% and
cost factory labour by 10%.
Prepare a statement showing the price to be quoted to give the same percentage of net profit on turnover as
was realised during the year 1994, assuming that the cost per unit of overhead charge will be the same as
per in the previous year. (Ans : Selling Price Rs. 63.053)
Q 20. Te following is the summarised Trading and Profit and Loss A/c of Samsung Manufactures Ltd., for the year
ending 31st March, 1994 in which year 400 T.V. were sold by the said company.
Trading and Profit and Loss Account
Particulars Rs. Particulars Rs.
To cost of materials 3,200 By Sales 16,000
To Direct wages 4,800
To manufacturing charges 2,000
To Gross Profit c/d 6,000
16,000 16,000
To Office salaries 2,400 By Gross Profit b/d 6,000
To rent and taxes 400
To selling expenses 800
To general expenses 1,200
To Net Profit 1,200
6,000 6,000

8
 The following estimates were made by the costing department of the company for the year ending 31st
March, 1995:
(a) The output and the sales will be of 500 T.V.
(b) The price of materials will rise by 25% on the previous year's level.
(c) Wages during the year will rise by 121/2%.
(d) Manufacturing cost will rise in proportion to the combined cost of materials and wages.
(e) Selling cost per unit will remain unchanged.
(f) Other expenses will remain unaffected by the rise in output.
From the above information prepare a cost statement showing the price at which the T.V. would be marketed
so as to show a profit of 20% on the selling price.
(Ans : Prime cost Rs. 11,750; Works Cost Rs. 14,688; Total Cost of Production Rs. 18,688; Cost of
Sales Rs. 19,688; Sales Rs. 24,610)
Q 21. L.G. Co., Ltd., makes two kinds of rubber balls, A and B. The following particulars relate to these balls for the
year 1994:
A B
Balls manufactured 1,00,000 48,000
Direct cost :
Rs. Rs.
Material 12,560 10,600
Wages 37,600 22,800
Power etc. 8,400 5,640
58,560 39,040
Other Costs :
Factory Supervision 14,400
Packing expenses 1,600
Selling expenses 17,760
You are required to prepare a statement showing the cost of each kind of balls when ready for despatch
taking the following into consideration:
(a) Factory supervision to be charged in proportion to direct costs. (b) Packing expenses to be apportioned
in the ratio that direct cost plus factory supervision cost of A bears to similar cost of B. (c) Selling expenses
to be charged in proportion to the number of balls manufactured.
(Ans: Total cost of balls A – Rs. 80,160 ; B – Rs. 51,200)
Q 22. In respect of a factory the following figures have been obtained for the year 1994:
Particulars Rs. Particulars Rs.
Cost of material 2,40,000 Direct wages 2,00,000
Factory overheads 1,20,000 Adminstrative overheads 1,34,400
Selling overheads 89,600 Distribution charges 56,000
Profit 1,68,000
A work order has been executed in 1995 and the following expenses have been incurred. Material Rs. 32,000
and wages Rs. 20,000. Assuming that in 1995 the rate of factory charges has increased by 20% distribution
charges have gone down by 10% and selling and administration charges have each gone up by 121/2%, at
what price should the product be sold as to earn the same rate of profit on selling price as in 1994?
Factory overhead is based on direct wages, while all other overheads are based on factory cost.
(Ans : Prime cost Rs. 52,000; Works Cost Rs. 66,400; Total Cost of Production Rs. 84,328 ;
Cost of Sales Rs. 1,02,256; Sales Rs. 1,22,707)
Q 23. The cost of manufacturing 5,000 units of a commodity comprises:
Particulars Rs. Particulars Rs.
Material 20,000 Wages 25,000
Chargeable expenses 400 Fixed overheads 16,000
Variable overheads 4,000
For manufacturing every 1,000 extra units of the commodity the cost of production increases as follows:
Materials proportionately. Wages 10% less than proportionately. Chargeable expenses: No extra cost. Fixed
overheads: Rs. 200 extra. Variable overheads: 25% less than proportionately.
Calculate the estimated cost of producing 8,000 units of commodity.
(Ans : Prime cost Rs. 70,900; Cost of Production Rs. 93,300)

9
Q 24. The fancy toys co., are manufacturers of two types of toys, X and Y. The manufacturing cost for the year ended
31st December, 1994 were:
Rs.
Direct Material 3,00,000
Direct wages 56,000
Production overheads 48,000
4,04,000
There was no work in progress at the beginning or at the end of the year. It ascertained that :
(i) Direct materials in type X cost twice as much as direct material in type Y. (ii) The direct wages for type Y
were 60% were those of type X. (iii) Production overhead was 30 paise, the same per toy of X and Y types.
(iv) Administration overhead for each grade was 200% of direct labour. (v) Selling cost was 25 paise per toy
for each toy. (vi) Production during the year was:
Type X– 40,000 toys of which 36,000 were sold. Type Y– 1,20,000 toys were which 1,00,000 were sold.
(vii) Selling prices were Rs. 7 per toy for type X and Rs. 5 per toy for type Y. Prepare a statement showing the
total cost per toy for each type of toy and the profit made on each type of toy.
(Ans: TCOP (X) Rs. 1,92,000 ; (Y) Rs. 3,24,000; Cost of Sales (X) Rs. 1,81,800; (Y) Rs. 2,95,000)
Q 25. The following particulars relating to the year 1994 have been taken from the books of chemical works
manufacturing and selling a chemical mixtures.
Kg. Rs. Kg. Rs.
Stock on 1st January Purchases
Raw materials
Finished mixtures
2,000
500
2,000
1,750
]
Raw Materials
Factory stores
1,60,000 1,80,000
24,250 ]
Factory stores 7,250 Sales :-
Factory wages
Power
1,78,650
30,400
Finished mixtures 1,53,050
Factory scrap
9,18,000
8,170 ]
Depreciation on machinery 18,000 Salaries:-
Expenses:- Factory 72,220
Direct
Office
Selling
18,500
18,200
18,000
Office
Selling
37,220
41,500
]
Stock on 31st Dec., 1994
Raw Materials 1,200
Finished mixtures 450
Factory stores 5,550
The stock of finished mixture at the end of 1994 is to be valued at the factory cost of the mixture for the year.
The purchase price of raw materials remained unchanged throughout 1994. Prepare a statement giving the
maximum possible information about cost and its breakup for the year 1994.
(Ans: Prime cost Rs. 3,77,800; Factory Cost Rs. 5,16,200; Cost of Production of Finished Mixtures Sold
Rs. 5,71,852 ; Cost of Sales Rs. 6,31,352)
Q 26. A firm has purchased a plant to manufacture a new product, the cost data for which is given below:
Estimated Annual Sales 24,000 units
Estimated Costs :
Material Rs. 4.00 per unit
Direct Labour Rs. 0.60 per unit
Overheads (Factory) Rs. 24,000 per year
Administrative Expenses Rs. 28,800 per year
Selling Expenses 15% of Sales
Calculate the selling price if profit per unit is Rs. 1.02.
(Ans. Sale = 2,20,800; Selling Expenses = 33,120)

10
 EXAMINATION PROBLEMS
Q 1. Prepare a cost sheet from the following data to find out profit and cost per unit.
Rs.
Raw Materials Consumed 1,60,000
Direct Wages 80,000
Factory Overheads 16,000
Office Overheads 10% of Factory Cost
Selling Overheads 12,000
Units Produced 4,000
Unit Sold 3,600
Selling Price Rs. 100 per unit

[B.Com (P), Delhi 1982] ; (Ans : P.C. Rs. 2,40,000; F.C. 2,56,000 COGS 2,53,440; COS 2,65,440)
Q 2. Wilson Company produces and sells two types of pens —"super" and "ordinary". You are provided the
following information.
(i) Direct Materials cost of "super" type pen is Rs.2 per pen and that of "ordinary" type is Re. 1 per pen.
(ii) Direct wages of "super" type pen is Re.1 per pen and that of an "ordinary" type is 50 paise per pen.
(iii) Production overheads to be charged at 100% of direct wages in both types of pens.
(iv) Administrative overheads to be charged at 25% of works cost in both types of pens.
(v) Selling and distribution overheads is Re. 1 per pen sold for both types.
(vi) Number of pens produced :
Super Type 60,000 pens
Ordinary Type 1,20,000 pens
(vii) Number of pens Sold
Super Type 50,000 pens
Ordinary Type 1,00,000 pens
Assuming there is no work-in-progress in the beginning or at the end and opening stock of finished goods
is nil, you are required to prepare a cost statement showing the price at which the two types of pens would
be marketed so as to show a profit of 20% on selling price.
[B.Com (P), Delhi 1985] ; (Ans : Profit Rs. 75,000; 87,500 COGS 2,50,000; 2,50,000)
Q 3. Walson Ltd. produces and sold 1,000 Washing Machines during the year ending 31st March 1986. The
summarised Trading and Profit and Loss Account is given below.
Particulars Rs. Particulars Rs.
To Cost of Materials Consumed 2,00,000 By Sales 8,00,000
To Direct Wages 2,00,000
To Work Expenses 1,00,000
To Gross Profit c/d 3,00,000
8,00,000 8,00,000
To Selling and Distribution Expenses 1,00,000 By Gross Profit b/d 3,00,000
To Net Profit 2,00,000
3,00,000 3,00,000
The management estimates the following for the year ending 31st March, 1987
(i) Output and Sales will be of 2000 Washing Machines
(ii) Prices of Materials and Wages will go up by 25% on the previous years level.
(iii) Work Expenses will rise in proportion to the combined cost of Materials and Wages.
(iv) Selling and Distribution Expenses per unit is estimated at Rs. 50.
Prepare a cost statement showing the price at which washing machines would be marketed so as to yield
a profit of 10% on selling price.
[B.Com (P), Delhi 1986] ; (Ans : COS Rs. 13,50,000; P.C. Rs. 10,00,000; Sales 15,00,000)

11
Q 4. Compute cost of raw material purchased from the data given below.
Rs.
Opening Stock of Raw Materials 10,000
Closing Stock of Raw Materials 15,000
Expenses of Purchases 5,000
Direct Wages 50,000
Prime Cost 1,00,000
[B.Com (P), Delhi 1986] ; (Ans : Cost of Raw material Rs. 50,000)
Q 5. Compute manufacturing expenses from the data given below.
Rs.
Opening Stock of Raw Materials 5,000
Purchases 25,000
Expenses on Purchases 1,000
Direct Wages 20,000
Direct Expenses 1,000
Closing Stock of Raw Materials 7,000
Manufacturing Cost 80,000
[B.Com (P), Delhi 1987] ; (Ans : Manufacturing Expenses Rs. 35,000)
Q 6. Vijay Industries manufactures a product X. On 1st January, 1986 there were 5,000 units of finished product
in stock. Other stock on 1st January, 1986 were as follows :
Rs.
Work in progress 57,400
Raw Materials 1,16,200
The information available from cost records for the year ended 31st December, 1986 was as follows:
Rs.
Direct Materials 9,06,900
Direct Labour 3,26,400
Freight on raw materials purchased 55,700
Indirect Labour 1,21,600
Other factory overheads 3,17,300
Stock of raw materials on 31-12-86 96,400
Work-in-progress on 31-12-86 78,200
Sales (1,50,000 units) 30,00,000
Indirect materials 2,13,900
There are 15,000 units of finished stock in hand on 31st December, 1986. You are required to prepare a
statement of cost and profit for 1986 assuming that opening stock of finished goods is to be valued at the
same cost per unit as the finished stock at the end of the period.
[B.Com (P), Delhi 1987] ; (Ans : COGS Rs. 18,19,500; TCOP Rs. 19,40,800)
Q 7. Below is the enumerated expenditure in the manufacture of A product :
Rs.
Raw Materials 28,000
Fuel 6,900
Electric Power 1,340
Process and General Wages 63500
Repairs 2400
Haulage 1060
Light and Water 400
Rent 2,000
Rates and insurance 300
Office salaries and general expenses 7,000
Administration (office) 5,000
Depreciation on Machinery 2,500
Total 1,20,400
Quintals manufactured 17,200
Preapre a cost-sheet showing the cost per each item of expense and the total cost per quintal.
[B.Com (P), Delhi 1988] ; (Ans : Total cost Rs. 1,20,400, Works Cost Rs. 1,08,400)

12
Q 8. Mr. A furnishes the following data relating to the manufacture of a standard product during the
month of Jan, 90:
Raw material purchased Rs. 15,000
Opening Stock of raw materials Rs. 4,000
Closing stock of raw materials Rs. 5,000
Direct Labour Cost Rs. 9,000
Machine Hours Worked 900 hours
Machine Hour Rate Rs. 5
Carriage Inwards Rs. 1,000
Administrative Overheads 20% on works cost
Selling overheads 50P. per unit sold
Units produced 17,100
Opening stock of finished products 2,000 units @ Rs. 1.50 per unit
Units sold 16,000 units
Selling price per unit Rs. 4

You are required to prepare :

(i) Cost Sheet (ii) a statement showing profit for the period.
[B.Com (P), Delhi 1991] ; (Ans : Cost of sales 39,000, Profit Rs. 25,000, TCOP Rs. 34,200)
Q 9. From the following particulars , prepare a statement showing cost per cabinet and profit per cabinet sold:

Sagwaan (Rs.) Commercial (Rs.)

Materials 12,400 10,600
Labour 24,600 30,250

Works on cost to be 100 percent on labour and office on cost to be 25 percent on works cost. There is no
opening or closing stocks of cabinets. 520 Sagwaan cabinets are sold during the year at Rs. 150 per
cabinet, whereas the price of commercial cabinet is Rs. 120 and the units sold were 740. What is the total
profit for the year as per the above particulars ?
[B.Com (P), Delhi 1993] ; (Ans : TCOP Rs. 77,000; 88,875; Profit Rs. 1,000;Loss Rs. 75)
Q 10. Find out the cost of Raw Materials Purchased from the data given below:
Particulars Rs. Particulars Rs.
Prime Cost 2,00,000 Closing stock of raw material 20,000
Direct Labour cost 1,00,000 Expenses on purchases 10,000
[B.Com (P), Delhi 1995] ; (Ans : Rs. 1,10,000)
Q 11. From the following information prepare cost sheet and find out the amount of profit :
Rs.
Raw materials purchased 24,000
Works Overheads 20,000
Stock as on 1st january, 1997:
Raw material 4,000
Finished Goods (800 quintals) 3,200
Work in progress
1st January, 1997 960
31st January, 1997 3,200
Office and Administrative Overheads 1,600
Sales (Finished Goods) 60,000
Advertising, discount allowed and sellling cost is Re. 0.40 per quintal. During the month 12,800 quintals
of the commodity were produced.
[B.Com (P), Delhi 1998] ; (Ans : Working cost Rs. 45,760, TCOP Rs. 47,360; Cost of sales Rs. 56,000)

13
Q 12. Tirupati Electronics Ltd., produces a stadard product and provides you the following information for the year
ending 31 st March, 1998
Particulars Rs.
Raw Materials
Opening Stock 10,000
Purchases 85,000
Closing Stock 4,000
Direct Wages 20,000
Other Direct Expenses 10,000
Factory overheads 100% of direct wages
Office overheads 10% of work cost
Selling expenses Rs. 2 per unit sold
Finished Goods
Opening Stock 1,000 units (Rs. 16,000)
Produced during the year 10,000 units
Closing stock 2,000 units
Prepare cost sheet for the year ending 31st March, 1998. Also ascertain the selling price per unit so as to
yeild a profit of 20% on the selling price. [B.Com (P), D.U. 1999]
(Ans : Prime Cost Rs. 1,21,000; Factory Cost Rs. 1,41,000; Cost of Production Rs. 1,55,100;
Cost of Goods Sold Rs. 1,40,080; Cost of Sales Rs. 1,58,080; Sales Rs. 1,97,600)
Q 13. The following extracts of costing information relate to commodity X for the year ending 31-12-1992
Particulars Rs.
Purchase of raw materials 6,000
Direct wages 5,000
Rent, Rates and Insurance 2,000
Carriage Inwards 100
Stock (1-1-1992)
Raw Materials 1,000
Finished Products-200 tonnes 800
Stock (31-12-1992)
Raw Materials 1,100
Finished Products-400 tonnes
Cost of factory Supervision 400
Sale of finished products 15,000
Advertising and selling cost is 40 paise per tonne sold, 3000 tonnes of the commodity were sold during the
year. Prepare a cost sheet.
(Ans : Prime Cost Rs. 11,000; Cost of Goods Sold Rs. 12,525; TCOP Rs. 13,400; Profit Rs. 1,275)

Q 14. From the following particulars, prepare the Cost Sheet for Job No. 75 and find out the value of the Job.
Materials issued for the job Rs. 6,000
Productive Wages Rs. 4,600
Direct Expenses Rs. 500
Provide 60% on productive wages for works on cost and 12.5 % on works cost for office on cost. Profit
to be realised on the selling price 15%. (2005 Ext.)
Sol. Cost Sheet for Job No. 75
Amount (Rs.)
Direct Materials 6,000
Productive Wages 4,600
Direct Expenses 500
Prime Cost 11,100
Works on cost (60% of productive wages) 2,760
Work Cost 13,860
Office on cost (12.5% on work cost) 1,733
Total Cost Production 15,593
Profit (15% on Sales) 2,752
Sales 18,345

14
Q 15. From the understated particulars, you are required to prepare a monthly cost sheet of Soap Manufactures
Ltd. showing therein :
(i) Prime Cost ; (ii) Works Cost; (iii) Cost of Production; (iv) Cost of Sales; and (v) Profit per unit
Opening Inventory (1. 1. 2004) Rs.
Raw materials 6,000
Work-in-progress 9,620
Finished Goods (1,000 units) 13,680
Closing Inventory (31. 1. 2004)
Raw Materials 7,000
Work-in-progress 8,020
Finished goods ?
Donations to home for destitutes 2,100
Raw materials purchased 72,000
Import Duty on Raw Materials purchased 14,000
Productive wages 18,000
Machine hours worked 21,600 hours
Machine hour rate Rs. 1.50
Chargeable expenses Rs. 2,000
Office and Administration Expenses Re. 1 per unit
Selling Expenses Re. 0.90 per unit
Units Sold 8,000 units
Units produced 8,200 units
Profit on Sales 10% (2005 Ext.)
Sol. Cost Sheet for January, 2004
Units : 8,200
Particulars Amount (Rs.) Amount (Rs.)
Opening Stock of raw materials 6,000
Add : Purchases of Raw Materials 72,000
Add : Import Duty on Purchases 14,400
92,400
Less : Closing Stock of raw materials 7,000
Raw materials consumed 85,400
Add : Productive wages 18,000
Add : Chargeable Expenses 2,000
Prime Cost 1,05,400
Add : Factory overheads (21,600 machine hrs. @ Rs. 1.50) 32,400
Gross Works Cost 1,37,800
Add : Opening Work in Progress 9,620
Less : Closing Work in Progress 8,020
Net Works Cost 1,39,400
Add : Office and Administrative expenses (8,200 units @ Re. 1) 8,200
Total Cost of Production 1,47,600
Add : Opening Stock of finished goods (1,000 units) 13,680
1,61,280
Less : Closing Stock of finished goods (1,200 units) 21,600
Cost of goods sold 1,39,680
Add : Selling Expenses (8,000 units@ Re. 0.90) 7,200
Cost of Sales 1,46,880
Profit (10% of Sales) 16,320
Sales 1,63,200
Profit per unit = Rs. 16,320 ÷ 8,000 units = Rs. 2.04

Workings Notes : Units Produced + Units of Opening Stock – Units of Closing Stock = Unit Sold
8,200 + 1,000 – Units of Closing Stock = 8,000
Units of Closing Stock = 1,200 units
Value of Closing Stock = Total Cost of Production × Unit of Closing Stock
Unit Produced
= Rs. 1,47,600 × 1,200 units
8,200 units
= Rs. 21,600

15
Q 16. Prepare cost sheet from the following data provided by Aruna Industries, Ltd. for the year ending 31st
March, 2005 :
Raw Materials Rs. 15,000
Direct Labour Rs. 9,000
Machine Hours 900
Machine Hour Rate Rs. 5
Production 17,100 units
Sales 16,000 units
Selling price per unit Rs. 4
Selling overheads per unit 50 paise
Office overheads are 20% of works cost. (2007 Reg.)

Sol. Cost Sheet for the year ending 31. 03. 2005

Particulars Total (Rs.)

Direct Materials 15,000
Direct Labour 9,000
Direct Expenses Nil
Prime Cost 24,000
Works overheads (900 Machine Hrs. × Rs. 5) 4,500
Work Cost 28,500
Administration overheads (20% of Rs. 28,500) 5,700
Total Cost of Production 34,200
Less : Closing Stock (1,100 units @ Rs. 2) 2,200
Cost of Goods Sold 32,000
Selling overheads (@ 50 paise on 16,000 units) 8,000
Cost of Sales 40,000
Profit 24,000
Sales (16,000 units @ Rs. 4) 64,000

Q 17. In respect of a factory, the following particulars have been extracted for the year 2006 :
Cost of Materials 6,00,000
Wages 5,00,000
Factory overheads 3,00,000
Administrative charges 3,36,000
Selling Charges 2,24,000
Distribution charges 1,40,000
Profit 4,20,000
A work order has to be executed in 2007 and the estimated expenses are : Materials Rs. 8,000,
Wages Rs. 5,000.
Assuming that in 2007 the rate of factory overheads has gone up by 20%, distribution, charges have
gone down by 10% and selling and administration charges have gone each up by 15%, at what price
should the product be sold so as to earn the same rate of profit on the selling price as in 2006.
Factory overheads are based on wages and administration, selling and distribution overheads on
factory cost. (2007 Ext.)

16
Sol. Cost Sheet for the year 2006
(Rs.)
Direct Materials 6,00,000
Direct Wages 5,00,000
Direct Expenses Nil
Prime Cost 11,00,000
Add : Factory Overheads 3,00,000
Work Cost 14,00,000
Add : Office & Administrative overhead 3,36,000
Total Cost of Production 17,36,000
Add : Selling & Distribution Overheads
Selling Charges 2,24,000
Distribution Charges 1,40,000
Cost of Sales 21,00,000
Profit 4,20,000
Sales 25,20,000

Computation of overhead rates :

1. Factory overheads as a % of Wages = 3,00,000 × 100 = 60% + 20% of 60%
5,00,000
= 60 + 12 = 72%
2. Adm. charges as a % of Factory Cost = 3,60,000 × 100 = 24% + 15% of 24%
14,00,000 = 24 + 3.60 = 27.60%
3. Selling charges as a % of Factory Cost = 2,24,000 × 100 = 16% + 15% of 16%
14,00,000 = 16 + 2.40 = 18.40%
4. Distribution charges as a % of Factory Cost = 1,40,000 × 100 = 10% – 10% of 10%
14,00,000 = 10 – 1 = 9%
5. Profit as a % of Total Cost of Sales = 4,20,000 × 100 = 20%
21,00,000
Statement of Estimated Price 2007
(Rs.)
Direct Materials 8,000
Direct Wages 5,000
Direct Expenses Nil
Prime Cost 13,000
Add : Factory Overheads (72% of Wages) 3,600
Works Cost 16,600
Add : Office & Administrative Charges (27.60% of Factory Cost) 4,581
Total Cost of Production 21,181
Add : Selling & Distribution Overheads
Selling Charges (18.40% of Factory Cost) 3,054
Distribution Charges (9% of Factory Cost) 1,494
Cost of Sales 25,729
Profit (20% of Cost of Sales) 5,146
Sales 30,875

17
Q 18. PCT introduced 1,000 units in a process at a cost of Rs. 10 per unit. Wages and overheads incurred
are Rs. 9,000 and Rs. 8,000 respectively. It is expected that 10% of total input is likely to be defective.
Actual output of good units 850. Cost of rectification of a defective unit is Rs. 5. There is no wastage
or scrap of materials. Required : Calculate the cost per unit if :
(i) defectives are rectified;
(ii) defectives are not rectified but sold as 'seconds' @ Rs. 9 each. (2008 Reg.)
Sol. Particulars If defective are If defective are not
rectified (Rs.) rectified (Rs.)
Cost of Materials (1000 units @ Rs. 10) 10,000 10,000
Wages 9,000 9,000
Overheads 8,000 8,000
27,000 27,000
Add : Cost of Rectification of
Normal Defectives (100 × Rs. 5) 500
Less : Realizable value of
Normal Defectives (100 × Rs. 9) – 900
Cost of Goods Produced (A) 27,500 26,100
No. of units (B) 1,000 900
Cost per unit (A ÷ B) Rs. 27.50 29
Q 19. The particulars obtained from the records of M/s. Jain Industries for the year 2008 are given below, from
which you are required to prepare a cost sheet and a statement showing estimated cost for 1,000
units in future :
Particulars Rs.
Opening Stock :
Raw materials 1,40,000
Finished products 20,000
Purchases 2,10,000
Factory Wages 3,80,000
Factory overheads 70,000
Office overheads 40,000
Closing Stock :
Raw Materials 600
Finished goods 1,60,000
Sales 7,56,000
At the end of the year, the number of units produced including the closing stock and the number of
units sold was 4,000.
On the basis of the above the industry wanted to supply 1000 units in future. It is estimated that the
prices of raw materials and labour may rise by 15% and 10% respectively. Assume that the same
percentage of profits on sales will be made. (2008 Ext.)
Sol. Cost Sheet for the Year 2008
4,000 Units
Particulars Details (Rs.) Total (Rs.)
Opening Stock of Raw Materials 1,40,000
Add : Purchases of Raw Materials 2,10,000
3,50,000
Less : Closing Stock of Raw Materials 19,600
Raw Materials Consumed 3,30,400
Direct Labour : Factory Wages 3,80,000
Direct Expenses Nil
Prime Cost 7,10,000
Add : Factory overheads 70,000
Factory Cost 7,80,400
Add : Office & Administration Overheads 40,000
Total Cost of Production 8,20,400
Add : Opening Stock of Finished Goods 20,000
8,40,400
Less : Closing Stock of Finished Goods 1,60,000
Total Cost 6,80,400
Profit 75,600
Sales 7,56,000

18
 Statement of Quotation of Price for 1000 units
Particulars Rs.
Material Cost 94,990
Direct Labour : Factory Wages 1,04,500
Prime Cost 1,99,490
Factory Overheads (1,000 units @ Rs. 17.50 per unit) 17,500
Factory Cost 2,16,990
Office overheads (1,000 units @ Rs. 10 per unit) 10,000
Total Cost 2,26,990
Profit (10% on Sales) 25,221
Selling Price 2,52,211
Raw Materials = 3,30,400 × 1,000 units = 82,600
4,000 units
+ 15% = 12,390
94,990
Direct Labour =3,80,000 × 1,000 units
4,000 units
= 95,000
+ 10% = 9,500
1,04,500
Factory Overheads = 70,000 × 1,000 units = Rs. 17,500
4,000 units
Office Overheads = 40,000 × 1,000 units = Rs. 10,000
4,000 units
In 2008 Percentage of Profit on Sale = Profit × 100
Sales
= 75,600 × 100 = 10% i.e. Profit = 10% on sales
7,56,000
Q 20. From the following prepare a cost sheet and quote a suitable price :
Total Production 5000 tons
Cost of raw materials Rs. 20,00,000
Carriage inwards Rs. 2,00,000
Direct Wages Rs. 20,00,000
Indirect Wages Rs. 1,00,000
Office Expenses Rs. 10,00,000
Selling Overheads Rs. 10,00,000
Payment of Income Tax Rs. 3,00,000
Dividend paid Rs. 5,00,000
A profit margin of 50% on cost is desired. (2009 Reg.)
Sol. Cost Sheet
Total Production : 5,000 tons
Particulars Amount (Rs.)
Cost of Raw Materials Rs. 20,00,000
Add : Carriage Inwards Rs. 2,00,000
Value of Raw Material Consumed 22,00,000
Direct Wages 20,00,000
Direct Expenses Nil
Prime Cost 42,00,000
Add : Factory Overheads :
Indirect Wages 1,00,000
Factory Cost 43,00,000
Add : Office and Administration Overheads :
Office Expenses 10,00,000
Total Cost of Production 53,00,000
Add : Selling and Distribution overheads :
Selling Overheads 10,00,000
Cost of Sales 63,00,000
Profit (50% on Cost) 31,50,000
Sales 94,50,000
19
Q.21. From the following prepare a cost sheet :
Cost of materials @ Rs. 13 per unit
Labour cost @ Rs. 7.50 per unit
Factory Overheads Rs. 45,000
Administration Overheads Rs. 50,000
Selling overheads Rs. 2.50 per unit sold
Opening Stock of finished goods – 500 units @ Rs. 19.75
Closing Stock of finished goods – 250 units
Sales – 10,250 units at a profit of 20% on sales. (2009 Ext.)
Sol. Cost Sheet
Particulars Rs.
Direct Material Cost (10,000 units × Rs. 13) 1,30,000
Direct Labour Cost (10,000 units × Rs. 7.50) 75,000
Direct Expenses Nil
Prime Cost 2,05,000
Add : Factory overheads 45,000
Factory Cost 2,50,000
Add : Office and Administration overheads 50,000
Total Cost of Production 3,00,000
Add : Opening Stock of finished goods (500 units @ Rs. 19.75) 9,875
3,09,875
Less : Closing Stock of finished goods
( 3,00,000
10,000 units ) × 250 units 7,500

Cost of Goods Sold 3,02,375

Add : Selling overheads (10,250 × Rs. 2.50) 25,625
Cost of Sales 3,28,000
Profit 82,000
Sales 4,10,000

Units Produced + Units of Opening Stock – Units of Closing Stock = Units Sold
Units Produced + 500 – 250 = 10,250
Units Produced = 10,000 units
Cost + Profit = Sales
3,28,000 + 20% on Sales = Sales
3,28,000 = Sales – 1/5 Sales
4/5 Sales = 3,28,000
Sales = 3,28,000 × 5/4 = 4,10,000
Q 22. X Ltd. has received an enquiry for the supply of 1000 premium shirts. The costs are estimated as
under :
Raw Materials 2,500 Mtrs. @ Rs. 40 per mtr.
Direct Wages 10,000 Hrs. @ Rs. 4 per hr.
Variable Overheads : Factory Rs. 2.40 per labour hr. Selling and Distribution Rs. 16,000
Fixed Overheads : Factory Rs. 6,000 Selling and Distribution Rs. 14,000
Prepare a Cost Sheet showing the price to be quoted per shirt which results in a profit of 20% on
selling price. (2010 Reg.)

20
Sol. X Ltd. (Cost Sheet of Premium Shirts)
Quantity : 1000 Shirts
Particulars Amount (Rs.)
Raw Materials (2,500 Mtrs. @ 40 per mtr.) 1,00,000
Direct Wages (10,000 Hrs. @ Rs. 4 per hr.) 40,000
Direct Expenses Nil
Prime Cost 1,40,000
Factory Overheads
Variable (10,000 hrs. × 2.40) 24,000
Fixed 6,000 30,000
Work Cost 1,70,000
Add : Office & Administration Overheads Nil
Total Cost of Production 1,70,000
Selling and Distribution Overheads
Variable 16,000
Fixed 14,000 30,000
Cost of Sales 2,00,000
Profit 50,000
Sales 2,50,000
Price to be quoted per shirt = Rs. 2,50,000 = Rs. 250
1,000
Cost + Profit = Sales
2,00,000 + 20% on Sales = Sales
2,00,000 = Sales – 1/5 Sales
2,00,000 = 4/5 Sales
∴ Sales = 2,00,000 × 5/4
= 2,50,000
Q 23. From the following prepare a Cost Sheet :
Particulars Rs.
Raw Materials 6,000
Direct Wages 5,000
Factory Overheads 2,400
Opening Stock of finished goods 800 [200 kg]
Closing Stock of finished goods ....[400 kg.]
Sale of finished product 20,000 [3,000 kg.]
Advertising and Selling Expenses 1,475
Profit desired is 30% on sales. (2010 Ext.)
Sol. Cost Sheet
Particulars Amount (Rs.)
Direct Materials 6,000
Direct Wages 5,000
Prime Cost 11,000
Factory Overheads 2,400
Factory Cost 13,400
Add : Office & Administration Overhead Nil
Total Cost of Production 13,400
Add : Opening Stock of Finished goods 800
14,200
Less : Closing Stock of Finished Goods 1,675
Cost of Goods Sold 12,525
Advertisement and Selling Expenses 1,475
Cost of Sales 14,000
Profit (30% of 20,000) 6,000
Sales 20,000
Working Notes :
1. Units Produced + Units of Opening Stock – Units of Closing Stock = Units Sold
Units Produced + 200 – 400 = 3,000
Units Produced = 3,000 + 400 – 200 = 3,200 kg.
∴ Production of finished product = 3,200 kg.
2. Value of Closing Stock = Total Cost of Production × Units of Closing Stock
Production (Units)
= 13,400 × 400 = Rs. 1,675
3,200

21
 ITEMS EXCLUDED FROM COST ACCOUNTS
There are certain items which are included in financial accounts but not in cost accounts. These items fall into
three categories :
Appropriations of profits
(i) Appropriation to Sinking Funds (ii) Dividends paid (iii) Taxes on income and profits
(iv) Transfers to General Reserves
(v) Excess provisions for depreciation of buildings, plant etc. and for bad debts.
(vi) Amounts written off - goodwill, preliminary expenses, underwritting commission, discounts on debentures
issued, expenses of capital issue etc.
(vii) Capital expenditure specifically charged to revenue (viii) Charitable donations, Cash Discounts
Matters of pure finance
(a) Purely financial charges :
(i) Losses on sale of investments, buildings etc. (ii) Expenses on transfer of company`s office.
(iii) Interest on bank loan, debentures, mortgages etc.(iv) Damages payable
(v) Penalties and fines (vi) Losses due to scrapping of machinery
(vii) Remuneration paid to the proprietor in excess of a fair reward for services rendered.
(b) Purely financial incomes :
(i) Interest received on bank deposits (ii) Profit made on the sale of investments, fixed assets etc.
(iii) Transfer fees received
(iv) Rent receivable (when rent is receivable from subletting part of business premises- then it can to be
taken to cost accounts).
(v) Interest, dividends etc. received on investments (vi) Brokerage received
(vii) Discounts, commission received. (viii) Abnormal Gains and Losses....
Cost Sheet
Factory Overheads :
Manufacturing expenses; Supervisors salary; Factory rent; Factory Insurance; Foreman's salary; Fac-
tory lighting; Grease, Oil and Lubricants; Consumable stores; Estimating; Haulage (Repairs); Repairs of
Plant and Machinery; Storekeepers Salary; Fuel, power,heating and lighting; Experimental expenses;
Contribution to Provident Fund of Factory employees; Loose tools; Water supply; Unproductive wages;
Indirect wages; Motive power; Material used in factory; Labour welfare expenses; Drawing office salaries;
Cost of training of New Employee; Stores Expenses; Workers Canteen and Welfare Expenses
Office Overheads :
Office management salaries; Director's fees; Legal charges; Bank charges; Audit fees; Office printing
and stationery; Office postage and stamps; Telephone charges; Office Rent; Office Lighting; Repairs of
office premises; Depreciation on furniture; Materials used in office; Depreciation of office buildings; Gen-
eral charges; Counting house salaries; Establishment expenses; Trade Subscriptions.
Selling Overheads :
Salesman salary; Travelling Expenses; Godown Rent; Warehouse charges; Advertisement; Price list;
Showroom expenses; Commission of Travelling Agents; Packing Expenses; Material used in selling the
product; Market research expenses; Repairs, maintenance, depreciation of delivery vans; Bad
debts; Shortage in stock of finished goods; Cost of samples; Discount on sales; Discount; Entertainment
of buyers; Carriage outward (Carriage on sales).
Direct Materials :
Raw material consumed; Materials used in manufacturing; Materials used in packing the material.
Direct Labour :
Manufacturing wages; Productive wages; Factory wages; Labour required in production; Wages paid to
labourers.
Direct Expenses :
Carriage Inward; Expenses on Purchases; Carriage on Purchase;
Freight Inward; Freight; Freight on Purchase; Octroi. ] Add in the value of
materials purchased
Direct chargeable expenses.
Cost of special moulds, Cost of hiring special machinery or plant
Cost of patents and royalties
Fees paid to Architects, Surveyors and other consultants.

22
 COST SHEET

Particulars Amount Amount

Direct Material .......
Direct Labour .......
Direct Expenses .......
Prime Cost .......
Add: Factory Overheads
................................................. ....... .......
................................................. ....... .......
Works Cost .......
Add : Office & Administration Overhead
................................................. ....... .......
................................................. ....... .......
Total Cost of Production .......
Add : Selling & Distribution Overheads .......
................................................. .......
................................................. ....... .......
Cost of Sales .......
Profit .......
Sales .......

COST SHEET
Particulars Amount Amount
Raw materials Purchased .......
Add : Opening Stock of Raw Materials .......
Add : Carriage Inward (Expenses on Purchases) .......
.......
Less : Closing Stock of Raw Materials .......
Raw materials Consumed .......
Add : Direct Labour .......
Add : Direct Expenses .......
Prime Cost .......
Add : Factory Overheads :
................................................. .......
................................................. ....... .......
Gross Works Cost .......
Add : Opening work in Progress .......
.......
Less : Closing work in Progress .......
Net Works Cost .......
Add : Office & Administrative Overheads: .......
Total cost of Production .......
Add : Opening Stock of Finished Goods .......

Less : Closing Stock of Finished Goods .......

Cost of Goods Sold .......
Add : Selling & Distribution Overheads :
Cost of Sales .......
Profit .......
Sales .......

23