Subject: Cost Accounting

Topic: Cost Sheet By: Questionscastle Academic Team

Document Code: CA/IPCC/CST/00012

Q 1.

Prepare a cost sheet from the following data to find out profit and cost per unit: 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 Units sold `3,600 Selling price `100 per unit Prepare the cost sheet to show the total cost of production and cost per unit of goods manufactured by a company for the M/o July 1998. Also find out cost of sales. Stock of Raw material 1.7.1998 `3,000 Raw materials purchased `28,000 Stock of Raw Material 31.7.1998 `4,500 Manufacturing wages `7,000 Depreciation on plant `1,500 Loss on sale of a part of plant `300 Factory rates and rents `3,000 Office rent `500 General Expenses `400 Discount on sales `300 Advertisement exp. to be charged fully `600 Income tax paid `2,000 The number of units produced during July, 1998 were 3,000. The stock of finished goods was 200 units on 1.7.1998 and 400 units on 31.7.1998. The total cost of units in hand on 1.7.1998 was `2,800. All these had been sold during the month. Mecca Cold Ltd. manufactured and sold 1,000 refrigerators in the year ending 31st Mar 1999. The summarized trading and profit & loss a/c is given below. Particulars To cost of material To direct wages To manufacturing exp. To gross profit (c/d) To management & staff salaries To rent, rates & insurance To selling exp. To general exp. Particulars ` 80,000 By sales 1,20,000 50,000 1,50,000 4,00,000 60,000 By gross profit b/d 10,000 30,000 20,000 1,50,000 ` 4,00,000

Q 2.

Q 3.

4,00,000 1,50,000

1,50,000

For the year ending 31st Mar 2000 it is estimated that1. Output and sales will be 1,200 refrigerators 2. Prices of raw material will rise by 20% on the previous years level 3. Wages rates will rise in proportion to the combined cost of materials and wages 4. Manufacturing cost will rise in proportion to the combined cost of materials and wages 5. Selling cost per unit will remain unchanged 6. Other expenses will remain unaffected by the rise in output.

You are required to submit a statement for the Management showing the price at which the refrigerators to be sold so as to earn a profit of 10% on selling price. Q 4. The cost of sale of a product is as follows: Materials used in manufacturing `5,500 Materials used in packing `1,000 Materials used in selling the product `150 Materials used in the factory `75 Materials used in the office `125 Labour required in producing `1,000 Labour required for supervision of the Management-Factory `200 Expenses `500 Expenses- Indirect- Factory `100 Office expenses `125 Depreciation on office building and equip. `75 Depreciation on factory `175 Selling exp. `350 Freight inward `500 Advertising `125 Assuming that all the products manufactured are sold, what should be the selling price to obtain profit of 25% on selling price? Prepare a cost sheet. Q 5. The following information relates to a company: 1. Stock Beginning Finished goods `1,10,000 WIP `70,000 Raw material `90,000 2. Cost of goods produced `6,84,000 3. Factory cost `6,54,000 4. Factory overheads `1,67,000 5. Direct Material Consumed `1,93,000 Required: 1. Raw material purchased 2. Direct labour cost 3. Cost of goods sold

Ending `95,000 `80,000 `95,000

Q 6. Prepare a cost sheet to find the cost per ton of A grade paper, manufactured by a paper mill in Mar 1995. The following data is made available from the mill: Direct Material: Paper pulp- 500 tons @ `52 per ton Other materials- 100 tons @ `30 per ton Direct labour: 80 skilled men @ `3 per day for 25 days 40 unskilled men @ `2 per day for 25 days Direct Expenses: Special equipment `2,500 Special dyes `1,500 Work Overhead: Variable @ 100% on direct wages Fixed @ 60% on direct wages Administration overhead @ 10% and selling and distribution overhead @ 20% on works cost. 400 tons of special paper was manufactured and `1,800 were realized by the sale of scrap material during the course of manufacture. The scrap value of the special equipment after utilization in manufacture is nil. Q 7. A factory incurred the following expenditure during the year 2007. ` Direct material consumed 12,00,000 Manufacturing wages 7,00,000 Manufacturing Overheads: Fixed 3,60,000

Variable

2,50,000

6,10,000 25,10,000

In the year 2008, following changes are expected in production and cost production. 1. Production will increase due to recruitment of 60% more workers in the factory. 2. Overall efficiency will decline by 10% on account of recruitment of new workers. 3. There will be an increase of 20% in fixed overhead and 60% in variable overhead. 4. The cost of direct material will be decreased by 6%. 5. The company desire to earn a profit of 10% on selling price. Ascertain the cost of production and selling price. Q 8. The cost structure of article X which is sold for `45,000 is as follows: Direct Material 50% Direct Labour 20% Overheads 30% An increase of 15% in the cost of materials and of 25% in the cost of is expected. These increased costs in relation to the present selling price would cause 25% decrease in the amount of present profit. Required: 1. Prepare a statement of profit per article at present, and 2. The revised selling price to produce the same percentage of profit to sales as before. Q 9. The following data belongs to XYZ Ltd. for the M/o July 1998: 1. Direct Material `847 2. Opening stock of finished goods? 3. Closing Stock of Finished goods `94. 4. Direct Labour cost `389. 5. Manufacturing Overheads? 6. Cost of goods produced `1,878. 7. Cost of Goods sold? 8. Cost of goods available for sale `1,949. Find out the missing items. Q 10. The Margo company has just completed operations for the year 1999. The companys assistant accountant prepared the following P&L a/c for the year ending Mar 1999. Sales `32,00,000 Operating Expenses: Insurance `40,000 Gas, electricity and water `1,00,000 Direct Labour Cost `6,00,000 Indirect Labour `1,20,000 Depreciation on Factory Equipment `1,60,000 Raw materials purchased during the year `12,00,000 Rent `4,00,000 Selling & Administration Overheads `3,20,000 29,40,000 Net Profit 2,60,000 As the assistant accountant was inexperienced he forgot to made the following adjustments: (i) Opening Closing Stock of Raw Material ----------1,50,000 Stock of WIP 4,20,000 4,80,000 Stock of Finished Goods 5,40,000 4,00,000 (ii) 10% of Gas, electricity and water, 30% of Insurance and 20% of Rent were utilized as Selling and Administration Overhead. Prepare the correct statement. Q 11. The following data are available from the cost ledger of Eureka Industries for the year 1997: ` Plant Maintenance 25,000 Office Lighting 6,300 Depreciation on plant (Charged on usage basis) 8,100

Rates and Taxes for the works 3,900 Staff Salaries 32,000 Management Salaries 22,000 Power for this plant 10,600 Rental for leasehold equipments 9,600 Indirect Wages 37,100 Rectification cost of defectives (normal) 8,400 Consumable Stores 17,600 Selling Expenses 30,000 General Charges 15,600 Sale proceeds from scrap (Normal) 4,200 During the year total production was 1,20,000 units. The break-up of prime cost units was: Material `2.20 and wages `1.80. The average selling price was `6.75 per unit and the entire quantity produced during the year was sold out. With effect from 1st Jan 1998 the selling price was reduced to `6.40 per unit. It was envisaged that production could be enhanced during 1998 by 33 1/3 percent without incurring any over time or extra shift work, or additional selling expenses. You are required to prepare statement showing: 1. Actual Cost and profit for the year 1997. 2. Estimated cost and profit for 1998 assuming that the entire production will be sold during the year. Assumptions, if any, required to be made in the above exercise should be clearly stated. Q 12. The expenses of a machine cost for a particular month are as under: Power = `50,000; Maintenance and Repairs = `10,000; Machine Operator Wages = `2,000; Supervision = `6,000; Depreciation = `40,000. Other particulars are as follows: Product Rate of production Production unit A 30 units per hour 1,800 B 10 units per hour 500 C 6 units per hour 300 D 4 units per hour 260 The entire production was to be offered to government on Cost-plus20% basis. Prime cost per unit is: A - `40, B - `60, C - `100 and D - `300. Prepare a statement showing product wise cost and offer price