CHAPTER 1 - COST SHEET

Q1. The following information has been obtained from the records of ABC

Corporation for the period from June 1 to June 30, 20X8.

On June 1, 20X8 On June 30, 20X8

Cost of raw material 60,000 50,000

Cost of work-in-process 12,000 15,000

Cost of stock of finished goods 90,000 1,10,000

Purchase of raw materials during June’ 20X8 4,80,000

Wages paid 2,40,000

Factory overheads 1,00,000

Administration overheads (related to production) 50,000

Selling & distribution overheads 25,000

Sales 10,00,000

PREPARE a statement giving the following information:

(a) Raw materials consumed;

(b) Prime cost;

(c) Factory cost;

(d) Cost of goods sold; and

(e) Net profit.

Q2. Prepare a Cost Sheet for the year ended 31.3.86 from the following

figures extracted from the books of Best Engineering Co.

Opening Stock:

(i) Raw Material 40,350,

(ii) Work-in-Progress 15,000 and

(iii) Finished Stock 35,590.

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Cost incurred during the period:

Materials purchased 2,50,000, Wages paid 2,00,000, Carriage

inward 2,000, Consumable Stores 10,000, Wages of Storekeeper

7,000, Depreciation of Plant & Machinery 10,000, Materials

destroyed by Fire 5,000, Repairs & Renewals 5,010, Office

Manager’s Salary 10,000, Salary to Office Staff 20,500, Printing &

Stationary 10,000, Power 10,500, Lighting for Office Building

2,000, Carriage outward 3,000, Freight 5,000, Entertainment

2,500, Warehousing charges 1,500, Legal charges 2,000, Expenses

for participating in Industrial exhibition-6,000.

Closing Stock:

(i) Raw material 35,000,

(ii) Work-in-Progress 14,500, and

(iii) Finished Stock 40,030. Profit 25% on cost

Q3. The books of Adarsh Manufacturing Company present the following data

for the month of April, 20X9:

Direct labour cost 17,500 being 175% of works overheads.

Cost of goods sold excluding administrative expenses 56,000.

Inventory accounts showed the following opening and closing balances:

April 1 April 30

Raw materials 8,000 10,600

Work-in-progress 10,500 14,500

Finished goods 17,600 19,000

Other data are:

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Selling expenses 3,500

General and administration expenses 2,500

Sales for the month 75,000

You are required to:

(i) COMPUTE the value of materials purchased.

(ii) PREPARE a cost statement showing the various elements of cost and

also the profit earned.

Q4. In a factory the expenses of factory are charged on a fixed percentage

basis on wages and office overhead expenses are calculated on the basis of
percentage of works cost.

I Order II Order

Material 12,500 18,000

Wages 10,000 14,000

Selling price 44,850 61,880

Percentage of profit on cost 15% 12%

Find the rate of Factory OH on Direct labour and Office OH on Factory cost.

Using the above recovery rates fix the selling price of the job whose details
given below

Direct material 28,000

Direct labour 22,000

Profit percentage 33-1/3 %

Q5. he following data relates to the manufacture of a standard product during

the month of April, 20X8:

Raw materials 1,80,000

Direct wages 90,000

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Machine hours worked (hours) 10,000

Machine hour rate (per hour) 8

Administration overheads 35,000

Selling overheads (per unit) 5

Units produced 4,000

Units sold 3,600

Selling price per unit 125

You are required to PREPARE a cost sheet in respect of the above showing:

(i) Cost per unit

(ii) Profit for the month

Q6. Prepare statement of cost and profit from the following information

Particulars (Rs.)

Opening stock of raw materials 10,000

Purchase of raw materials 40,000

Materials returned to supplier 2,000

Closing stock of raw materials 8,000

Direct wages 20,000

Works on cost 25% on wages

Office on cost 20% on works cost

Selling on cost 10% on works cost

Profit 10% on cost

Q7. The following figures for the month of April,2021 were extracted from the
records of a factory

Opening stock of Finished goods (5000 units) 45,000

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Purchases of raw material 2,57,100

Direct wages 1,05,000

Factory overheads 100% of direct wages

Administration overheads Rs 1 per unit

Selling and Distribution overheads 10% of sales

Closing stock of finished goods (10000 units) ?

Sales (45000 units) 6,60,000

Prepare a cost sheet for the month of April 2021 assuming that sale are made
on the basis of “first in and first out” principle.

Q8. XYZ ltd produces refrigerators & sells each for ₹2000 during a certain
accounting year. The direct material, Direct labour and overheads costs are
60%, 20% and 20% respectively of the cost of sales.

In subsequent accounting year, the direct material cost has increased by 15%
and direct labour cots by 17.5%. Due to increase in costs, there would be 50%
decrease in amount of profit if the same selling price is to be maintained.

Compute the new selling price to enable the company to maintain the same
percentage of profit as that earned during the preceding year.

Q9. Maximum production capacity of JK Ltd. is 5,20,000 units per annum.

Details of estimated cost of production are as follows:

Direct material - Rs. 15 per unit

Direct Labour - Rs. 9 per unit (subject to a minimum of Rs.2,50,000 per month)

Fixed Overheads - Rs. 9,60,000 p.a.

Variable Overheads - Rs. 8 per unit

Semi variable Overheads - Rs.5,60,000 per annum up to 50% capacity and

additional Rs.1,50,000 per annum for every 25% increase in capacity or a part
of it.

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JK Ltd. worked at 60 per cent capacity for the first three months during the
year 2008, but it is expected to work at 90 per cent capacity for the remaining
nine months.

The selling price per unit was Rs.44 during the first three months.

You are required, what selling price per unit should be fixed for the remaining
nine months to yield a total profit of Rs.15,62,500 for the whole year.

Q10. Usha Engineering Works Ltd., manufactured and sold 1,000 sewing
machines in 2010. Following are the particulars obtained from the records of
the company:

Rs.

Cost of materials 80,000

Wages paid 1,20,000

Manufacturing expenses 50,000

Salaries 60,000

Rent, rates and insurance 10,000

Selling expenses 30,000

General expenses 20,000

Sales 4,00,000

Prepare a statement of Cost and Profit for the year 2010.

The company plans to manufacture 1200 sewing machines in 2011. You are
required to submit a statement showing the price at which machines would be
sold so as to show a profit of 10% on the selling price. The following additional
information is supplied to you:

i) The price of materials will rise by 20% on the previous year’s level.

ii) Wage rates will rise by 5%.

iii) Manufacturing expenses will rise in proportion to the combined cost of

materials and wages.

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iv) Selling expenses per unit will remain unchanged.

v) Other expenses will remain unaffected by the rise in output.

Q11. SK Engineering Company Limited manufactures two types of auto bearing –

type ‘XD’ and type ‘XE’. The company’s records show the following particulars
for those bearings for the month of May, 2009 :

(Rs.)

Direct Materials 38,10,000

Direct labour 20,10,000

Production overheads 6,03,000

Office Overheads 6,42,300

There was no work-in-progress at the beginning or at the end of the month. It

was ascertained that:

(i) Direct material cost per bearing for type ‘XD’ was 160 percent of those for
type ‘XE’.

(ii) Direct labour cost per bearing for type ‘XE’ was 40 percent of those for
type ‘XD’.

(iii) Production overheads were absorbed on the basis of direct labour cost.

(iv) Office overheads were absorbed on the basis of factory cost.

(v) Selling and distribution overheads were Rs.2 per bearing sold for each type.

(vi) Stock of finished bearing on 1st May, 2009 was 15,000 bearings @ Rs.15 of
type ‘XD’ and 20,000 bearings @ Rs.8 of type ‘XE

(vii) Production during the month of May, 2009 was 2,70,000 bearings of type
‘XD’ and 3,30,000 bearings of type ‘XE’ and out of May’s output 25,000
bearings of type ‘XD’ and 40,000 bearings of type ‘XE’ would be remains in
stock on 31st May, 2009 which valued at cost of production.

You are required to:

(i) Prepare a statement showing cost of production each type of bearings.

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(ii) Prepare a statement showing the selling price at which the bearings would
be marketed, if the company desires @ 20 percent profit on selling price.

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