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2d) - Cost Statement and Related Issues

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Habiba Rowshan
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16 views4 pages

2d) - Cost Statement and Related Issues

Uploaded by

Habiba Rowshan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Cost Statement and Related Issues

Format

Name of the Firm:


Statement of Cost and Profit and Loss
For the Period ended:

Particulars Taka
Opening Inventory of Raw Material
Add Purchase of Raw Material
Add Transportation In
Less Closing Inventory of Raw Material
Cost of Material
Used/Consumed
Add Direct Labour
Add Direct Expenses
Prime Cost
Add Works/Factory Overhead
Works /Factory Cost
Add Opening Work-in-Progress
Less Closing Work-in- Progress
Less Sales of Scrap
Cost of
Manufacture
Add Office & Administrative Overhead
Cost of Production
Add Opening Inventory of Finished Goods
Less Closing Inventory of Finished Goods
Cost of Goods Sold
Add Selling & Distribution Overhead
Cost of Sales
Add Profit or Less Loss
Sales

Page No. 01/04

Illustration No. 01
The following information has been taken from the records of AB Ltd. for
the year ended 31st December, 2021:

Inventory 01/01/2021 31/12/2021


Taka Taka
Raw Materials 12,500 17,500
Work-in-Progress 15,000 25,000
Finished Goods 22,500 27,500
Purchases of Raw Materials Tk.1,00,000; Transportation in Tk.5,000; Direct
Labor Tk.80,000; Direct Expense Tk.20,000; Works Overhead Tk.40,000;
Office & Administrative Overhead Tk.36,000; Selling & Distribution
Overhead Tk.24,000; Sales of Scrap Tk.5,000, Profit Tk.56,000.

Required:

a) Sales;
b) % of Works Overhead to Direct Labor;
c) % of Office & Administrative Overhead to Works Cost;
d) % of Selling & Distribution Overhead to Works Cost;
e) % of Profit on Cost; &
f) % of Profit on Sales.
g) The Company wants to offer a Selling Price of a Product which will
require Material Tk.40,000 and Labour Tk.20,000. Using the above
percentages calculate the Selling Price of the Product.

Home Task No. 01

You are given the following data relating to CD Ltd.:

Direct Material Tk.5,00,000; Direct Labour 60% of Direct Material; Works


Overhead 25% of Prime Cost; Office and Administrative Overhead 20% of
Works Cost; Selling and Distribution Overhead 10% of Cost of Production;
Profit 25% on Sales. Calculate the Sales Value.

Page No. 02/04


Solution (Illustration No. 01):
AB Ltd.
Statement Showing the Computation of Sales Value
Particulars Taka
Opening Inventory of Raw Material 12,500
Add Purchase of Raw Material 1,00,000
Add Transportation In 5,000
Less Closing Inventory of Raw Material (17,500)

Cost of Material 1,00,000


Used/Consumed
Add Direct Labour 80,000
Add Direct Expenses 20,000

Prime Cost 2,00,000

Add Works/Factory Overhead 40,000


Works /Factory 2,40,000
Cost
Add Opening Work-in-Progress 15,000
Less Closing Work-in- Progress (25,000)
Less Sales of Scrap (5,000)
Cost of 2,25,000
Manufacture
Add Office & Administrative Overhead 36,000
Cost of Production 2,61,000
Add Opening Inventory of Finished Goods 22,500
Less Closing Inventory of Finished Goods (27,500)
Cost of Goods Sold 2,56,000
Add Selling & Distribution Overhead 24,000
Cost of Sales 2,80,000
Add Profit or Less Loss 56,000
Sales 3,36,000

Required:
a) Sales Tk.3,36,000
b) % of Works Overhead to Direct Labour = Works Overhead ÷ Direct
Labour × 100
= Tk.40,000 ÷ 80,000 × 100 = 50%
c) % of Office Overhead to Works Cost = Office Overhead ÷ Works Cost
× 100
= Tk.36,000 ÷ 2,40,000 × 100 = 15%

Page No. 03/04

d) % of Selling Overhead to Works Cost = Selling Overhead ÷ Works


Cost × 100
= Tk.24,000 ÷ 2,40,000 × 100 = 10%
e) % of Profit on Cost = Profit ÷ Cost of Sales × 100
= Tk.56,000 ÷ 2,80,000 × 100 = 20%
f) % of Profit on Sales = Profit ÷ Sales × 100
= Tk.56,000 ÷ 3,36,000 × 100 = 16.667%

g) AB Ltd.
Statement Showing the Computation of Selling Price
Particulars Tk.
Direct Material 40,000
+ Direct Labour 20,000
Prime Cost 60,000
+ Works Overhead = Tk.20,000 × 50% 10,000

Works Cost 70,000


+ Office Overhead = Tk.70,000 × 15% 10,500

Cost of 80,500
Production 7,000
+ Selling Overhead = Tk.70,000 × 10%

Cost of Sales 87,500


+ Profit = Tk.87,500 × 20% 17,500
Selling Price 1,05,000

Page No. 04/04

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