6 Cost Sheet

Question 1:
Arnav Inspat Udyog Ltd. has the following expenditures for the year ended 31st March, 20X8:
Sl. Amount (`) Amount (`)
No.
(i) Raw materials purchased 10,00,00,000
(ii) GST paid on the above purchases @18% (eligible for 1,80,00,000
input tax credit)
(iii) Freight inward 11,20,600
(iv) Wages paid to factory workers 29,20,000
(v) Contribution made towards employees’ PF & ESIS 3,60,000
(vi) Production bonus paid to factory workers 2,90,000
(vii) Royalty paid for production 1,72,600
(viii) Amount paid for power & fuel 4,62,000
(ix) Amount paid for purchase of moulds and patterns (life 8,96,000
is equivalent to two years production)
(x) Job charges paid to job workers 8,12,000
(xi) Stores and spares consumed 1,12,000
(xii) Depreciation on:
- Factory building 84,000
- Office building 56,000
- Plant & Machinery 1,26,000
- Delivery vehicles 86,000 3,52,000
(xiii) Salary paid to supervisors 1,26,000
(xiv) Repairs & Maintenance paid for: 48,000
- Plant & Machinery
- Sales office building 18,000
- Vehicles used by directors 19,600 85,600
(xv) Insurance premium paid for:
- Plant & Machinery 31,200

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 Cost Sheet 6.2

- Factory building 18,100

- Stock of raw materials & WIP 36,000 85,300
(xvi) Expenses paid for quality control check activities 19,600
(xvii) Salary paid to quality control staffs 96,200
(xviii) Research & development cost paid improvement in 18,200
production process
(xix) Expenses paid for pollution control and engineering & 26,600
maintenance
(xx) Expenses paid for administration of factory work 1,18,600
(xxi) Salary paid to functional mangers:
- Production control 9,60,000
- Finance & Accounts 9,18,000
- Sales & Marketing 10,12,000 28,90,000
(xxii) Salary paid to General Manager 12,56,000
(xxiii) Packing cost paid for:
- Primary packing necessary to maintain 96,000
quality
- For re-distribution of finished goods 1,12,000 2,08,000
(xxiv) Interest and finance charges paid 7,20,000
(xxv) Fee paid to auditors 1,80,000
(xxvi) Fee paid to legal advisors 1,20,000
(xxvii) Fee paid to independent directors 2,20,000
(xxviii) Performance bonus paid to sales staffs 1,80,000
(xxix) Value of stock as on 1st April, 20X7:
- Raw materials 18,00,000
- Work-in-process 9,20,000
- Finished goods 11,00,000 38,20,000
(xxx) Value of stock as on 31st March, 20X8:
- Raw materials 9,60,000
- Work-in-process 8,70,000
- Finished goods 18,20,000 36,50,000

Amount realized by selling of scrap and waste generated during manufacturing process –
`86,000/-

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 6.3 Cost and Management Accounting

From the above data you are requested to PREPARE Statement of cost for Arnav Ispat Udyog
Ltd. for the year ended 31st March, 20X8, showing (i) Prime cost, (ii) Factory cost, (iii) Cost of
Production, (iv) Cost of goods sold and (v) Cost of sales.
Answer:
Statement of Cost of Arnav Ispat Udyog Ltd. for the year ended 31st March, 20X8:
Sl. Particulars Amount (`) Amount (`)
No.
(i) Material Consumed:
- Raw materials purchased 10,00,00,000
- Freight inward 11,20,600
Add: Opening stock of raw materials 18,00,000
Less: Closing stock of raw materials (9,60,000) 10,19,60,600
(ii) Direct employee (labour) cost:
- Wages paid to factory workers 29,20,000
- Contribution made towards employees’ PF 3,60,000
& ESIS
- Production bonus paid to factory workers 2,90,000 35,70,000
(iii) Direct expenses:
- Royalty paid for production 1,72,600
- Amount paid for power & fuel 4,62,000
- Amortised cost of moulds and patterns 4,48,000
- Job charges paid to job workers 8,12,000 18,94,600
Prime Cost 10,74,25,200
(iv) Works/ Factory overheads:
- Stores and spares consumed 1,12,000
- Depreciation on factory building 84,000
- Depreciation on plant & machinery 1,26,000
- Repairs & Maintenance paid for plant & 48,000
machinery
- Insurance premium paid for plant & 31,200
machinery
- Insurance premium paid for factory building 18,100
- Insurance premium paid for stock of raw 36,000
materials & WIP

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 Cost Sheet 6.4

- Salary paid to supervisors 1,26,000

- Expenses paid for pollution control and
engineering & maintenance 26,600 6,07,900
Gross factory cost 10,80,33,100
Add: Opening value of W-I-P 9,20,000
Less: Closing value of W-I-P (8,70,000)
Factory Cost 10,80,83,100
(v) Quality control cost:
- Expenses paid for quality control check 19,600
activities
- Salary paid to quality control staffs 96,200 1,15,800
(vi) Research & development cost paid improvement in 18,200
production process
(vii) Administration cost related with production:
- Expenses paid for administration of factory 1,18,600
work
- Salary paid to Production control manager 9,60,000 10,78,600
(viii) Less: Realisable value on sale of scrap and waste (86,000)
(ix) Add: Primary packing cost 96,000
Cost of Production 10,93,05,700
Add: Opening stock of finished goods 11,00,000
Less: Closing stock of finished goods (18,00,000)
Cost of Goods Sold 10,86,05,700
(x) Administrative overheads:
- Depreciation on office building 56,000
- Repairs & Maintenance paid for vehicles 19,600
used by directors
- Salary paid to Manager- Finance & 9,18,000
Accounts
- Salary paid to General Manager 12,56,000
- Fee paid to auditors 1,80,000
- Fee paid to legal advisors 1,20,000
- Fee paid to independent directors 2,20,000
- Interest and finance charges paid 7,20,000 34,89,600

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 6.5 Cost and Management Accounting

(assuming related with non-equity fund)

(xi) Selling overheads:
- Repairs & Maintenance paid for sales office 18,000
building
- Salary paid to Manager- Sales & Marketing 10,12,000
- Performance bonus paid to sales staffs 1,80,000 12,10,000
(xii) Distribution overheads:
- Depreciation on delivery vehicles 86,000
(xiii) - Packing cost paid for re-distribution of
finished goods 1,12,000 1,98,000
Cost of Sales 11,35,03,300

Notes:

(i) GST paid of purchase of raw materials would not be part of cost of materials as it is eligible for
input credit.

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