Problems

Problem: 1 In a factory the expenses are as follows:

Material: 2,00,000
Labor: 1,50,000
Factory expenses: - 98,000
Office expenses: 85,000
Sales: 5,10,000
Prepare a Cost Sheet

Cost Sheet
Particulars Amount
Material 2,00,000
+ Labor 1,50,000
Prime Cost 3,50,000
ADD: Factory overhead:
Factory expenses 98,000
Factory cost 4,48,000
Add: office expenses 85,000
Total cost 5,33,000
Loss (Balancing figure) 23,000
Sales 5,10,000

Problem:2
Mr. Arjun provides the following data relating to the manufacture of a
Standard product for the month of January 2019.
SL Particulars Amount
No
1 Materials 90,000
2 Direct Wages 60,000
3 Depreciation of machinery 11,500
4 Power and consumable stores 12,000
5 Indirect wages at factory 15,000
6 Lighting of factory 5,500
7 Cost of Rectification of defective 3,000
work
8 Sale of Scrap 2,000
9 Office and selling overhead 39,000
10 Selling Price 3,16,000
Prepare the Cost Sheet.
Cost Sheet
Particulars Amount Amount
Material -- 90,000
Add: Direct wages 60,000
Prime cost 1,50,000
Add: Factory overhead:
Power and Consumable stores 12,000
Indirect wages at factory 15,000
Lighting of factory 5,500
Cost of Rectification of defective 3,000
work
Depreciation of machinery 11,500
47,000
Less: Sale of Scrap 2,000 45,000(+)
Works cost 1,95,000
Add: Office and Selling
overhead: 39,000

Total cost 2,34,000

Profit (Balancing figure) 82,000

Sales 3,16,000

Problem:3
From the following information, prepare a Cost Sheet showing the
cost per unit and profit for the period.
Raw material consumed: Rs 40,000
Direct wages: 24,000
Machine hours worked: 4,000
Machine hour rate Rs2
Office overhead 10% of factory cost
Selling overhead Rs 1.5 per unit
Units produced 2,000
Units sold 1,800 at Rs 50 each.
 Cost Sheet
Units Produced:2000
Particulars Total Cost Cost per unit
Raw material consumed 40,000 20
Add: Direct wages 24,000 12
Prime Cost 64,000 32
Add: Works or Factory
overheads:

(Machine hours Worked

X Machine hour rate) 8,000 4
4000 hours X Rs2
Factory cost 72,000 36
Add: Office or
Administration O/H:
10% of Factory cost 7,200 3.6
(Rs,72,000X10/100)

Cost of Production 79,200 39.6

Less: Closing stock of -----
Finished Goods: (-)7,920
(200unitsX39.6)
Units produced:- 2000
Less: units sold 1,800
Stock of finished Goods 200
Cost of Goods Sold 71,280 39.6
Add: Selling & Distribution
O/H:
Selling o/h
(No. of Units sold X Selling 2,700 1.5
O/H per unit)
(1,800 units sold XRs1.5)
Total Cost 73,980 41.1

Profit(Balancing figure) 16,020 8.9

Sales(Given:1,800unitsXRs50 90,000 50
Problem: 4
November 2017- 5marks Problem
Compute Prime cost and Production cost from the following
information:
Opening Stock of Raw material: 10,000
Purchases :50,000
Expenses on Purchase : 2,000
Direct Wages 20,000
Closing Stock of Raw materials: 14,000
Manufacturing cost: 1,60,000
Administrative expenses : 40,000

Solution: Cost Sheet for the year ending ---

Particulars Amount
Direct materials:
Opening Stock of Raw materials: 10,000
Add: Purchases 50,000
Add: Expenses on Purchase 2,000
62,000
Less: Closing Stock of Raw materials:14,000
Raw material consumed 48,000 48,000
Add: Direct Wages 20,000
Prime cost 68,000
Add: Factory over heads:
Manufacturing cost 1,60,000

Factory cost/Works cost 2,28,000

Add: Administration overheads:
Administrative expenses 40,000

Cost of Production 2,68,000

Problem No: 5
Prepare a cost sheet of the following data relating to the manufacture of Jeans:

Number of Jeans manufactured during the month: 1,000

Direct materials consumed 20,000
Direct labour 8,000
Indirect labour (in factory) 2,500
Supervision costs (in factory) 1,000
Factory premises rent 1,600
Factory lighting 600
Oil for machines 100
Depreciation of machines 500
Office overheads 8,000
Office salaries 2,000
Misc. office expenses 1,000
Selling and distribution overheads 6,000
Note: A profit margin of 20% on the total cost of goods is expected on the sale of Jeans.

Solution: Cost Sheet (for the Month...) Units Manufactured:1000

Particulars Total cost Cost Per unit

Direct Material: 20,000

Direct labor : 8,000
Prime Cost 28,000 28
Add: Works or Factory overhead:
Indirect labour (in factory) 2,500
Supervision costs (in factory) 1,000
Factory premises rent 1,600
Factory lighting 600
Oil for machines 100
Depreciation of machines 500
6,300 6.3
Works cost/Factory cost 34,300 34.3
Add: Office and administration overhead:
Office overheads 8,000
Office salaries 2,000
Misc. office expenses 1,000 11,000 11

Cost of Production 45,300 45.3

Add: Selling and Distribution overhead 6,000 6

Total Cost 51,300 51.3
Add: Profit 20% of total cost 10,260 10.26
( 51,300X20/100)
Sales 61,560 61.56

Problem:6 ( 5marks October/November 2018)

Prepare a Cost Sheet:

Particulars Amount
Direct material 6,40,000
Labour 2,80,000
Productive wages 1,60,000
Factory cost 2,80,000
Office cost 1,20,000
Selling Cost (15% on works cost) --
Sales during the period 19,00,000
Cost Sheet
Particulars Amount
Direct material – 6,40,000
Add: Labour 2,80,000
Add: Productive wages 1,60,000

Prime Cost 10,80,000

ADD: Factory Cost/Works cost 2,80,000

Works Cost 13,60,000
Add: Office and Administration o/h
Office cost 1,20,000

Cost of Production 14,80,000

Add: Selling O/H
Selling cost 2,04,000
(15% on Works Cost
13,60,000X15/100)
Total Cost 16,84,000
Profit (Balancing figure) 2,16,000
Total 19,00,000

Problem- 7.

From the following information for the month of January, prepare a Cost Sheet to show the
following components : (a) Prime Cost, (b) Factory Cost, (c) Cost of Production, (d) Total Cost.
Direct material 57,000
Direct wages 28,500
Factory rent and rates 2,500
Office rent and rates 500
Plant repairs and maintenance 1,000
Plant depreciation 1,250
Factory heating and lighting 400
Factory manager’s salary 2,000
Office salaries 1,600
Director’s remuneration 1,500
Telephone and postage 200
Printing and stationery 100
Legal charges 150
Advertisement 1,500
Salesmen’s salaries 2,500
Showroom rent 500
Sales 1,16,000

Particulars Amount Amount

Direct material 57,000
Direct wages 28,500
Prime Cost 85,500
Factory overheads/Works cost
Factory rent and rates 2500
Plant repairs and maintenance 1000
Plant depreciation 1250
 Factory heating and lighting 400
Factory manager’s salary 2000 7,150

Factory cost 92,650

Add: Office and Administration exp,.
Office rent and rates 500
Office salaries 1,600
Director’s remuneration 1,500
Telephone and postage 200
Printing and stationery 100
Legal charges 150

Cost of Production 4,050

Add: Selling& Distribution overheads: 96,700
1,500
Advertisement 2,500
Salesmen’s salaries 500
Showroom rent
4,500
Total Cost 1,01,200
Add: Profit(1,16,000-1,01,200) 14,800
(Balancing figure)
Sales 1,16,000

Treatment of Stocks
Stocks may be of three types :
(a) Stocks of raw materials.
(b) Stocks of work-in-progress.
(c) Stocks of finished goods.
(a) Stock of Raw Materials: In cost sheet, materials consumed in production are shown. In
calculating the value of raw materials consumed during the period, opening stock of raw material is
added in purchases and the value of closing stock is subtracted from purchases. In the following
example with assumed figures, the treatment of stock of raw material has been shown : `
Opening stock of raw materials 30,000
Add: Purchases 80,000
1,10,000
Less: Closing stock of raw materials 17,000
Cost of materials consumed 93,000
B) Stock of Work-in-Progress.
This is the stock of semi-finished goods, i.e., the goods which are in manufacturing
process. In the following example, figures have been assumed to show the
treatment of the stock of work-in-progress. `
 Direct materials consumed: 93,000
ADD: Direct wages 22,000
Direct expenses 5,000
Prime Cost 1,20,000
Add: Factory overhead: 24,000
1,44,000
Add : Opening stock of work-in-progress 14,000
1,58,000
Less: Closing stock of work-in-progress 8,000
Works Cost or Factory Cost 1,50,000
(a) Stock of Finished Goods.

This stock is adjusted after the calculation of cost of production. The opening stock
is added to and closing stock is subtracted from the cost of production. The resulting
figure will be the Cost of Goods Sold.
This is shown below, continuing the same assumed figures: `
Factory cost 1,50,000
Add: Administration overhead 10,000
Cost of Production 1,60,000
Add : Opening stock of finished goods 30,000
1,90,000
Less: Closing stock of finished goods 22,000
Cost of Goods Sold 1,68,000