PROBLEMS ON COST SHEET
1. Calculate prime cost from the following particulars for a production unit:
Rs.
Cost of material purchased 30,000
Opening stock of material 6,000
Closing stock of material 4,000
Wages paid 3,000
Rent of hire of a special machine for production 5,000
Material Consumed = Material purchased + Opening stock of material– Closing stock
of material.
2. Calculate factory cost from the following particulars:
Particulars Rs.
Material consumed 60,000
Productive wages 20,000
Direct Expenses 5,000
Consumable stores 2,000
500
Oil grease/Lubricating
Salary of a factory manager 6,000
Unproductive wages 1,000
Factory rent 2,000
Repair and Depreciation on Machine 600
Factory Cost = Prime cost + Factory overheads
ADJUSTMENT FOR STOCK OF WORK-IN-PROGRESS :
In the process of production, some units remain to be completed at the end of a period. These
incomplete units are known as work-in-progress. Normally, the cost of incomplete units
includes direct material, direct Labour, direct expenses, and average factory overheads.
Hence, at the time of computing factory cost, it is necessary to make adjustment of opening
and closing stock of work in progress to arrive at the net Factory cost/works cost.
3. From the following information calculate the works cost.
Particulars Rs.
Direct material 80,000
Direct Labour 22,000
Direct Expenses 5,000
Factory overheads 12,000
Work-in-progress: Opening stock 13,000
Closing stock 7,000
TOTAL COST AND COST SHEET
If office and administrative overheads are added to factory or works cost, total cost of
production is arrived at. Hence the total cost of production is calculated as:
Total Cost of production = Factory Cost + office and administration overheads
4. From the following information calculate the total cost of production
Rs.
Direct material 90,000
Direct Labour 32,000
Direct Expenses 9,000
Factory overheads 25,000
Office and administration overheads 18,000
COST OF GOODS SOLD
It is not necessary, that all the goods produced in a period are sold in the same period. There
is stock of finished goods in the opening and at the end of the period. The cost of opening
stock of finished goods is added in the total cost of production in the current period and cost
of closing stock of finished goods is deducted. The cost of goods sold is calculated as:
Cost of goods sold = Total cost of production + Opening stock of Finished goods –
Closing stock of finished goods
[Link] the following information calculate the cost of goods sold.
Rs.
Total Cost of Production 1,22,000
Opening stock of finished goods 12,000
Closing stock of finished goods 16,000
Cost of goods sold = Cost of Production + Opening stock of Finished goods - closing
stock of Finished goods
Total Cost i.e, Cost of Sales
If selling and distribution overheads are added to the total cost of production, total cost is
arrived at. This cost is also termed as cost of Sales. Hence the total cost is calculated as:
Total Cost = Cost of Goods sold + Selling and distribution overheads
[Link] the following information calculate the total cost.
Rs.
Direct material 1,60,000
Direct Labour 52,000
Direct Expenses 19,000
Factory overheads 45,000
Office and administration overheads 28,000
Selling and distribution overheads 33,000
7. Question and answer in the notes.
Sales = Total Cost + Profit
[Link] the following information, prepare a cost sheet for period ended on 31st March 2006.
Rs.
Opening stock of raw material 12,500
Purchases of raw material 1,36,000
Closing stock of raw material 8,500
Direct wages 54,000
Direct expenses 12,000
Factory overheads 100% of direct wages
Office and administrative overheads 20% of works cost
Selling and distribution overheads 26,000
Cost of opening stock of finished good 12,000
Cost of Closing stock of finished
15,000
PROFIT ON COST 20%
9.A manufacturer has shown an amount of 19,310 in his books as ‘Establishment’ which
really include the following expenses:
Interest on debentures 1,200
Agents’ commission 6,750
Warehouse wages 1,800
Warehouse repairs 1,500
Lighting of office 70
Office salaries 1,130
Director’s remuneration 1,400
Travelling expenses of salesmen 1,760
Rent, rates and insurance of warehouse 310
Rent, rates and insurance of office 230
Lighting of warehouse 270
Printing and stationery 1,500
Trade magazines 70
Donations 150
Bank charges 100
Cash discount allowed 770
Bad debts 300
From the above information prepare a statement showing in separate total:
(a) Selling expenses,(b) Distribution expenses,(c) Administration expenses (d) Expenses
which you would exclude from costs.
10. 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
11. The Bangalore Ltd. supplies you the following in format ion and requires you to prepare a
cost sheet .
Stock of raw materials on 1st Sept ., 2013 75,000
Stock of raw materials on 30th Sept ., 2013 91,500
Direct wages 52,500
Indirect wages 2,750
Sales 2,00,000
Work-in-progress on 1st Sept ., 2013 28,000
Work-in-progress on 30th Sept ., 2013 35,000
Purchases of raw materials 66,000
Factory rent , rates and power 15,000
Depreciation of plant and machinery 3,500
Expenses on purchases 1,500
Carriage outward 2,500
Advertising 3,500
Office rent and taxes 2,500
Travelers’ wages and commission 6,500
Stock of finished goods on 1st Sept ., 2013 54,000
Stock of finished goods on 30th Sept ., 2013 31,000
ITEMS EXCLUDED FROM COST
The following items are of financial nature and thus not included while preparing a cost sheet
Cash discount
Transfer to reserves
Interest paid
Donations
Preliminary expenses writ ten off
Income-tax paid
Goodwill writ ten off
Dividend paid
Provision for taxation
Profit / loss on sale of fixed assets
Provision for bad debts 1
Damages payable at law, etc.
7th May 2021
[Link] 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 f 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
[Link] of Scrap
From the following in format ion prepare a cost sheet to show :
(a) Prime cost ; (b) Works cost ; (c) Cost of product ion ; (d) Cost of sales; and (e) Profit .
Raw materials purchased 32,250
Carriage on purchases 850
Direct wages 18,450
Factory overhead 2,750
Selling overhead 2,450
Office overhead 1,850
Sales 75,000
Sale of factory scrap 250
Opening stock of finished goods 9,750
Closing stock of finished goods 11,100
14. Mr. Ganesh furnishes the following data relating to the manufacture of a standard product
during the month of April 2018 :
Raw materials consumed Rs15,000
Direct labour charges Rs 9,000
Machine hours worked 900
Machine hour rate Rs 5
Administration overheads 20% on works cost
Selling overhead Re. 0.50 per unit
Units produced 17,100
Units sold 16,000 at Rs 4 per unit
You are required to prepare a cost sheet from the above, showing:
(a) the cost per unit,
(b) cost per unit sold and profit for the period.
[Link] the following particulars, prepare a cost statement:
Stock, 1-1-2019: Raw materials 30,500
Finished goods 20,400
Stock, 31-1-2019: Raw materials 48,500
Finished goods 10.000
Purchase of raw materials 25,000
Work-in-progress, 1-1-2019 8,000
Work-in-progress, 31-1-2019 9,000
Sales 95,000
Direct wages 20,400
Factory expenses 10,500
Office expenses 5,400
Selling expenses 3,800
Distribution expenses 2,500
Also calculate the percentage of works expenses to direct wages and the percentage of office
expenses to works cost.
10TH MAY 2021 :
16. In respect of a factory the following particulars have been extracted for the year 2019 :
Cost of materials 6,00,000
Wages 5,00,000
Factory overheads 3,00,000
Administration charges 3,36,000
Selling charges 2,24,000
Distribution charges 1,40,000
Profit 4,20,000
A work order has to be executed in 2020 and the estimated expenses are :
Materials Rs 8,000, wages Rs 5,000.
Assuming that in 2020, the rate of factory overheads has gone up by 20%, distribution
charges have gone down by 10% and selling and administration charges have gone each up
by 15%, at what price should the product be sold so as to earn the same rate of profit on the
selling price as in 2019 ?
Factory overheads are based on wages and administration, selling and distribution overheads
on factory cost.
[Link] following extracts of costing information relate to commodity X for the year ending
31-12-2019.
`
Purchases of raw materials 6,000
Direct wages 5,000
Rent, rates and insurance 2,000
Carriage inwards 100
Stock (1-1-2019) : Raw materials 1,000
Finished products — 200 tons 800
Stock (31-12-2019) : Raw materials 1,100
Finished products — 400 tons –
Cost of factory supervision 400
Sale of finished products 15,000
Advertising and selling cost is 40 paise per ton sold. 3,000 tons of the commodity were sold
during the year. Prepare a Cost Sheet
18. The accounts of Flex Manufacturing Co. for the year ended 31st March, 2013, show the
following information :
`
Production wages 2,50,000
Direct material used 3,18,200
Chargeable expenses 30,000
Sales 7,80,000
Drawing office salaries 10,000
Counting office salaries 18,800
Cash discount allowed 3,000
Carriage outward 5,400
Bad debts written off 8,500
Rent, rates and taxes
(i) Office 4,000
(ii) Works 15,400
Travelling expenses 3,600
Travellers’ salaries and commission 8,500
Depreciation on plant and machinery 6,500
Depreciation on office furniture 1,000
Directors’ fee 12,000
Gas and water (3/ 4 Factory, 1/ 4 Office) 2,800
Manager’s salary (3/ 4 Factory, 1/ 4 Office) 24,000
General expenses 4,000
Hire of crane 5,000
Donations to charitable trust 2,000
Prepare a statement showing (i) Prime Cost (ii) Factory Cost and (iii) Total Cost and (iv) Net
Profit
19. E Ltd. furnish the following information for 10,000 units of a product manufactured
during the year 2018 :
M
Material 90,000
Direct wages 60,000
Power and consumable stores 12,000
Indirect wages 15,000
Factory lighting 5,500
Cost of rectification of defective work 3,000
Clerical salaries and management expenses 33,500
Selling expenses 5,500
Sale proceeds of scrap 2,000
Repairs, maintenance, and depreciation of plant 11,500
The net selling price was ` 31.60 per unit sold and all units were sold.
As from 1-1-2019, the selling price was reduced to Rs 31 per unit. It was estimated that
production could be increased in 2019 by 50% due to spare capacity.
Rates for materials and direct wages will increase by 10%
You are required to prepare:
(a) Cost sheet for the year 2018 showing various elements of cost per unit, and
(b) Estimated cost and profit for 2014. Assume that 15,000 units will be produced and sold
during the year and factory overheads will be recovered as a percentage of direct wages and
office and selling expenses as a percentage of works cost
20. The following direct costs were incurred on Job No. 239 of XYL Co. Ltd. Materials Rs
6,010
Wages: Deptt. A — 60 hours @ Rs 30 per hr.
B — 40 hours @ Rs 20 per hr.
C — 20 hours @ Rs 50 per hr.
Overhead for these three departments were estimated as follows :
Variable overheads: Deptt. A — Rs 15,000 for 1,500 labour hours
B — Rs 4,000 for 200 labour hours
C — Rs 12,000 for 300 labour hours
Fixed overheads: Estimated at Rs 40,000 for 2,000 normal working hours.
You are required to calculate the cost of Job No. 239 and quote the price to give profit of
25% on selling price
