Cost Sheet/ Statement of cost
In-Class Problem 3: 1.1 Direct Materials
Opening stock of raw materials 2000
Add: Purchases of raw material 20000
22000
Less: Purchase returns 3000
Raw material available for use 19000
Less: Closing stock of raw materials 4500
Total direct materials consumed 14500
Direct labor
Actual Labour cost 45000
Accured labour cost 5000
Total Direct labor cost incurrred 50000
Direct Expenses
Raw material transportation costs 1500
Coolants used on the job while in operation 4500
Total direct expenses incurred 6000
PRIME COST 70,500
In-Class Problem 3: 1.2 Factory overhead
Cleaning supplies 3,800
On-site material inspection costs 3,500
Additional factory supervisor salary 60,000
Unexpected production machine maintenance 20,000
Depreciation of machines 12,500
Heating, lighting and water 22,000
Total Factory or Manufacturing overhead 121800
Total manufacturing cost/ Gross works cost / Gross cost of production 192,300
In-Class Problem 3: 1.3 Add: Opening work in process 25,000
Total work in process for the period 217,300
Deduct: Closing work in process 35,000
Works cost/ Cost of production/ Cost of goods manufactured 182,300
In-Class Problem 3: 1.4 Add: Opening inventory of finished goods 95,000
Cost of goods available for sale 277,300
Deduct: Closing inventory of finished goods 45,000
Cost of goods sold 232,300
In-Class Problem 3: 1.5 Administrative overhead
Office building heating, lighting and insurance 37,000
Total admin cost 37000
Selling and distribution overhead
Sales commission and sales manager's salaries 85,500
Sales promotion and advertising 22,000
Total selling and distribution cost 107500
Total non manufacutring cost 144500
Cost of Sale 376,800
In-Class Problem 3: 1.6 Gross sales 382,760
Less: Sales returns 10,400
Net Sales 372,360
Less: Cost of sales 376,800
Profit / Loss -4,440
Cost Sheet/ Statement of cost
Direct Materials
Opening stock of raw materials
Add: Purchases of raw material
Raw material available for use
Less: Closing stock of raw materials
Total direct materials consumed
Direct labor
PRIME COST
Factory overhead
Indirect material
Indirect labor
Depreciation on plant and equipment
Utilities
Other
Total Factory or Manufacturing overhead
Total manufacturing cost/ Gross works cost / Gross cost of production
Add: Opening work in process
Total work in process for the period
Deduct: Closing work in process
Works cost/ Cost of production/ Cost of goods manufactured
Add: Opening inventory of finished goods
Cost of goods available for sale
Deduct: Closing inventory of finished goods
Cost of goods sold
Selling and Administrative overhead
Total non manufacutring cost
Cost of Sale
Sales revenue
Less: Cost of sales
Profit / Loss
60000
250000
310000
70000
240000
400,000
640,000
10,000
25,000
100,000
25,000
30,000
190000
830,000
120,000
950,000
115,000
835,000
150,000
985,000
165,000
820,000
110,000
110,000
930,000
1,105,000
930,000
175,000
Cost Sheet/ Statement of cost
Direct Materials
Opening stock of raw materials
Add: Purchases of raw material
Raw material available for use
Less: Closing stock of raw materials
Total direct materials consumed
Direct labor
PRIME COST
Factory overhead
Indirect labor
Building depreciation (80,000*.75)
Other factory costs
Total Factory or Manufacturing overhead
Total manufacturing cost/ Gross works cost / Gross cost of production
Add: Opening work in process
Total work in process for the period
Deduct: Closing work in process
Works cost/ Cost of production/ Cost of goods manufactured
Add: Opening inventory of finished goods
Cost of goods available for sale
Deduct: Closing inventory of finished goods
Cost of goods sold
Selling and Administrative overhead
Selling and administrative salaries
Building depreciation (80000*.25)
Other selling and administrative expenses
Total non manufacutring cost
Cost of Sale
Sales revenue
Less: Cost of sales
Profit / Loss
15800
175000
190800
18200
172600
254,000
426,600
109,000
60,000
344,000
513000
939,600
35,700
975,300
62,100
913,200
111,000
1,024,200
97,900
926,300
133,000
20,000
195,000
348,000
1,274,300
1,495,000
1,274,300
220,700
Cost Sheet/ Statement of cost
Direct Materials
Opening stock of raw materials
Add: Purchases of raw material
Raw material available for use
Less: Closing stock of raw materials
Total direct materials consumed
Direct labor
PRIME COST
Factory overhead
Indirect material
Indirect labor
Utilities: plant
Depreciation: plant and equipment
Other manufacturing overhead
Total Factory or Manufacturing overhead
Total manufacturing cost/ Gross works cost / Gross cost of production
Add: Opening work in process
Total work in process for the period
Deduct: Closing work in process
Works cost/ Cost of production/ Cost of goods manufactured
Add: Opening inventory of finished goods
Cost of goods available for sale
Deduct: Closing inventory of finished goods
Cost of goods sold
Selling and Administrative overhead
Total non manufacutring cost
Cost of Sale
Sales revenue
Less: Cost of sales
Profit / Loss
40000
180000
220000
25000
195000
200,000
395,000
10,000
15,000
40,000
60,000
80,000
205000
600,000
40,000
640,000
30,000
610,000
20,000
630,000
50,000
580,000
150,000
150,000
730,000
950,000
730,000
220,000
Cost Sheet/ Statement of cost
Direct Materials
Opening stock of raw materials
Add: Purchases of raw material
Less: Purchase returns
Raw material available for use
Less: Closing stock of raw materials
Total direct materials consumed
Direct labor
Actual Labour cost
Accured labour cost
Total Direct labor cost incurrred
Direct Expenses
Freights on raw materials ( carriage inwards)
Special Designing charges
Special Equipment hire charges
Special Dyes
License fees for Special Orders
Direct Power used for special order
Total direct expenses incurred
PRIME COST
Factory overhead
Indirect Labour Actual
Indirect Labour Accrued
Factory supervision
Factory repairs and upkeep
Heat light and power (65000*8/10)
Rents, Rates and taxes (6300*2/3)
Misc. Expenses factory
Depreciation on plant and machinery (460500*0.1)
Depreciation on Building (200000*0.04*8/10)
Total Factory or Manufacturing overhead
Total manufacturing cost/ Gross works cost / Gross cost of production
Add: Opening work in process
Total work in process for the period
Deduct: Closing work in process
Works cost/ Cost of production/ Cost of goods manufactured
Add: Opening inventory of finished goods
Cost of goods available for sale
Deduct: Closing inventory of finished goods
Cost of goods sold
Administrative overhead
Office Salaries and expenses
Heat light and power (65000*1/10)
Rents, Rates and taxes (6300*1/3)
Depreciation on Building (200000*0.04*1/10)
Depreciation on office appliance (17500*0.05)
Total admin cost
Selling and distribution overhead
Sales Commission
Sales Travelling
Sales Promotion
Exhibition and Trade Fair Expenses
Catalogue Printing
Finished goods Warehouse Rent
Carriage on Sales
Final Packing & Forwarding Expenses
Distribution dept. salaries & expenses
Heat light and power (65000*1/10)
Depreciation of building (200000*0.04*1/10)
Total selling and distribution cost
Total non manufacutring cost
Cost of Sale
Gross sales
Less: Sales returns
Net Sales
Less: Cost of sales
Profit / Loss
140000
320000
460000
4800
455200
180000
275200
160000
8000
168000
16000
10000
10000
10000
10000
10000
66000
509,200
18,000
1,200
10,000
14,000
52,000
4,200
18,700
46,050
6,400
170550
679,750
200,000
879,750
192,000
687,750
80,000
767,750
115,000
652,750
8,600
6,500
2,100
800
875
18,875
33,600
11,000
1,000
1,500
5,000
5,000
5,000
5,000
18,000
6,500
800
92,400
111275
764,025
768,000
14,000
754,000
764,025
-10,025
Cost Sheet/ Statement of cost
Direct Materials
Opening stock of raw materials
Add: Purchases of raw material
Raw material available for use
Less: Closing stock of raw materials
Total direct materials consumed
Direct labor
PRIME COST
Manufacturing overhead applied
Total Factory or Manufacturing overhead
Total manufacturing cost/ Gross works cost / Gross cost of production
Add: Opening work in process
Total work in process for the period
Deduct: Closing work in process
Works cost/ Cost of production/ Cost of goods manufactured
Add: Opening inventory of finished goods
Cost of goods available for sale
Deduct: Closing inventory of finished goods
Unadjusted Cost of goods sold
Add: Underapplied overhead
Adjusted cost of goods sold
12000
30000
42000
18000
24000
58,000
82,000
87,000
87,000
169,000
56,000
225,000
65,000
160,000
35,000
195,000
42,000
153,000
4,000
157,000
Manufacturing overhead incurred 215000
Actual direct labor hours 11500
Predetmined overhead rate 18.2
Manufacturing overhead underapplied 209300
Manufacturing overhead underapplied 5700
Because manufacturing overhead is underapplied increase cost of goods sold by $5,700 and
the gross margin would decrease by $5,700.
Cost Sheet/ Statement of cost
Direct Materials
Opening stock of raw materials
Add: Purchases of raw material
Raw material available for use
Less: Closing stock of raw materials
Total direct materials consumed
Direct labor
PRIME COST
Manufacturing overhead applied
Total Factory or Manufacturing overhead
Total manufacturing cost/ Gross works cost / Gross cost of production
Add: Opening work in process
Total work in process for the period
Deduct: Closing work in process
Works cost/ Cost of production/ Cost of goods manufactured
Add: Opening inventory of finished goods
Cost of goods available for sale
Deduct: Closing inventory of finished goods
Unadjusted Cost of goods sold
Actual Manufacturing overhead
Applied Manufacturing overhead
Less: Over applied overhead
Adjusted cost of goods sold
Mason Company
Income Statement
Sales
Less: Adjusted Cost of goods sold
Gross margin
Selling and administrative expenses:
Selling expenses
Administrative expense
Net operating income
7000
118000
125000
15000
110000
70,000
180,000
90,000
90,000
270,000
10,000
280,000
5,000
275,000
20,000
295,000
35,000
260,000
80,000
90,000
10,000
250,000
524,000
250,000
274,000
140000
63,000 203000
71,000
Cost Sheet/ Statement of cost
Direct Materials
Opening stock of raw materials 20000
Add: Purchases of raw material 400000
Raw material available for use 420000
Less: Indirect materials Purchased 15000
Raw material available for use (Only direct) 405000
Less: Closing stock of raw materials 30000
Total direct materials consumed 375000
Direct labor 60,000
PRIME COST 435,000
Manufacturing overhead applied* 485,000
Total Factory or Manufacturing overhead 485,000
Total manufacturing cost/ Gross works cost / Gross cost of production 920,000
Add: Opening work in process 40,000
Total work in process for the period 960,000
Deduct: Closing work in process 70,000
Works cost/ Cost of production/ Cost of goods manufactured 890,000
*Actual manufacturing overhead costs (a).......... 473,000
Manufacturing overhead cost applied:
19,400 MH × $25 per MH (b) .......................... 485,000
Overapplied overhead cost (a) ‒ (b)................ -12,000