(1) A manufacturer has shown as amount of Rs. 19.

310 in his books as “Establishment “which really includes the following expenses: Rs Interest on debentures 1200 Agents’ commission 6750 Warehouse wages 1800 Warehouse repairs 1500 Lighting of office 70 Office salaries 1130 Director’s remuneration 1400 Travelling expenses of salesman 1760 Rent, rates and insurance of warehouse 310 Rent, rates and insurance of office 230 Lighting of warehouse 270 Printing and stationery 1500 Trade magazine 70 Donations 150 Bank charges 100 Cash discount allowed 770 Bad debts 300 From the information prepare a statement showing total: (a) Selling expenses. (c) Administration expenses : (b) Distribution expenses. (d) Expenses which you would exclude from costs. (2) 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 Direct wages Factory rent and rates Office rent and rates Plant repairs and maintenance Plant depreciation Factory heating and lighting Factory manager’s salary Office salaries Director’s remuneration Telephone and postage Printing and stationery Legal charges Advertisement Salesmen’s salaries Showroom rent Sales 57000 28500 2500 500 1000 1250 400 2000 1600 1500 200 100 150 1500 2500 500 116000

(3) The following particular have been extracted from the book of J.K production Co. Ltd., for he year ended 31st march 2005. Stock of materials as on 1st April, 2004 47,000 Stock of materials as on 31st March, 2005 45,000 Materials purchased 2,08,000 Drawing office salaries 9,600 Counting house salaries 14,000 Carriage inwards 8,200 Carriage outwards 5,100 Donations to relief fund 4,300 Sales 4,87,000 Bad debts written off 4,700 Repairs of plant, machinery an tools 8,600 Rent, rates, taxes and insurance (factory) 3,000 Rent, rates, taxes and insurance (office) 1,000 Travelling expenses 3,700 Travelling salaries and commission 7,800 Production wages 1,45,000 Depreciation written off on machinery, plant and tools 9,100 Depreciation written off on office furniture 600 Director’s fees 6,000 Gas and water charges (factory) 1,000 Gas and water charges (office) 300 General charges 5,000 Manager’s salary 18,000 Out of 48 working hours in a week, the time devoted by the manger to the factory and office was on an average 30 hours and 18 hours respectively throughout the accounting year. Prepare a cost sheet showing different element of cost. (4) Mr. Gopal furnishes the following data relating to the manufacture of a standard product during the month of April 2005; Raw materials consumed Rs. 15,000 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 Unit produced 17,100 Unit 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 and profit for the period.

000 Sales of finished supervision 1.600 28.400 16.900 2. Rates and taxes --Factory Office Travelling expenses Salesmen’s salaries and commissions Depreciation written on plant & machinery On Furniture Director’s fees Electricity charges (Factory) Fuel (for boiler) 1.800 42.50. b) The net profit. insurance and works on cost 20.000 2.000 . 32.000 Rent. 2004 8.000 18.400 Work--in progress __31 December.000 40.79.000 15.400 12.38. rates.000 Finished product – 2.000 Direct wages 50.000 Stock _ 31 December.in progress—1 January. 2004: Raw materials 10. 2005: Stock of materials --.opening Closing Materials purchased during the year Direct wages paid Indirect wages Salaries to administrative staff Freight: __ Inward Outward Sales Cash discount allowed Bad debts written off Repairs of plant and machinery Rent.000 2. discount allowed and selling costs Re. he following details has been extracted for the year ending March 31. (6) From the books of account of M/s ZYX Enterprises. 2004: Raw materials 11.400 24.000 48. 2004 Purchases of raw materials 60.800 14.000 Carriage inward tons of the commodities were produced during the period.(5) The following extract of costing information relates to Commodity a for the year ending 31 December. 0.000 Finished products __ 4.000 8.000 Cost of factory supervision 4. Prepare a production statement to ascertain: a) the cost of the output of the period and the cost per ton of production.000 tons 8.400 12.400 33.000 Stock-1 January.000 64.000 Advertising.00.000 tons _ Work.000 20.000 6. 2004 2.000 32.40 per ton sold.

500 Expenses on purchases 1.000 Work –in – progress on 30 September.000 Rent. 2005 31. supplies you the following details from its cost records.000 Advertising 5.500 Stock of finished goods on 1 September.500 Indirect wages 2.750 Sales 2. The following additional information is supplied to you.20.500 Travelers wages and commission 6. 2005 75. (c) cost of production.000 Manufacturing expenses 50. You are required to submit a statement showing the price at which machines would be sold so as to show a profit of 10% on the selling price. (b) Wages rates will rise by 5 per cent. Manufactured and sold 1.000 Depreciation of plant and machinery 3. Stock of raw materials on 1 September.00.200 sewing machines in 2005.000 Selling expenses 30. (8) Usha engineering work Ltd.000 The company plans to manufacture 1.500 Carriage outward 1. From the above details you are required to prepare a cost sheet to show: (a) Prime cost. 2005 35.000 sewing machines in 2004.800 Manager’s salary 48. rates and power 15.000 Work-in progress on 1 September.000 Factory rent.000 Stock of raw materials on 30 September.000 Sales 4.000 Prepare a cost sheet giving the maximum possible break-up of cost and profit. rates and insurance 10. Cost of materials 80.000 General expenses 20. (d) total cost.00.Sale of scrap 500 General charges 24.000 Wages paid 1. (b) factory cost.000 Office rent and taxes 2.000 Stock of finished goods on 30 September.000 The manager’s time is shared between the factory and the office in the ratio of 20:80. (e) profit. . 2005 54. 2005 28. 2005 91.000 Purchase of raw materials 66. (a) The price of materials will rise by 20 per cent over the previous year’s level.500 Direct wages 52. Following are the particulars obtained from the records of the company.000 Salaries of managerial staff 60. (7) The PET chemicals Co.

000 Direct wages 12.800 Running expenses of machines 4. (e) Other expenses will remain unaffected by the rise in output. (e) Selling cost was RS.000 pairs of which 36. The total expenses during a period as shown by the books for the assembly of 600 of the type A and 800 of the type B vehicles are as under: Materials 1.00. manufactures two types of shoes A and B. (d) administrative overhead for each type was 150% of direct wages. (g) Selling price was RS.00.000 were sold.000 pairs of which 1. 1. 98.500 Works general overhead 30.60. 28 for type B per pair. (9) A company makes two distinct types of vehicles.20. (b) The direct wages for type B shoes were 60% of those of type A shoes.400 Depreciation 2. 44 for type A and RS.(c) Manufacturing expenses per unit will rise in proportion to the combined cost of materials and wages.00 There was no work-in-progress at the beginning or at the end of the year.000 __________ 27. A and B.000 3.000 8. (c) Production overhead was the same per pair of A and B type.200 Labour amenities 1. (f) production during the year were : type A 40.000 Administration and selling overhead 26.000 Stores overheads 19.40. 2005 were: 15. Direct materials Direct wages Production overhead . (10) Jolly shoes Co. It is ascertained that (a) direct material in type A shoes consists twice as much as that in type B shoes. type B 1.000 were sold. production costs for the year ended 31st March.800 The other data available to you is: A: B Material cost ratio per unit 1: 2 Direct labour ratio per unit 2: 3 Machine utilization ratio per unit 1: 2 Calculate the cost of each vehicle per unit giving reasons for the bases of apportionment adopted by you. Prepare a statement showing cost and profit.00.50 Per pair. (d) Selling expenses per unit will remain unchanged. Type Q -----1. (c) Production overhead was same for both types. manufacturing two types of pens P and Q. Direct labour costs for his period were RS. A physical verification taken after the flood revealed the following valuations. 1.20.000. 10 per for the type Q.000 2.000 and manufacturing overhead has historically been 50% of direct labour.000 It is further ascertained that: (a) Direct materials in type P cost twice as much direct material in type Q.000.70.000 (g) sale during the year: Type P -----36. 2004.000 1. 14 per pen for the type P and RS. . a flash flood damaged the warehouse and factory of ABC Corporation completely destroying the work-in-progress in inventory there was no damage to either the raw materials or finished goods in inventories.00. the cost date for the year ended 30th September. 80. 1. Raw material purchases were RS. 2004. profit and also total sales value separately for two types of pens P and Q.000 96.2. The sales for the first six months of 2004 were RS.19. (12) On June 30. 2005 is as follows: Direct materials Direct wages Production overhead 4. Compute the cost of work-in-progress inventory lost at June 30.(11) Pee co.00.000 30.000 Type Q -----1. (e) Selling costs were 50 paisa per pen sold for both types.20.000 7.24.000 0 1. prepare a statement showing per unit cost of production.40. (f) Production during the year: Type P -----40. consisted of the following: Raw materials Work-in-progress Finished goods 62. 2004 by preparing a statement of cost and profit.000 Selling prices were RS. (d) Administration overhead for each was 200% of direct labour.000 A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales.000 Rs. Raw materials Work-in-progress Finished goods The inventory on Jan.000 1. total cost.15. (b) Direct wages for type Q were 60% of those for type P.

3 each 18.000 units Prepare a cost sheet and show the profit (15) A factory produces a standard product.000 Direct wages 20. Cost of materials 6.000 Other direct expenses 10000 Factory overheads 100% of direct labour Office overheads 10% of works cost Selling and distribution expenses Rs. 2005: Raw materials consumed 20.000 Closing stock 4.000 Factory overheads 3. from which you are required to prepare a “cost sheet” for the period ended 31 July. 5.000 hours.00. 0.000 Machine-hours worked 1. distribution charges have gone down by 10% and selling and administration charges have each gone up by 15% at what price should the product be sold so as to earn the same rate of profit as in 2004 ? Factory overheads are based of wages and administration.000 wages RS.000 Purchases 85. (14) The following data relate to the manufacturing of a standard product during the four weeks ending on 31st March. Machine-hour rate Rs.40 Per unit Units produced 20. 16. 2005: Opening stock 10. 2 per hour Office overhead 20% on works cost Selling overheads Re. selling and distribution overheads on factory cost.000 Distribution charges 1. the following particulars have been extracted for the year 2004. 8. The following information is given to you.40.000) Produced during the period 10.24.000 units .000 Direct wages 12.000 units In hand at the end of the period 2.000 units Units sold at RS.000 A work order has to be executed in 2005 and the estimated expenses are: Materials RS.000 Administration charges 3.00.000 Selling charges 2.00.000 Wages 5.000 Assuming that in 2005 the rate of factory overheads has gone up by 20%.000 Profit 4.(13) In respect of a factory. 2 per unit sold Units of finished product: In hand at the beginning of the period units 1.000 (value Rs.20.36.

Also. 700 __________ _________ Total RS.000 Direct labour 28. 25. 1.200 RS.800 RS.800 3. 1.000 Advertising.600 tons of commodities were produced during the period: You are required to prepare a cost statement showing the cost and profit.600 __________ _________ During the year.000 1.000 1. Prepare a statement of cost of production. Raw materials: Purchases 40.10. (17) The following information relates to a commodity for the half year ended 30th June. 600 sets are produced.. 2005 Cost of factory supervision Sales of finished products 1.600 8. rates.600 24.32.600 tons) Stock on 30 June.300 Work-in-progress: opening closing Materials RS. 2005 Raw materials Finished products (1. (16) Z company is manufacturing transistor sets and the following details are furnished in respect of its factory operations for the year ended 31st December. 2005 Raw materials Finished products (3.500 Office and administration expenses 5. There was no work-in-progress either at the beginning or at the end of the period.000 44. 2005: Purchase of raw materials Direct wages Rent.400 Manufacturing expenses RS. discounts allowed and selling cost 75 paisa per ton sold. insurance and work on cost Carriage inward Stock on 1 January. . 600 RS.000 RS.500 Labour RS.464 -------5. find out the selling price per unit on the basis that profit mark-up is uniformly made to yield a profit of 20% of the selling price. 2005 Work-in-progress 30 June.000 Closing stock 6.584 22.000 17. 2004.000 Opening stock 8. 1. 2.280 17. 1. 3.000 Manufacturing expenses 8.30.200 tons) Work-in-progress 1 Jan.

000 Factory indirect wages 15.000 Purchases of materials: 1.2004: Direct materials 90.500 Selling expenses 5.75.000 Other expenses for the year were: Selling expenses 10% of sales Administrative expenses 5% of sales. You are required to prepare: (a) cost sheet for the year 2004 showing various elements of cost per unit.500 Sale proceeds of scrap 2.(18) Modern manufacturing company submits the following information on 31 March.000 Direct labour 65.000 Inventories at the beginning of the year were: Finished goods 7. the selling price was reduced to RS. It was estimated that production could be increased in 2005 by 50% due to spare capacity.000 Factory overhead was 60% of the direct labour cost: Inventory at the end of the year were: Work-in-progress 6. 2005.12. 31 per unit.000 Materials inventory at the Beginning of the year 3. and (b) Estimated cost and profit statement for 2005 assuming that 15.500 Defective work (cost of rectification) 3. .10.000 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.000 TV values manufactured during the year ending 31.000 Clerical salaries and management expenses 33.60 per unit sold and all units were sold.000 Finished goods 8.000 Lighting of factory 5. 31.000 End of the year 4. Sales for the year 2.000 Work-in-progress 4.000 Direct wages 60. Rates of materials and direct wages will increase by 10%.000 Plant repairs and maintenance and depreciation 11.500 The net selling price RS. Prepare statement of cost Television Enterprises supply you the following information for 10.000 Power and consumable stores 12. 2005. As from 1 January.

000 respectively as having been incurred on job no. dept. Materials RS. has completed all jobs in hand on 30t Dec. 415 of standard radio company. A--. 40. Materials 70 Direct wages 18 hrs. You are required to calculate the cost of job 415 and calculate the price to give profit of 25% on selling price.. dept.000 for 300 labour hours Fixed overheads: Estimated at Rs..000 normal working hours. 2004 the last day of the accounting year.60 hours @ RS. 12.40 hours @ RS. 2004. Calculate the cost of work-in-progress of job no.000 Indirect labour Rs.PROBLEMS ON JOB COSTING (1) The following direct costs were incurred on job No. 30. 303 to determine the selling price.500 labour hours B Rs. X 8 hrs.000 for 2. 447. 4. Overhead for these three departments were estimated as follows: Variable overheads: Dept A Rs. 40. 2. 8.. Z 4 hrs. showed direct materials and direct labour costs of RS. 15..) Chargeable expenses (special stores items) 5 _______ Add: 33 1/3% for expenses 120 40 ________ Total cost 160 __________ .20 hours @ RS.000 for 1.000 Miscellaneous factory overhead Rs. The cost sheet on 30th Dec. (3) A shop floor supervisor of a small factory presented the following cost for job no.50 45 (Dept. 2004. 3.000 for 200 labour hours C Rs. 6010 Wages: Dept. The costs incurred by the business on 31st Dec. Per unit RS.000 and RS.000 It is the practice of the business to make the jobs factory overheads on the basis of 120% of direct labour cost. 2. @ RS. 447.000 Direct labour (job 447) Rs. B --. 50 per hr. 20 per hr C --. were as follows: Direct materials (job 447) Rs. except job no. Y 6 hrs. 30 per hr. 447 on 31st Dec.. 2. (2) Mayur Engineering engaged in job work.

Direct materials 1.000 4.000 Gross profit b/d 50.000 Assembly shop ( 10.Z are similar.000 ___________ selling expenses Net profit It is also noted that average hourly rates for the 3 departments.200 Assembly shop 51. (3) Add 20% to total cost to determine the selling price.000 Works overheads Machine shop 88. You are required to: (1) Draw up a job cost sheet.000 81.50. 1.000 _____ __ 50.50.000 2. Z 8.000 30.000 1.40. RS.000 Administrative overhead Selling overhead Distribution overhead 90.000 ________ 2.000 hours ) 63. X 5.800 1.000 62.000 Dept.11.000 hours) 48.50.100 .000 Direct wages: Machine shop ( 12.000 Dept.50.000 _______ 50.000 Work cost Gross profit c/d RS.000 Dept Z 2.000 2. (2) Calculate the entire revised cost using 2004 actual figures as basis.Y.000 Sales less returns 2. Y 12.Analysis of the profit/loss account for 2004 shows the following: Material used Direct wages : Dept. X 10.000 special stores items works overheads: Dept.000 50.00. (4) From the records of a manufacturing company.000 16.000 30. the following budgeted details are available: Rs. X.000 Dept Y 9.99.000 _______ 20.

8 and machine No.000 Selling price for the above job Rs. Considering only machine shop cost. (6) The estimated material cost of a job is Rs. 6 welders worked on the job for 5 days of 8 hours each.000 Administration overheads 3. Direct material = 25 kg @ Rs.000.000 Direct wages 4. In a machine shop it will require machining by machine No. 11 are respectively RS.80/kg.000. 80. 15kg @ Rs. 2004.000 Chargeable expenses 1. 2198.00. 5.000 as against RS. total direct wages for the period being Rs.000 Selling and distribution overheads 2. 1. 600 and labour charge directly to the jobs was Rs. You are required to prepare a statement showing the profit earned for the year 2004 from the job and an estimated price of a job which is to be executed in the year 2005. 18. 2198 was commenced on 10 October 2005 and completed on 1 November 2005.Assuming that the company follows absorption method of costing. 8 for 20 hrs and by machine No. Other expenditure of the concern not apportioned for calculating the machine hour or the direct labour rates amounted to Rs.500 office expenses. 400. 5. Materials used were Rs. the direct labour hour rate for welders is 20 paise.000 respectively for the . 2. 20. 7.50 Machine No. 48. the direct wages in all other shops last year amounted to Rs. 160 used for 30 hours.000 Factory overheads 2.50. wages and chargeable expenses required will be of Rs. Machine hour rates for machine No. Direct materials 3. 16. Prepare a quotation which guarantees 20% profit on selling price.4. 2. 215 used for 40 hours. 37. 20.000 as against Rs. the machine hour rate is Rs. Machine No. 11 for 6 hours. Rs.000 Ascertain the works cost of job No.000 and direct labour cost is likely to be Rs. Materials. (b) Work out a cost Estimate for the following job based on overhead so computed.000 and Rs. Other information was as follows. the machine hour rate is Rs.000. you are required to: (a) Prepare a schedule of overhead Rates from the figures available stating the basis of overhead recovery rates used under the given circumstances.000 factory overhead. Last year factory cost of all jobs amounted to RS.00/kg Direct labour (on the basis of hourly rate for machine shop and Assembly shop): Machine shop 30 hours and assembly shop 42 hours (5) Job no. 20.000. 3. 10 and 15. (7) The following expenses were incurred for a job during the year ended 31st December.

000 Selling charges 2. Direct labour = dept.000 Distribution charges 1. B variable overheads Rs. wages Rs. the following particulars have been extracted for the year 2004. (10) The following expenses were incurred on job No. Direct materials = 34 units @ RS. The various overhead should be recovered on the following basis while calculating the estimated price: (a) Factory overheads as a percentage of direct wages. 664. Assuming that in 2005 the rate of factory overheads has gone up by 20% distribution charges have gone down by 10% and selling administration charges have each gone 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 2004? Factory overheads are based on wages and administration selling and distribution overhead on factory cost. C 60 hours at Rs.000 Hours to be worked. (8) In respect of a factory.000 Total hours to be worked 50.24. A 40 hours at Rs.000 Wages 5.000 Administration charges 3. The cost estimator has produced the following data. 5 per hour (3) works overhead expenses of these departments were estimated as under: . Material Rs.000 A work order has to be executed in 2005 and the estimated costs are.000 Factory overheads 3. 8.000 Profit 4.K Ltd has to quote a price for job No. 9 per hour Dept. Cost of materials 6.20.00. 10. You are required to prepare a job cost sheet.80 Per hour The following additional information is extracted from the company’s budgets. 1.000. RS. A—12 hours @ RS.80 Per hour dept. 1. 450.000 Hours to be worked 18. 5.job. B 50 hours at Rs.36.00. (9) R. 18. Dept. (2) Wages paid: Dept.000 Dept.000 Profit is taken at 20% of the selling price.00. 2 per hour. (1) Materials. A variable overhead Rs. 9. 1.000 Fixed overhead for the company Rs.00. A—12 hours @ RS. 8 per hour Dept. (b) Administration and selling and distribution overhead as a percentage of factories cost.

000 units are produced. 30.000 Direct expenses Rs.000 for 5. You are required to calculate the cost of job No.000 for 3.25 each. 2. 1 per unit.Dept.000 working hours Dept C Rs. Process 1 Process 2 Process 3 Material 6000 3000 2000 Labour 5000 4000 5000 Direct expenses 1000 200 1000 The indirect expenses for the period were Rs.50. 6 per kg. Of the units introduced. 1. 1. 2 and 3. (2) The following information is given in respect of process A.10. you are required to prepare (i) process account. (4) Fifty units are introduced into a process at a cost of rupee one each.000 working hours. The following information is obtained. 2 per kg. It is the practice to recover office overhead as percentage of direct wages. 0. The total additional expenditure incurred by the process is Rs.000 for 6. A Rs. The direct labour accounted for RS. Owing to an accident. Dept B Rs.000 working hours. these possess a scrap value of Re. • Scrap arising out of normal has a sale value of Re. 4 per kg. 12. 760. During the week ended 31st January. @ RS. 664 and its price to be quote which would include 20% profit on selling price. The normal loss is 10% of input and the net production was 500kg. 1. and (ii) Abnormal loss Account. Prepare a ledger account of process A clearly showing the values of normal and abnormal loss. PROBLEMS ON PROCESS COSTING (1) A product passes through three distinct processes to completion. 2800 apportioned to the processes on the basis of labour costs. Assuming that process scrap is saleable at RS. 5. Material 1. These processes are numbered respectively 1. 200 and the other departmental expenses amounted to RS. 75. Office expenses were RS.000 when total direct wages paid in all three departments came to RS. .000.000 Indirect expenses allocated to process A Rs. 10% are normally spoiled in the course of manufacture. (3) 600kg of a material was charged to process A at the rate of Rs.000 kg. Labour Rs. only 47 units are produced.000 Normal wastage 10% input Prepare process A account when: • Scrap value of normal loss in nil. 9.

that of process B at 50 Paise per unit and that of process C at Re. (7) A product passes through three processes A. 39. Process B-5 per cent. 40. The normal wastage of each process is as follows: process A-3 per cent. (8) A product passes through two processes. Actual production was 920 units.(5) Fifty units are introduced into a process at a cost of rupee one each. 40. and (ii) Abnormal gain Account.000 Direct labour RS. The output of process I becomes the input of process II and the output of process II is transferred to warehouse.000 RS. you are required to prepare (i) process account. 10 per unit.000 Normal loss 8% 5% Output RS. 1.25 each. The quantity of raw materials introduced into process I is 20. 10. The cost and output data for the month under review are as under: Process I Process II Direct materials RS. (6) From the following information prepare a process account. 1 per unit.00 The company’s policy is to fix the selling price of the end product in such a way as to yield a profit of 20% on selling price.00 3.000 units were issued to process A in the beginning of October 2005 at a cost of Re. 0. Wastage of process A was sold at 25 paise per unit. 60. 18. The total additional expenditure incurred by the process is Rs. 10% are normally spoiled in the course of manufacture.000 units at Rs. .500 The normal process loss has been estimated at 10% of the input which can be sold at Rs.000 Production overhead 3. /unit 2.000 Production overhead RS. 40 per unit were introduced in process I: Labour cost RS. 5. 30. 1 per unit. B and C. 40.000 Material 20. these possess a scrap value of Re. assuming that there were no opening or closing stocks. 30.000 kg at RS. The other expenses were as follows: Process A Process B Process C Sundry materials 1000 1500 500 Labour 5000 8000 6500 Direct expenses 1050 1188 2009 Actual output 9500 units 9100 units 8100 units Prepare the process Accounts. Required: (h) prepare the process Accounts (ii) Determine the selling price per unit of the end product.400 Loss realization of Rs. Also give the abnormal wastage and Abnormal gain Accounts. Of the units introduced. 17.000 RS.000 RS.000 RS. and process C-8 per cent. 10 per kg. only 40 units are produced. Owing to an accident.

000 Direct labour RS. The following additional data are obtained: Process output during percentage of normal value of scrap the week loss to input per unit Process I 950 units 5% RS.000 units are introduced to process A at a cost of Rs. From the following information you are required to prepare accounts. 24. 3 each were introduced to process I. . 23. There was no stock of material of work-in-progress at the beginning or at the period.000 Manufacturing Expense RS.980 2.000 4.468 Input in process A Units 20. 2005: Items Total Process I II III Rs. The output of each process passes direct to the next process and finally to finished stock.000 1. 10 per100 units. Rs.000 Production overhead 9.000 Normal wastage % of input 5% 10% Value of normal wastage Rs.000 ___ Input in process A Rs.000 14.100 26. The output of A passes to B and of B to finished stock. 28. A B Materials consumed RS.800 16.400 2. 2 per unit of each process respectively (11) A product passes through two processes A and B and thereafter it is transferred to finished stock. (10) Prepare process Accounts from the following data: X article passes through two processes.000 units at Rs.640 units Normal wastage of each process is 5% and 10% of units introduced respectively.600 1. Rs.100 27. The output of each process is: Process A = 1. Rs. The following information is obtained from the accounts for the week ending 31st October.000 18. The costs of the processes are: Process A Process B Labour 45. 1 and RS. Direct materials 7.962 Direct wages 9.000 14. 20.360 Mfg.000 ____ Output Units 18.800 units B = 1.(9) Product B is obtained after it passes through three distinct process. Production overhead is recovered on 100% of direct wages. 5 per unit.000 2. 2 Process II 840 10% 4 Process III 750 15% 5 Prepare process cost accounts and abnormal gain or loss accounts. Expenses 21.10 per100 units Rs.000 3.542 2. The scrap is saleable at Re.

Prepare process accounts. .) 3.750 9.050 Normal loss as % of input 5 10 5 Scrap value per unit (RS. It is ascertained that in each process normally 5% of the total weight is lost and 10% is scrap which from processes A and B realizes Rs. The following are the figures relating to both the processes: Processes A processes B Materials in tones 1.000 10.) 1 5 6 Direct wages (RS. Other information for the month was as follows: Processes I II III Output (units) 4. From the past experience it is ascertained that wastage is incurred in each process as under: process A 2% process B 5% and process C 10%. the output of each process has been as under Process A 19500 units Process B 18800 units Process C 16000 units There was no stock work in progress in any process in the beginning and in the end of March.000 5.000 units at Rs. Following is the information regarding the production of March 2005 Process A Process B Process C materials 12000 8000 4000 direct Labour 16000 12000 6000 machine expenses 2000 2000 3000 other factory expenses 3500 3800 4200 20000 units have been issued to process A at a cost of Rs. 20000. (13) The product of a manufacturing concern passes through two processes A and B and then to finished stock.910 15.000 Direct expenses (RS. (14) A product is completed in three consecutive processes.500 Overhead total RS. There was no stock of work-in-progress in any process.000 chargeable as percentage of direct wages. 80 per 100 units.250 Output in tones 830 780 Prepare process Accounts showing cost per ton of each process. During a particular month. 2 per unit. The wastage of processes A and B is sold at Rs. 200 per ton respectively. 32.300 4. 10 per 100 units and that of process C at Rs.(12) The product of a company passes through three distinct processes to completion.000 Manufacturing expenses in rupees 8.700 4.) 9.000 8. the input to process I of the basic raw material was 5.000 70 Cost of materials in rupees per tones 125 200 Wages in rupees 28. 8 per ton and Rs.000 5.

000 28. The output of each process is transferred to the next process and the finished output emerges from the process III and transferred to stock. There was no stock of materials of work-in-progress at the beginning or at the end of the month. Prepare the process accounts.600 32..960 5. where applicable. The scrap generated out of wastage has a sale value of 70 paisa per unit. 80 paisa per unit and Rupee per unit in the process I. II and III respectively. Processes I II III Material used (RS. I. .) 5. The normal wastage in each process is 5%.) 4.000 units of raw input at cost of RS.000 units at Rs.000 for the month. Processes I II III Direct material (RS.200 3.000 Process I was fed with 40. There was no stock of work.20.000.000 Direct labour cost (RS. 6 each were introduced in process I. abnormal loss and abnormal gain.There was no opening or closing work-in-progress stock.000 40.20.) 40. 18. viz. The following information is collected for January 2005. Compile three process accounts and finished stock account with details of abnormal loss and gain.000 40.000 Production expenses (RS.) 80. Production overhead was RS. II and III respectively (calculated with reference to the number of units fed into each process). (15) A product is obtained after passing it through three processes.000 Output in the month (units) 950 840 750 Normal loss 5% 10% 15% Value of scrap per unit (RS) 4 8 10 Additional data: 1.000 Output in units (actual) 38.000 60.000 60. 7% and 10% for the processes I.) 1.000 6. II and III. The details of cost data for the month are given below.000 34. Prepare account indicating normal loss. (16) The finished product of a manufacturing company passes through three processes.000 40. 3.924 Direct wages (RS.000 8.-in-progress in any process in a particular month.

(17) A product passes through three processes to completion.000 units were issued to process I @ Rs. Manufactures and sells three chemicals produced by consecutive processes known as X.348 Cost per tonne materials (RS.710 20% 51 passes to the (19) XYZ Ltd. 5 each. Wages 2. (18) A product passes through three processes namely 1. Expenses (RS. X Y Z Sent to warehouse for sale 25% 50% 100% Passed on the next process 75% 50% __ The following particulars relate to the Month of May: Materials used (tones) 1.462 production overheads 3. Rs. Prepare the process accounts: Process I process II Raw material used (tones) 1. II and III respectively.000 ___ Cost per tonne (RS. In January 2005 the cost of production was given below: I II III Material Rs.) 72. which from processes X and Y realized Rs.800 Weight loss 5% 10% Scrap (sold at Rs. 2 and following information.800 25. in processes II 5% and in process III. 3. In each process 2% of the total weight put in is lost and 10% is scrap.760 18.226 5. Wastage realizes Rs. Y and Z. The details of these three processes are as follow: . 3 per unit. manufacture a chemical in three processes. Prepare the necessary accounts.500 4. Rs.) 30. 50 per tonne) 50 30 Two-thirds of output of process I and one-half of process 2 output next process and the balance is sent to warehouse for sale. Rs.500 40. 6 per unit in processes I. 200 a tonne. Rs. process II-870 units and process III-800 units. it is 10%.) 200 ____ Manufacturing wages and Expenses (RS. Actual production: process I-920 units.000 3. showing the cost per tonne of each product (20) Bangalore products Ltd. The products of the three processes are dealt with as follows. From the process III _____ _____ 10.100 Prepare an account for each process. 5 per unit and Rs. 100 a tonne and from Z.000 1.000 140 1.) 120 200 80 Mfg. Normal loss in process I is 10%.020 3.

87. .000 Direct expenses 6. medium and hard. 64 per tonne.580. 100 Rs. Processes a patent material used in buildings . where necessary. (22) A product through three processes A.000 5. 15. Rs. the details of expenditure are: Process I 2.Process I Process II Process III Transfer to next process 662/3% 60% ____ Transfer to warehouse for sales 331/3% 40% 100% In each process out of the total weight put in.500 5% 50 tones Rs. Rs. 20.10. 40 per tonne. 4% is wasted and 6% is scrap.soft.200 Selling price per unit of Output 120 165 250 Management expenses during the year were RS. The entire output of process III is sold. 500 Process III ______ ______ RS. For the month of October.500 10% 30 tones Rs. Prepare process Accounts. 50 per tonne) Sale price per tonne 1.000 Cost per unit Rs.000 these are not allocable to the processes.000 65. The scrap is sold at Rs.000 and selling expenses were RS. B and C.10 and Rs. Process I Raw materials used Cost per tonne Manufacturing wages and expense Weight lost ( % of input of the process ) Scrap ( sale price Rs. (21) Chemicals Ltd. 80. Sundry materials 10.500 and selling expenses Rs. and III processes respectively. Production labour cost is: process I RS. the office and administration expenses worked out at RS.00 tones Rs. Rs.39. 350 Process II ____ _____ RS. 12 per tonne in I. process III 11. For the month of October.000 18.6. 200 RS.150 27.000.520 tonnes of materials at RS.17. Calculate the cost per tonne in cash process. Process II 320 tonnes of materials at RS. Process III 2. 800 Mana gement expenses were Rs. Prepare the three process accounts and a statement of profit.608. II.567 which is to be charged equally for all the process.710 20% 51 tones Rs. Two third of the output of process I and one-half of the output of process II are passed on to the next process and the balances are sold. Make approximations. process II 12. 50.560. The details of expenses incurred on the three processes during the year were as under: Processes A B C Units introduced 10.the Material is produced in three consecutive grades .000 Labour 30. 28 per tonne. 10.000 80.000 15.800 tonnes of materials at RS.

process C: 210 units. 10 per unit. A B Output passed to the next process 60% 80% Output sent to warehouse for sale 40% 20% The figures relating to the processes are: Raw materials consumed 2. showing cost per kg of each product. and that of process C at Rs.000 kg. 1. Two-thirds of output of process A and one half of the output of process B were passed on to the next process and the balance was sold. C ___ 100% 500 kg.000 kg.15% and C . Rate of raw materials (per kg.300 units. 2 per unit that of B at Rs. B and C. 5 per unit and of process C at Rs. 10 per kg. RS. process B : 15% and process C: 20%. The entire output of process C was sold. B ..2.720 Sale price of output (per unit) 70 100 200 Actual output of the three processes was __ Process A: 930 units.392 Direct expenses 600 8.640 Output 1.000 Manufacturing expenses Rs. the details of expenses incurred on the three processes during the year 2004 were as under: Processes A B C Units issued 1. calculated on the input of every process was: Process A : 5% .000kg.500 500 Labour 2. Prepare the three process accounts and the profit and loss account.000 these are allocable to the processes but to be considered while drawing the income statement. RS. The entire output of process C was sold. The product of three processes is dealt with as follows.) Rs.900 1. (23) A manufacturer produced three products in consecutive processes A.000 1.000 Rs. Prepare the process accounts. 1 per unit that of process B at Rs. B and C. It is known from the past experience that wastage occurs in the process as under: The scrap value of wastage in process A is Rs.5. 100 48. 3 per unit. 20 50 Sundry materials and direct wages Rs.20%.400 units and C .800kg. The normal loss of the three processes. 10.800 kg.9. B . Two-thirds of the output of process A and one-half of the output of process B was passed on to the next process and the balance was sold. calculated on the input of every process was: process A . The loss of process A was sold at Rs.815 2. 20 per kg. . Selling and distribution expenses during the year were RS. 15 per kg and in process C Rs.000 6. 24. The normal loss of the three processes. 6 per unit. Cost per unit 50 ___ ___ Sundry materials 1.000 35.5%. process B: 540 units. in process B is Rs.600 8.000 23. 3 2.000 20.100 units. (24) A product passes through three processes A. 2. The loss of process A was sold at Re.Actual output of the three processes was: A .

(26) The following details are extracted from the costing records of an oil refinery for the week ended 30 September 2005.750. The losses of the three processes were sold at RS. You are required to show the accounts in respect of each of the following stages of .500 25.000 2.000 1.110 Direct expenses 2.400 5 Process B 5. (25) Product X in a manufacturing unit passes through three processes—A. B and C. three-fourth of the output of process A and two-third of the output of process B were transferred to the next process and the balances were sold outside. A B C Units of input issued 9. Purchase of 500 tonnes of copra RS.500 1.000 which is not allocated to processes. 248 tonnes of refined oil was finished for delivery. RS.200 8.000 Loss in weight in crushing 25 tonnes. 6. Copra sack sold RS.00. 45.000 RS. 2. 5 per unit for process A.000 Crushing plant Refinery Finishing Cost of labour 2.500 Electric power 600 360 240 Sundry material 100 2. 250 tonnes of oil was produced by refining process. Prepare the three process accounts and a statement of income considering a total selling and distribution expenses of RS. RS.250 7.660 3 During the year.000 15.000 ___ Repairs to machinery and plant 280 330 140 Steam 600 450 450 Factory expenses 1. 400 175 tonnes of copra residue sold RS.100 Selling price per unit of output 200 280 600 The actual outputs obtained vis-à-vis normal process losses from the three processes were: Output (units) process loss (%) Process A 8.Prepare the three process accounts and a statement of income. sold outside.500 300 tonnes of crude oil was produced.700 10 Process C 3. the expenses incurred in the three processes during the year 2001 were as under.200 26.000 Direct labour 80. Cost per unit 150 ___ ___ Sundry materials 23. 45 tonnes by-product was obtain from refining valued at RS. 10 per unit for process B and RS.07. 11. 15 per unit for process C. RS. The entire output of process C was however.320 660 220 Cost of casks ___ ___ 7.

100 and 35 tonnes of oil cake were sold at RS. Crushing Refining Finishing Wages RS. 2. (c) Finishing process (27) The following details are taken from the books of an oil mill for the month of March. 700 RS. 60 per ton.250 Make out accounts in respect of each process and calculate the cot of the product per tonne at the end of each process.000 RS. 8.000 .000 RS.5 tonnes of by-product from refining process were valued at RS. 51 tons of oil was produced in the refining process. and selling Fixed overhead .1. 13.000 RS. 1. Supplies you the following data: Direct material cost Direct wages Variable overhead . 50 tonnes of refining oil were furnished for delivery. (a) Copra crushing process. 8.000 RS.manufacture for the purpose of arriving at the cost per tonne of each process and also the total cost per tonne of finished oil. Loss in weight in crushing was 5 tonnes.Factory Admn and selling Sales RS. 2.000 RS. Empty bags of oilseeds were sold for RS. 48.350 60 tonnes of crude oil produced. 1. 20.Factory Admn.25. PROBLEMS ON ABSORPTION COSTING (1) Zen Ltd.000 RS.000 RS. (b) Refining process. 900 Sundry stores 200 600 100 Electricity 400 350 200 Steam 300 250 200 Factory expenses 500 400 300 Container __ ____ 2. Purchase of 100 tons of oil seeds at RS. 22.000 per tonne.

Y and Z one equitable bases.000 1. 15 Prepare (a) Income statement under marginal costing.500 9.000 1.100 sales Z RS 7.200 1. 2.000 1.500---900 3.000 units There was no opening stock. if any.000 9.000--61.000 1.RS.500 6. The company uses a first-in first-out actual costing system. Variable manufacturing cost per unit RS. Production –1100 units. 0.200 Variable selling and administration overhead per unit Re. (4) XYZD limited sells its products at RS.50 Fixed selling and administration overhead RS.500 1.500 4. 2005. Supplies you the following data for the year ending 31st Dec. 7 Fixed manufacturing overhead (total) RS.000 30. 3 per unit.Prepare an income statement under absorption costing.000 3. A new fixed manufacturing overhead allocation rate is computed each year by dividing the actual fixed manufacturing overhead cost by the actual production costs. sales 1. 700 year II 1.000 32. (c) Explain the difference in profit under marginal and absorption costing.000 RS.000 Fixed factory overhead and fixed selling overhead were apportioned to products X. Direct materials Direct wages Factory overhead__fixed variable 3. (3) XYZ ltd.fixed variable 2. 500 Sales (units) Production (units) Costs Variable manufacturing . The following simplified data are related to its first two years of operation: Year I 1.500 600 16.900 selling overhead --. RS. (2) From the following information prepare an income statement under: (a) Marginal costing (b) Absorption costing Products _________________________________ _____ X Y .000 9. 400 Selling price per unit RS.000 3.400 RS. (b) Income statement under absorption costing.

200 400 Required : (i) prepare income statements based on : a.00.000 . (ii)Give reasons for the difference in the answer.000 20.000 6. Required: (i) present income statement for ABC Motors in March and April under (a) variable costing and (b) absorption costing. Data relating to march and April. variable costing for each year.00. 10.Fixed manufacturing Variable marketing and administration Fixed marketing and administration 700 1. (ii) Explain the differences between (a) and (b) for March and April. ABC Motors assembles and sells motor vehicles.000 The selling price per motor vehicle is RS.00. 21. are: March Unit data: Beginning inventory 0 Production 500 Sales 350 Variable-cost data: RS. Manufacturing costs per unit produced 10.00.000. It uses an actual costing system. in which unit costs are calculated on a monthly basis.000 3.000 Marketing costs 6.ss April 150 400 520 RS. absorption costing and b.000 Fixed cost data : Manufacturing costs 20. 24.000 Distribution costs per unit sold 3.000 400 700 1.

000 During a month the company produced 2. Variable selling and administrative overhead per unit is Re. Selling price 40 Direct material 8 Direct labour 5 Variable factory overhead 2 Fixed factory overhead RS. 10.60. 24. Normal capacity utilization is reckoned as 90%.000 Units produced in year 2006 1. (i) calculate the profit for the year (a) by absorption costing method and (b) by normal costing method.0.20.20 Fixed factory overhead RS. 3. Variable selling costs are RS.00.000 higher than the standard. 60.000 per year.50 Variable factory overhead RS.000 units.000 units and sales were 1. the production was 1.6 Fixed selling overhead per year were RS. (ii) Explain the difference in the profits. 3. The fixed costs are RS. Production and sales data for the year 2005 and year 2006 are as follows: Units produced in year 2005 2.000 per year. 1. 1. Standard variable production costs are RS. the following is the standard cost data per unit of product ‘X’ RS. 75.000 Units sold in the year 2005 1.000 units per year.000 units of the product and sold 1. prepare income statement for the two years under (i) Absorption costing. Has a production capacity of 2.000 Units sold in year 2006 1.50 and fixed selling administrative overhead are RS.50.00 Production at normal capacity is 2. 1. and (ii) Marginal costing.000 per year. 2006.60 Direct labour RS. 1. 3 per unit and fixed selling costs are RS.000 units per year) variable selling overhead RS. Top class company supplies you the following standard cost per unit for one of its products.000 Inventory—31st Dec. The unit selling price is RS.000 units.00.70. in the year just ended on 30th June. Direct material RS.000 Selling price in each year was RS.35. The actual variable production costs for the year were RS.20.50.60. 2005 68. 5 (based on a budgeted normal output of 36.22. The closing inventory on 30th June was 20. .500 units there was no opening stock. 2.000 units. 11 per unit.50.00. 23. XYZ Ltd.80.

RS.000 --. Explain the reasons for difference in profit.variable 15. 2005 opening stock ---.8.fixed 20.500 units and normal capacity utilization is 80% opening inventory of finished goods on 1-12005 was 1.000 --. 27. Sales 1.000 Variable factory overhead 1.40.50.overhead—fixed 5.000. Explain the difference in profit if any. 2005: RS.000 units. There was no opening stock. Prepare an income statement under— (a) Absorption costing. if any 28.000 (including variable cost of RS. and .000 units were produced but only 20.000 Direct material 2. 10.000 Fixed factory overhead 2. 50 per unit) 10. the following information is given for the year ending 31st Dec. 70. Total fixed selling and administration overheads amounted to RS. your company has a production capacity of 12.10.You are required to prepare an income statement under (i) absorption costing. and (b) Marginal costing. Prepare income statements under absorption costing and marginal costing. the company sells its product at RS.000 Direct materials 50. Variable cost RS.000 Selling and administration overhead (variable) 20. and (b) marginal costing.50.000 Production ----. Sales (@ RS.00.000 Adm.000 Selling and administration overhead (fixed) 60. 6. 10 per unit.000 units Sales --.000 26.10.000 Direct labour 3. 1.000 units were sold.20. the following information is given for the year ending 31st Dec. 60 per unit Fixed cost (Total) ---RS.000 units at RS.000 Selling overhead --. Prepare income statement under (a) absorption costing. 25. 50 per unit).000 Direct labour 20.000 During the year 24.000 Fixed factory overhead 10. During the standard variable cost per unit is RS.50 and standard fixed factory cost per unit is RS.1000 units valued at RS. RS.variable 12. 90 per unit. 1.90.20. From the following information prepare an income statement under (a) Absorption costing. and (ii) marginal costing.

00.000 1.000 units at the same price. 15. the company produced 2. 30. Produces a product which has the following costs: Variable manufacturing cost --. 50 50 Fixed production overhead RS. Comment on the results 31. (b) Marginal costing.00.000 units There are no work in progress inventories.000 Fixed production overhead per unit 10 10 ( pre-determined absorption rate ) selling and distribution costs (fixed)RS.000 12. prepare operating statements for the months of June and July using: (i) marginal costing and (ii) Absorption costing. Fixed manufacturing cost ---RS. Per unit 50 monthly costs: Direct material cost 18 fixed production overhead RS. Feb.000 Direct labour cost 4 fixed selling expenses RS. Jan. In year I. 99. 29.000 production (units) 12. 7 per unit. June July Sales (units) 10.000 Variable production overhead 3 fixed administration expenses RS. 25. and (b) marginal costing.000 per year Normal capacity ---2. Sales in units 5.00. 4 per unit.000 Variable selling costs are 10% of sales revenue and normal production capacity is 11.000 units and sold 90% at a price of RS.000 units per month.000 prepare income statement under (a) absorption costing.00.000 Production in units 10.000 10. The data given below relates to a company which makes and sells calculators.00. In the II the company produced 2. using the information given below.000 Selling price per unit RS.(b) Marginal costing Explain the difference in profit.000 5. if any.10. 50.15. 2. Selling price RS. 1. Suggest reasons why the two techniques disclose different amounts of profit. X Ltd.000 50. Prepare income statement for two years based on (a) Absorption costing.000 units and had sold 2. 100 100 Variable production cost per unit RS.RS.000 .000 10.

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