Tax Shield Education Pvt. Ltd.

Cost Accounting-


Cost Sheet ( including Job & Unit Costing )
1. The following figure for the month of April, 2004 were extracted from the records of a factory Opening stock of Finished Goods (5,000 units) Rs. Purchase of Raw Materials Direct Wages Factory Overhead Administration Overhead Selling & Distribution Overhead Closing stock of Finished Goods (1000 units) Sales (45,000 units) 75,000 12,57,100 10,05,000 100% of Direct Wages Re. 20 per unit 10% of Sales ? Rs. 36,60,000

Prepare a cost sheet assuming that sales are made on the basis of “First-in first-out” principle. 2. A factory can produce 60,000 units per annum at its optimum (100%) capacity. The estimated costs of production are as under : Direct material Direct labour Indirect Expenses: Fixed Variable Semi-variable Rs. 30 per unit. Rs. 25 per unit. Rs. 4,50,000 per annum Rs. 15 per unit Rs. 3,50,000 per annum up to 50% capacity and an extra expenses of Rs.92,000 for every 25% increase in capacity or part thereof.

The factory produces only against orders (and not for own stock). If the production programme of the factory I as indicated below and the management desires to ensures a profit or Rs. 2,50,000 for the year work out the average selling price at which each unit should be quoted: First 4 months of the year: 50% of capacity; remaining months at 80% of capacity. 3. The Modern Manufacturing Company submits the following information on 31st March, 2004: Sale for the year Inventories at the beginning of the year: Finished Goods Work – in – progress Purchase of materials for the year were Materials inventories: At the beginning of the year At the end of the year Direct labour Inventories at the end of the year: Work – in – progress Finished goods Other expenses for the Travelling expenses Administrative expenses Prepare a statement of cost. Rs. 2,75,000 7,000 4,000 1,10,000 3,000 4,000 65,000 6,000 8,000 10% of sales 5% of sales

Tax Shield Education Pvt. Ltd.

Cost Accounting-



Honesty Engineering Works has machining shop in which it manufacture two Auto parts P1 and P2 out of forgings F1 and F2 respectively. For the quarter ending December, 2004, following cost data are available : Consumption of Raw Materials - F1 F2 Wages and Salaries Stores & Spares Repairs & Maintenance Power Insurance Depreciation Factory Overheads Administrative Overheads Distribution Overheads Total Cost You are given following further information : (I) Production and Sale of P1 and P2 were as under : P1 Production (Pieces) 6,000 Sale of above pieces (Rupees) 4,80,000 P2 4,000 5,20,000 Rs. 1,50,000 2,00,000 1,53,000 12,000 15,000 16,000 8,000 50,000 68,000 64,400 75,000 8,11,400

(ii) (iii) (iv) (v)

Direct wages paid were Rs. 36,000 in case of P1 and Rs. 32,000 for P2. This basis is used for apportioning Wages and Salaries and Factory Overheads. Following machine hours were utilised in production of these products : P1 550 ; P2 450 Stores & Spares, Repairs & Maintenance, Power, Insurance and Depreciation are charged to cost of both the products on the basis of machine hours used. Administrative overheads are apportioned on the basis of respective conversion costs while Distribution overheads on the basis of their sales realisation. All the production was sold out.

Required : Prepare cost sheets of both the products and work out profit earned on each of them. 5. The cost structure of an article, the selling price of which is Rs. 25,000 is follows : Direct Material Direct Labour Overhead : 50% of the Total cost : 30% of the Total cost : Balance

Due to anticipated increase in existing material price by 25% and in the existing labour rate by 10%, the existing profit would come down by 20% if the selling price remains unchanged. Prepare a comparative statement showing the cost, profit and sale price under the present conditions and with the increase expected for future, assuming the same percentage of profit on cost as at present (calculations may be made to the nearest rupee) had to be earned.

Tax Shield Education Pvt. Ltd.

Cost Accounting-



The following figures are extracted on the Trial Balance of Go-getter Company on 30th September, 2004 : Inventories : Finished Stock Raw Materials Work-in-Process Office Appliances Plant & Machinery Buildings Sales Sales Return and Rebates Materials Purchased Freight incurred on Materials Purchase Returns Direct Labour Indirect Labour Factory Supervision Repairs and Upkeep-Factory Heat, Light and Power Rates and Taxes Miscellaneous Factory Expenses Sales Commission Sales Travelling Sales Promotion Distribution Dept.-Salaries and Expenses Office Salaries and Expenses Interest on Borrowed Funds Further details are available as follows : (I) Closing inventories : Finished Goods Raw Materials Work-in-Process Direct Labour Indirect Labour Interest on Borrowed Funds Office Appliances Building Plant & Machinery 5% 10% 12% 1,15,000 1,80,000 1,92,000 8,000 1,200 2,000 Rs. 80,000 1,40,000 2,00,000 17,400 4,60,500 2,00,000 7,68,000 14,000 3,20,000 16,000 4,800 1,60,000 8,000 10,000 14,000 65,000 6,300 18,700 33,600 11,000 22,500 18,000 8,600 2,000


Accrued Expenses on :


Depreciation provided on :


Distribution of the following costs : Heat, Light and Power to Factory, Office and Distribution in the ratio 8 : 1 : 1. Rates and Taxes two-third to Factory and one-third to Office. Depreciation on Buildings to Factory, Office and Selling in the ratio 8 : 1 : 1. With the help of the above information, you are required to prepare a cost sheet & a condensed Profit and Loss Statement of Go-getter Co. for the year ended 30th September, 2001.


Tax Shield Education Pvt. Ltd.

Cost Accounting-



A Co. makes two distinct types of vehicles A and B. The total expense during a period is shown by the books for assembly of 600 of A and 800 of B are as under :Material Wages Stores overhead Running Expenses of Machine Depreciation Labour amenities Works General Expenses Adm. and Selling Expenses Other information Material cost ratio per unit Wages cost ratio per unit Machine utilisation unit Rs. . 1,98,000 1,12,000 19,800 44,400 32,200 31,500 30,000 26,800 A :B 1:2 2:3 1:2

Calculate the cost of each vehicle giving reasons for the basis of apportionment adopted by you. 8. X and Y shoe polish company Ltd. manufactures black and brown polish in one standard size of tin retailing at Rs. 1.08 and Rs. 1.20 respectively. Following data are supplied to you. Direct Materials :Polish Tins Direct Wages Production overhead Administrative and Selling O/H Sales for the year were : Black Rs. 7,38,000 2,88,000 2,44,800 3,67,200 1,22,400 Brown Brown 1,60,000 60,000 6,00,000 tins.

14,40,000 tins and

The opening and closing stocks were : Black Opening Stock 48,000 Closing Stock 1,08,000

The opening stock of black and brown polish was valued at its production cost of paise 80.4 per tin and paise 86.4 per tin respectively. The cost of raw material for brown polish is 10% higher than that for black but there is no difference in the cost of tins. Direct wages for brown are 8% higher than those for black polish and production overheads are considered to vary with direct wages. Administrative and selling overhead is absorbed at a uniform rate per tin of polish sold. Prepare a statement to show the cost and profit per tin of polish. 9. AB Ltd. manufactures product XL 101 in batches of 100 units by a series of operations in the Fabrication and Assembly departments of a factory. The following details relate to 42 batches manufactured by the firm during June 2004 :Fabrication department Materials :Issued 2420 kg of an alloy costing Rs.250/kg; 200 kg were returned at the end of the month. Off-cuts and scrap fetched Rs.1,500.

Tax Shield Education Pvt. Ltd.

Cost Accounting-


Labour : Normal rate of wages is Rs.25/hr. Time office recorded 2460 hrs. for June 2004. This included 340 hrs. overtime work paid at double the normal rate. Assembly department Materials : Cost of components used Rs.1,57,900 Labour : Workers are paid at a piece work rate of Rs.6.4/unit for production up to 3,000 units. For excess production over 3,000 units up to 4,000 units, the rate is 25% more and for excess production over 4,000 units the rate is 50% more. During June 2004 there was stoppage of production for 10 hrs. due to machine breakdown and for this stoppage ten workers in the department were paid wages at time rate of Rs.25/hr. Calculate the average prime cost per unit of XL 101 manufactured during June 2004. 10. The cost estimates of a company for product XY was : Rs. per unit Direct Materials 5.00 Direct Wages 2.00 Factory overheads (50% fixed) 6.00 Selling & Adm. Overheads (1/3 variable) 3.00 Selling Price 18.00 When the budgeted was discussed it was felt the company would be able to achieve only a volume of 2,50,000 units of production and sales per quarter. The company therefore decided than an aggressive sales promotion campaign should be lunched to achieve the following improved operations. Proposal I : -Sell 4,00,000 units per quarter by spending Rs. 2,00,000 on special advertising -The factory fixed costs will increase by Rs. 4,00,000 per quarter. Proposal II : -Sell 5,00,000 units per quarter subject to the following conditions. -An overall price reduction of Rs. 2 unit is allowed on all sales. -Variable Selling and Administration Costs will increase by 5% -Direct Material Costs will be reduced by 1% due to purchase price discounts. -The fixed factory Costs will increase by Rs. 2,00,000 more. You are required to prepare cost sheet at 2,50,000 , 4,00,000 and 5,00,000 units of output per quarter and calculate the Profit at each of the above levels of output. 11. In the current quarter, a company has undertaken two jobs. The data relating to these jobs are as under: Job 1102 Rs. 1,07,325 8% Rs,37,500 Rs.30,000 Job 1108 Rs. 1,57,920 12% Rs. 54,000 Rs. 42,000

Selling price Profit as percentage on cost Direct Materials Direct Wages

It is the policy of the company to charge Factory overheads as percentage on direct wages and Selling and Administration overheads as percentage on Factory cost.

Tax Shield Education Pvt. Ltd.

Cost Accounting-


The company has received a new order for manufacturing of a similar job. The estimate of direct materials and direct wages relating to the new order are Rs. 64,000 and Rs. 50,000 respectively. A profit of 20% on sales is required You are require to compute i. The rates of Factory overheads and Selling and administration overheads to be charged; ii. The Selling price of the new order. 11/02/5 12. A fire occurred in the factory premises on October 31, 2003. The accounting records have been destroyed. Certain accounting records were kept in another building. They reveal the for the period September 1,2003 to October 31,2003 : (i) (ii) (iii) (iv) Direct materials purchased Work in process inventory, 1.9.2003 Direct material inventory, 1.9.2003 Finished goods inventory, 1.9.2003 Rs.2, 50,000 Rs.40, 000 Rs.20, 000 Rs.37, 750 40% of conversion cost Rs.7,50,000 Rs.2,22,250 Rs.3,97,750 30% Rs.5,55,775

Indirect manufacturing costs Sales revenues Direct manufacturing labour Prime costs Gross margin percentage based on revenues Cost of Goods available for sale

The loss is fully covered by insurance company. The insurance company wants to know the historical cost of the inventories as a basis for negotiating a settlement, although the settlement is actually to be based on replacement cost, not historical cost. Required:Finished goods inventory, 31.10.2003 Work-in-process inventory, 31.10.2003 Direct materials inventory, 31.10.2003


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