Nirma University

Institute of Technology
Mechanical Engineering Department
Sub: Industrial Management
Assignment - Costing

1. A company manufacturing pocket transistors have its monthly expenditure

asunder
Direct material cost - Rs 10,000/-
Direct labour - 200 hours @ Rs 5/- per hour
125 hours @ Rs 4/-per hour
Factory overheads - 10% of prime cost
Other overheads - 10% of factory cost
Profit - 20% of total cost

Number of units manufactured per month: 200 units

Estimate the unit selling price of the pocket transistor.

2. An article is being sold in the market in Rs. 300. The selling expenses are
40% of production cost. Find the manufacturing cost, assuming 25% profit on
the selling price.

3. An industry employs twenty persons. It consumes material of Rs 20,000/-per

month, it pays to worker at the rate of Rs. 10/- per hour and incurs total overheads
of Rs. 10,000.
In a month (25 days) workers had overtime of 150 hours and were paid of double
their normal rate. Find the total cost, assume eight working hours in a day.

4. A factory is producing 150 pens per day, involves Rs 250 as direct material
cost, Rs 200 as direct labour cost and Rs 225 as factory overhead. Assume
profit as 10% of selling price and selling overhead as 30% of factory cost.
Calculate the selling price of one pen.

5. A Moulder Can cast twenty five gears in a day. Each gear's weight is 3 kg
and gear’s material cost is Rs 15 per kg. If overheads expenses are 150% of
direct labour cost and a molder is paid at me rate of Rs 80/- per day.
Calculate the cost of producing one gear.
6. From the following data, find (a) material cost, (b) prim cost, (c) direct cost (d)
factory cost (e) administrative overheads (f) cost of production (g) selling and
distribution overheads (h) total cost or cost of sales (i) selling price, assume a
net profit of 10,000.
Sr. Particulars Rs.
1. Material in hand (april 1, 1975) 60,000
2. New material purchased 2,50,00
3. Director's fees 3,500
4. Advertising etc. 12.000
5. Depreciation on sales department car 1,200
6. Printing and stationary charges 300
7. Plant depreciation 5000
8. Wages of direct workers 70,000
9. Wages of indirect (factory) workers 10,000
10. Rent of factory building 5,000
11. Postage, telephone and telegraph 200
12. Water and electricity for factory 1,000
13. Office salaries 2,000
14. Rent of the office 500
15. Rent of the show room 1,500
16. Commission of salesman 2,500
17. Sales department car expenses 1,500
18. Material in hand (March 31,1976) 50,000
19. Variable direct expenses 750
20. Plant repair and maintenance 3,000
21. Heating, lighting and water for office use 2,500
22. Cost of distributing goods 2,000

7. A factory produces two components "A" and "B" component "A" requires 20 hours
and is manufactured by the workers paid at the rate of Rs. 10.00 per hour, component
"B" also requires 20 hours, but the workers producing it paid at the rate of Rs 7.50 per
hour. Find out the overhead of each component if,
1. It is 40% of the direct labour cost
2. Rs 2 per manpower

8. Selling price of a drill press is Rs 6000. A discount of 25% of this price is given to the
distributor. If labour cost, material cost and factory overheads are as 4:1:2 and selling
expenses are 25%of the factory cost, calculate the profit of the factory for one drill
press. Assume factory overhead of Rs 800.

9. A factory is making a pipe fitting by (a) casting (b) forging. The cost data is as follows.
Casting Forging
Material cost per piece Rs.2 Rs 2
Labour rate per hour Rs.0.8 Rs0.8
Time required making one fitting 3 hours 48 minutes
Overheads 25% 150%
of labour cost of labour cost

Calculate and compare the total cost of each pipe fitting in the two cases.