Problems on Cost Sheet:

1. From the following particulars, prepare a cost sheet showing – materials consumed, prime
cost, factory cost, cost of production and profit.

$
Opening stock of raw materials 20,000
Opening stock of work in progress 10,000
Opening stock of finished goods 50,000
Raw materials purchased 5,00,000
Direct wages 3,80,000
Sales for the year 12,00,000
Closing stock of raw materials 75,000
Closing stock of work in progress 15,000
Factory overhead 80,000
Direct expenses 50,000
Office and administrative overhead 60,000
Selling and distribution expenses 30,000

Solution:

Cost sheet for the year……………….

Particulars Amount ($) Amount ($)

Opening stock of raw materials 20000
Purchases 500000
520000
Less: Closing stock of raw materials 75000
Cost of raw materials consumed 445000
Add: Direct wages 380000
Add: Direct expenses 50000 430000
Prime Cost 875000
Add: Factory overheads 80000
Add: Opening stock of work in
progress 10000
90000
Less: Closing stock of workin
progress 15000 75000
Works or Factory cost 950000
Add: Office & administrative
overhead 60000
Cost of Production 1010000
Add: Opening stock of finished goods 50000
1060000
Less: Closing stock of finished goods 50000
Cost of goods sold 1010000
Add: Selling & distribution overhead 30000
Cost of sales 1040000
Profit 160000
Sales for the year 1200000
2. From the following particulars calculate prime cost, works cost, cost of production, cost of
sales and profit
Prime Industries manufacture a product A. on 1st January 2020 finished goods in stock
$50000. Other stocks such as:
Work in progress (1.1.2020) $40000
Raw materials (1.1.2020) $100000
The information available from cost records for the year ended 31st December 2020 was as
follows:
Direct materials 800000
Direct wages 300000
Carriage inwards 40000
Indirect wages 90000
factory overhead 275000
Stock of raw materials (31.12.2020) 80000
Work in progress (31.12.2020) 70000
Sales (120000 units) 2500000
Indirect materials 175000
Office and administrative overhead 80000
Selling and Distribution overhead 100000
Stock on finished goods (31.12.2020) 60000
Solution:
Cost Sheet for the year ended 31st December 2020

Particulars Amount ($) Amount ($)

Opening Stock of raw materials 100000
Add: Direct materials 800000
Add: Carriage inwards 40000
940000
Less: Closing stock of raw materials 80000
Raw materials consumed 860000
Add: Direct wages 300000
Prime cost 1160000
Add: Factory overhead 275000
Add: Opeining work in progress 40000
315000
Less: Closing work in progresss 70000 245000
Works or Factory cost 1405000
Add: Office & administrative
overhead 80000
Cost of production 1485000
Add: Opening stock of finished goods 50000
1535000
Less: Closing stock of finished goods 60000
Cost of goods sold 1475000
Add: Selling & distribution expenses 100000
Cost of sales 1575000
Profit 925000
Sales 2500000
3. From the following information of Procta & Co. Ltd., for the year 2003 you are required to
prepare: (a) Prime Cost (b) Work Cost (c) Cost of Production (d) Cost of goods sold and (e)
Net Profit

$
Stock of raw materials (1.1.2003) 50,000
Purchase of raw materials 1,70,000
Stock of raw materials (31.12.2003) 80,000
Carriage Inward 10,000
Direct Wages 1,50,000
Indirect Wages 20,000
Other Direct Charges 30,000
Office rent and rates 1,000
Factory rent and rates 10,000
Indirect consumption of materials 1,000
Depreciation on plant 3,000
Depreciation on office furniture 200
Salesmen salary 4,000
Salary to office supervisor 5,000
Other factory expenses 11,400
Other office expenses 1,800
General Manager's remunerations:
Office Rs. 4,000
Factory Rs. 8,000
SeIling Dept. 12,000
Other seIling expenses 2,000
Traveling expenses of salesmen 2,200
Carriage & Freight outward 2,000
Sales 5,00,000
Advertisement 4,000

Solution:

Particulars Amount ($) Amount ($)

Stock of raw materials (1.1.2003) 50,000
Add: Purchases 1,70,000
Carriage Inwards 10,000
2,30,000
Less: Stock of raw materials (31.12.2003) 80,000
Raw Materials Consumed 1,50,000
Wages 1,50,000
Other Direct Charges 30,000
Prime Cost 3,30,000
Add: Factory Overhead:
Indirect Charges 20,000
Factory rent and rates 10,000
Indirect Materials 1,000
Depreciation of Plant 3,000
Other factory Expenses 11,400
General Manager's remuneration 8,000 53,400
 Factory Cost 3,83,400
Add: Office & Administrative Overheads:
Office rent and rates 1,000
Depreciation on office furniture 200
Salary to Office Supervisor 5,000
Other Office Expenses 1,800
General Managers remuneration 4,000 12,000
Cost of Production: 3,95,400
Add: SeIling & Distribution Overheads:
Salary to Salesmen 4,000
General Manager's Salary 12,000
Other Selling Expenses 2,000
Advertisement 4,000
Traveling expenses 2,200
Carriage and freight overhead 2,000 26,200
Cost of Goods Sold 4,21,600
Profit 78,400
Sales 5,00,000
 Problems on Overhead Apportionment:
1. PQR Ltd. has two production departments A, B and one service department S. The actual
costs for a period are as follows:
$
Power 1750
Lighting 1600
Rent and rates 6000
Indirect wages 4000
Sundry Expenses 1600
Depreciation on Machinery 6000

Production Departments Service Department

A B S
Working Hours 4000 3000 2000
Direct wages ($) 3000 2000 3000
Cost of Machinery 75000 50000 25000
H.P. of Machinery 60 30 10
Light points 18 12 10
Floor Area (Sq. ft.) 1000 1200 800

Apportions the costs of the various departments on most equitable basis.

Solution:

Primary Distribution Summary

Items Basis of Apportionment Total Production Service
($) Departments Department
A B S
Power Horse power * Hours (24:9:2) 1750 1200 450 100
Lighting Light points (9:6:5) 1600 720 480 400
Rent and rates Area occupied (5:6:4) 6000 2000 2400 1600
Indirect wages Direct wages (3:2:3) 4000 1500 1000 1500
Sundry Expenses Direct wages (3:2:3) 1600 600 400 600
Depreciation Cost of Machinery (3:2:1) 6000 3000 2000 1000
20950 9020 6730 5200
2. Finex Co. Ltd has three production departments and four service departments.
The expenses of these departments as per primary distribution summary were as follows:
Production Departments $
X 90000
Y 117000
Z 72000
Total 279000
Service Departments
Stores 9000
Time-keeping and accounts 13500
Power 5400
Canteen 6000
Total 33900

The following information is also available in respect of production departments:

X Y Z
H.P. of machines 1200 900 600
No. of workers 120 80 40
Value of store requisitioned ($) 7500 6000 4500

Apportion the cost of various service departments to the production departments.

Solution:

Secondary Distribution Summary

Item Basis of Apportionment Total Production Departments
X Y Z
$ $ $
Cost as per primary - 279000 90000 117000 72000
distribution
Stores Value of stores (5:4:3) 9000 3750 3000 2250
Time-Keeping No. of workers (3:2:1) 13500 6750 4500 2250
Power H.P of machines (4:3:2) 5400 2400 1800 1200
Canteen No. of workers (3:2:1) 6000 3000 2000 1000
312900 105900 128300 78700