COST SHEET

1. From the following particulars, prepare a cost sheet for the year 2011:

Rs
Stock of Direct Materials on 1.1.2009 46,000
Stock of Direct Materials on 31.12.2009 42,000
Purchases of Direct Materials for the year 2,98,000
Direct Labour 1,54,000
Direct Expenses 66,000
Indirect Materials 23,000
Indirect Labour 17,000
Indirect Expenses 14,000
Office & Administrative Overheads 82,000
Research and Development Cost 37,000
Selling & Distribution Overheads 55,000
Sales for the year 8,30,000
[Sol: Profit: Rs 80,000]

2. The following information for the month of August, 2011 was extracted from the record of a
factory:

On 01.08.2009 On 31.08.2011
Rs Rs
Stock of Raw Materials 33,000 31,000
Stock of Work-in-Progress 20,000 30,000
Stock of Finished Goods 50,000 60,000
Expenses during the month were: Rs
Purchases of Raw Materials 2,58,000
Wages paid 1,20,000
Factory Overheads 1,30,000
Administration Overheads 80,000
Research & Development Cost 50,000
Selling & Distribution Overheads 70,000
Sales 8,00,000
Prepare a statement giving the following information: (a) Prime Cost, (ii) Factory Cost, (iii)
Cost of Production, (iv) Cost of Goods Sold, (v) Cost of Sales, (vi) Profit.
[Sol: Profit – Rs 1,10,000]

3. From the following particulars prepare a cost sheet of Watkins and Company Limited for the
month of March, 2011

Rs
Opening stock of raw materials 1,00,000
 Direct wages 2,00,000
Warehouse wages 11,000
Closing stock of finished goods 10,000
Bad Debt 22,000
Opening stock of finished goods 40,000
Remuneration of technical directors 25,000
Closing stock of raw materials 30,000
Sales 8,00,000
Raw Materials purchased 1,50,000
Insurance of finished stock 13,000
Internal transport cost 5,000
Professional fees paid to solicitor 12,000
Factory power, heat, light and other expenses 19,000
Legal expenses 2,000
Hire of accounting machines 7,000
Finished goods warehouse expenses 6,000
Abnormal loss of stores 8,000
Personal department expenses 50,000
Research and experimental cost 15,000
[Sol: Profit – Rs 1,52,000]

4. From the following particulars, prepare a statement showing all the elements of cost and
profit:

Rs
Opening Stock of Raw Materials 30,000
Opening Stock of Work-in-Progress 10,000
Opening Stock of Finished Goods 32,000
Purchase of Raw Materials 4,10,000
Carriage on Purchase of Raw Materials 20,000
Purchase Return 20,000
Productive Wages 2,00,000
Hire Charges of special type of Machinery 25,000
Cost of Pattern and Design 60,000
Cost of acquiring the contract 15,000
Non-productive Wages 20,000
Fuel, Gas, Water, etc. 47,000
Repairs to Plant 13,000
Depreciation on Machinery 25,000
Factory Lighting 15,000
Power 28,000
Consumable Stores 35,000
Factory Insurance 12,000
Lubricating Oil 8,000
Work Managers’ Salary 12,000
 Depreciation on Factory Building 14,000
Sundry Factory Expenses 11,000
Sale of scrap 10,000
Salaries to staff 45,000
Depreciation on Office Building 9,000
Insurance of Office building 4,000
Office Electricity 18,000
General Expenses 14,000
Directors’ Fees 15,000
Depreciation on Furniture 5,000
Printing & Stationery 12,000
Auditor’s Fees 6,000
General Managers’ Salary 22,000
Depreciation to Staff car 8,000
Depreciation on Delivery Van 3,000
Sales Managers’ Salary 14,000
Carriage Outwards 18,000
Warehouse Rent 6,000
Salesmen’s Commission 5,000
Distribution Expenses 4,000
Closing Stock of Raw Materials 40,000
Closing Stock of Work-in-Progress 40,000
Closing Stock of Finished Goods 40,000
Selling Price 14,00,000

5. From the following information, prepare a Cost Sheet for the year ended 31 st December,
2011:

Rs Rs
Stock of Raw Materials on 1.1.2011 25,000
Stock of Work-in-Progress on 1.1.2011:
At Prime Cost 59,000
Add: Manufacturing Expenses 12,000
71,000
Stock of Finished goods on 1.1.2011 34,000
Purchase of Raw Materials 2,35,000
Carriage Inwards 10,000
Purchase Returns 10,000
Abnormal loss of Materials 20,000
Normal loss of Materials 12,000
Manufacturing Expenses 70,000
Chargeable Expenses 25,000
Indirect Materials 18,000
Indirect Wages 11,000
Repairs and Maintenance 23,000
 Factory Rent 14,000
Deprecation on Plant and Machinery 9,000
Salary to Manager (He devotes 2/5th of his time for the factory and 50,000
1/5th of his time for selling purpose)
Salaries to staff 38,000
Electricity Charges (1/5th of which for office purposes) 30,000
Trade Magazines 2,400
Depreciation on Furniture 6,600
Office Rent 12,000
Depreciation on Car (1/2 of which is used for selling purpose) 10,000
Car Expenses 12,000
Insurance of Finished goods 4,500
Lighting of Showroom 5,500
Cost rectification of defective work 6,000
Sales Promotion 18,000
Advertisement 28,000
Branch Office Expenses 16,000
Expenses for participating in exhibition 7,000
Stock of Raw Materials on 31.12.2011 40,000
Stock of Work-in-Progress on 31.12.2011:
At Prime Cost 44,000
Add: Manufacturing Expenses 7,000
51,000
Stock of Finished goods on 31.12.2011 20,000
Selling Price 8,00,000
[Sol: Profit – Rs 1,50,000]

6. William Duncun Ltd. manufactures circuit breakers selling at Rs 1,000 each and the costing
data worked out for the month of March, 2011 were as follows:

Output – 3,000 circuit breakers

Rs
Expenditure for the month:
Raw Material consumed 6,00,000
Wages - Factory 4,00,000
- Office 2,00,000
- Showroom 1,00,000
Rent and rates - Factory 1,50,000
- Office and Showroom 75,000
Power 3,00,000
Heating and Lighting – Factory 1,25,000
- Office and Showroom 90,000
Depreciation:
Machinery 48,000
Office Equipment 72,000
 Showroom Equipment 60,000
Estimates of expenditure not included above for the full year.
Miscellaneous expenditure 48,000
Factory 48,000
Office and Showroom 72,000
Advertising 60,000
It is estimated that all expenditure not directly apportioned between the Office and
Showroom is attributed one-third to the Showroom and two-thirds to the Office. The
company’s salesmen receive a commission of 10% on the sale price of all circuit breakers
sold and 2,500 circuit breakers were sold during the month.
Draw up a cost statement from the above.
[Sol: Profit – Rs 4,50,000; Per unit cost – Rs 180.20]
7. The books of a company show the following information relating to the month of January,
2011:

Rs
Direct Labour Cost (being 175% of Works Overhead) 17,500
Cost Goods Sold excluding Administration Expenses 56,000
General & Administration Expenses 2,500
Selling Expenses 3,500
Sales for the month 75,000
Inventory accounts show the following opening and closing balances:

01.01.2011 31.01.2011
Rs Rs
Raw materials 8,000 10,600
Work-in-progress 10,500 14,500
Finished Goods 17,600 19,000
You are required to:
a. Compute the value of Raw Materials purchased.
b. Prepare a Cost Statement showing the various elements of cost and profit earned.
[Sol: Value of Raw Materials purchased – Rs 36,500; Profit – Rs 13,000]

8. The following data relate to the manufacture of a Standard Product during the four weeks to
July 27, 2011:

Raw Materials Consumed Rs 25,000

Manual and Machine Labour Wages Rs 15,000
Chargeable Expenses Rs 4,500
Machine hours worked 1,000 hours
Machine hour rate Rs 2.50
Establishment and General Expenses Rs 4,700
Selling and Distribution Overhead per unit 8 paisa
Unit produced 10,000
 Unit sold 8,000
Selling Price per unit Rs 6
a. You are required to prepare a Cost Sheet in respect of the above showing therein the
cost per unit under each element of cost and the profit for the period.
Also show the percentage that the Works Overhead Cost bears to the Manual and
Machine Labour wages and the percentage that the Establishment & General Expenses
bear to the Works Cost.
b. What price should the company quote to produce 1,000 units of another product which
will require an expenditure of Rs 8,000 for raw materials and Rs 6,000 for direct wages,
so that it will yield a profit of 25% on cost of sales?
[Sol: Profit – Rs 6,000, Per unit profit – Re. 0.75]

9. Mohit Ltd. furnished following information in relation to the production of 2000 units of
Product ‘N’ for the year 2010:

Rs
Direct Material 2,00,000
Direct Labour 1,50,000
Indirect Wages (50% fixed) 40,000
Consumable Stores (70% variable) 30,000
Office Rent (100% fixed) 60,000
Selling Expenses 80,000
In the year 2011, it is estimated that the production will be increased by 50%. The price of
material and labour will go up by 10% and 20% respectively.
You are required to compute selling price per unit of Product ‘N’ for the year 2011, if the
company wishes to maintain profit @ 10% on cost.
[Sol: For the year 2010: Cost of Sales – Rs 5,60,000, Cost per unit – Rs 280; For the year
2011: Selling Price – Rs 9,31,550, Selling Price per unit – Rs 310.38]

10. Himshital Company manufactured and sold 1,000 Table Fan during the year 2010. Following
are the information obtained from the records of the company:

Rs
Direct Materials 80,000
Direct Wages 1,20,000
Manufacturing Wages 50,000
Salaries 60,000
General Expenses 20,000
Rent, Rates and Insurance 10,000
Selling Expenses 30,000
Selling Price 4,00,000
The company plans to manufacture 1,200 Table Fan in the year 2011. The following
additional information is available:
 a. Price of materials will rise by 20% on the previous years’ level.
b. Wage rates will go up by 5%.
c. Manufacturing expenses will rise in proportion to the combined cost of materials and
wages.
You are required to submit a statement showing the price at which these fans would be sold
so as to earn a profit of 10% on selling price.
[Sol: For the year 2010: Profit – Rs 30,000, Profit per unit – Rs 30; For the year 2011:
Selling Price – Rs 5,10,000, S.P. per unit – Rs 42.50]

Solutions:
1. Cost Sheet

Particulars ₹ ₹
Direct Material Consumed:
Opening Stock of Raw Materials 46,000
Add: Purchases of Raw Materials 2,98,000
3,44,000
Less: Closing Stock of Raw Materials 42,000
3,02,000
Direct Labour 1,54,000
Direct Expenses 66,000
PRIME COST -------------- 5,22,000
Factory Overheads:
Indirect Material 23,000
Indirect Labour 17,000
Indirect Expenses 14,000
54,000
FACTORY/WORKS COST -------------- 5,76,000
Office and Administrative Overheads:
Research and Development Expenses 37,000
Office and Administration Expenses 82,000
1,19,000
COST OF PRODUCTION/COST OF GOODS SOLD ---------- 6,95,000
Selling and Distribution Overheads:
Selling and Distribution Expenses 55,000
COST OF SALES ---------------------- 7,50,000
Profit (bal. fig.) 80,000
SALES --------------- 8,30,000

4. Cost Sheet

₹ ₹ ₹
Direct Material Consumed:
Opening Stock of Raw Materials 30,000
Add: Purchase of Raw Materials 4,10,000
Carriage on Purchase of Raw Materials 20,000
4,60,000
Less: Purchase Return 20,000
Closing Stock of Raw Materials 40,000
60,000
4,00,000
Productive Wages 2,00,000
Direct Cost:
Hire Charges of special type of Machinery 25,000
Cost of Pattern and Design 60,000
Cost of acquiring the contract 15,000
1,00,000
PRIME COST ----------------------- 7,00,000
Factory Overheads:
Non-productive Wages 20,000
Fuel, Gas, Water, etc. 47,000
Repairs to Plant 13,000
Depreciation on Machinery 25,000
Factory Lighting 15,000
Power 28,000
Consumable Stores 35,000
Factory Insurance 12,000
Lubricating Oil 8,000
Work Managers’ Salary 12,000
Depreciation on Factory Building 14,000
Sundry Factory Expenses 11,000
2,40,000
Less: Sale of scrap 10,000
2,30,000
Add: Opening Stock of WIP 10,000
2,40,000
Less: Closing Stock of WIP 40,000
2,00,000
FACTORY COST/WORKS COST 9,00,000
Office & Administration Overheads:
Salaries to staff 45,000
Depreciation on Office Building 9,000
Insurance of Office building 4,000
Office Electricity 18,000
General Expenses 14,000
Directors’ Fees 15,000
Depreciation on Furniture 5,000
Printing & Stationery 12,000
Auditor’s Fees 6,000
 General Managers’ Salary 22,000
Depreciation to Staff car 8,000
1,58,000
COST OF PRODUCTION ---------------- 10,58,000
Add: Opening Stock of Finished Goods 32,000
10,90,000
Less: Closing Stock of Finished Goods 40,000
COST OF GOODS SOLD -------------- 10,50,000
Add: Selling and Distribution Overheads:
Depreciation on Delivery Van 3,000
Sales Managers’ Salary 14,000
Carriage Outwards 18,000
Warehouse Rent 6,000
Salesmen’s Commission 5,000
Distribution Expenses 4,000
50,000
COST OF SALES ------------------------ 11,00,000
Profit (bal. fig) 3,00,000
Selling Price 14,00,000
5. Cost Sheet

₹ ₹ ₹
Direct Material Consumed:
Opening Stock of Raw Materials 25,000
Add: Purchase of Raw Materials 2,35,000
Carriage Inwards 10,000
2,70,000
Less: Purchase Return 10,000
Abnormal loss of materials 20,000
Closing Stock of Raw Materials 40,000
70,000
2,00,000
Manufacturing Expenses 70,000
Chargeable Expenses 25,000
2,95,000
Add: Opening W.I.P. of Prime Cost 59,000
2,36,000
Less: Closing W.I.P. of Prime Cost 44,000
PRIME COST ----------------------- 1,92,000
Factory Overheads:
Indirect Materials 18,000
Indirect Wages 11,000
Repairs and Maintenance 23,000
Factory Rent 14,000
Deprecation on Plant and Machinery 9,000
 Salary to Manager (2/5) 20,000
Electricity Charges (4/5) 24,000
1,19,000
Add: Opening W.I.P. of Manufacturing Expenses 12,000
1,31,000
Less: Closing W. I.P of Manufacturing Expenses 7,000
1,24,000
FACTORY COST/WORKS COST 3,16,000
Office & Administration Overheads:
Salary of Manager (2/5) 20,000
Salaries to staff 38,000
Electricity Charges (1/5) 6,000
Trade Magazines 2,400
Depreciation on Furniture 6,600
Office Rent 12,000
Depreciation on Car (1/2) 5,000
Car Expenses (1/2) 6,000
96,000
COST OF PRODUCTION ---------------- 4,12,000
Add: Opening Stock of Finished Goods 34,000
4,46,000
Less: Closing Stock of Finished Goods 51,000
COST OF GOODS SOLD -------------- 3,95,000
Add: Selling and Distribution Overheads:
Depreciation on Car (1/2 of which is used for selling 5,000
purpose)
Car Expenses 6,000
Insurance of Finished goods 4,500
Lighting of Showroom 5,500
Cost rectification of defective work 6,000
Sales Promotion 18,000
Advertisement 28,000
Branch Office Expenses 16,000
Expenses for participating in exhibition 7,000
Salary of Manager (1/5) 10,000
1,06,000
Cost of Sales 5,01,000
Profit (bal.fig.) 2,99,000
Sales 8,00,000

8. Cost Sheet

₹ ₹ ₹ (p.u.)
Raw Materials Consumed 25,000 2.50
 Manual and Machine Labour Wages 15,000 1.50
Chargeable Expenses 4,500 0.45
PRIME COST -------- 44,500 4.45
Add: Factory Overheads – Manufacturing Costs 2,500 0.25
(Machine hours worked x Rate per hr.) (1,000 x ₹
2.50)
WORKS COST -------------- 47,000 4.70
Establishment and General Expenses 4,700 0.47
COST OF PRODUCTION ------------ 51,700 5.17
Selling and Distribution Overhead per unit (8,000 x 640 0.08
0.08)
Cost of Sales 52,340 5.25
Profit (8,000 x 0.75) 6,000 0.75
Sales 58,340 6.00
Workings:
Percentage of Works Overhead Cost to the Manual and Machine Labour wages
2,500
= ----------------- x 100 = 16.67%
15,000
Percentage that the Establishment & General Expenses bear to the Works Cost
4,700
= ------------- x 100 = 10%
47,000
Estimated Cost Sheet (1000 units)

₹
Materials 8,000
Wages 6,000
Prime Cost 14,000
Factory Overheads – 16.67% of Wages (1/6 x ₹ 6,000) 1,000
Works Cost 15,000
Establishment and General Expenses – 10% of Works Cost 1,500
Cost of Production 16,500
Selling and Distribution Cost – 1,000 units x ₹ 0.08 80
Cost of Sales 16,580
Profit – 25% of ₹ 16,580 4,145
Sales 20,725
9. Cost Sheet

₹ ₹ ₹ (p.u.)
Direct Material 2,00,000 100.00
Direct Labour 1,50,000 75.00
PRIME COST ------------- 3,50,000 175.00
Factory Overheads:
Indirect Wages – Fixed (50%) 20,000
- Variable (50%) 20,000
40,000 20.00
Consumable Stores – Fixed (30%) 9,000
- Variable (70%) 21,000
30,000 15.00
Factory Cost/Works Cost 4,20,000 210.00
Office and Administrative Expenses:
Office Rent (100% fixed) 60,000 30.00
Cost of Production/Cost of goods sold 4,80,000 240.00
Selling and Distribution Overheads:
Selling Expenses 80,000 40.00
Cost of Sales 5,60,000 280.00
Estimated Cost Sheet for 2011

₹ ₹ ₹
Materials (2,000 + 50%) x ₹ 110 3,30,000 110.00
Wages (2,000 + 50%) x ₹ 90 2,70,000
Prime Cost 6,00,000
Factory Overheads – 16.67% of Wages (1/6 x ₹ 6,000)
Works Cost
Establishment and General Expenses – 10% of Works
Cost
Cost of Production
Selling and Distribution Cost – 1,000 units x ₹ 0.08
Cost of Sales
Profit – 25% of ₹ 16,580
Sales