Q.t. ABC Ltd.

has furnished the following information from the financial

st
t,o Oks for the year ended 31 March 2009:
I I '
(2011)
Profit & Loss Account
IQli:~ ~ ~~~T~ -!IA1!' . ,.Parliculm Amt. m
~,\ ~, Opening :stock · 70,000 By Sales (10,250 units) 28,70,000
(500 units at f140 each) By Closing stock
To Material consumed 10,40,000 (250 units at f200 each) 50,000
To Wages · 6;00,000 By Interest . · 1,000
To Factory overheads 3,79;000 By Rent received 40,000
To Administration overheads ·. 4,24,000
To Selling expenses 2,20,000
To Bad debts . 16,000
To Preliminary expenses 20,000
To Net Profit . · 1,92 ,ooo
29,61 ,000
29,61,000
The cost sheet shows the cost of materials ~h104 per unit and the labour cost
at ~60 per unit. The factory overheads are absorbed at 60% of labour cost and
administration overheads at 20% offactory cost. Selling expenses are charged at
~24 per unit. The opening stock of finished goods is valued at t180 per unit.
You are required to prepare: ·
{t) A statement showing profit as per Cost Accounts for the year ended
31 st March, 2009; and .
(it) ·A statement showing t~e reconc~ia~on o! profit as disclosedjn Cost .
Accounts with the profit shown Ill Fmanc1al Accounts. . . .· . .. · . .
· ct~tPment of Cost.and Profit · · · ..- ~ -.- ·.. -;--;-_, _:•·· ·_·_-
 ncial accounts of a company showed a profit off 59~
Q. 2. The audited fina_
whereas the profits as per the cost accounts was f26,725. From the follol\1' O,
information provided, you are required to prepare a reconciliation statemUtg
dearly bringing out the reasons for the difference between the two figures: ellt
Profit and Loss Account
Dr. for the year ended 31 st Match, ?Pl2
.)~if1/ti#/ii{ttt$!
;'·:';:.;····i?;,',\.:_:it. ;. .·.··~
Opening stock
Purchases
Direct Wages
,Jffii i1J\j~fi:
Factory Overheads .. 4,05;;500
Gross Profit (c/d) 2,89,500
42,15,000 , 42, 15,000
Administrative .Overheads 98,000 Gross Profit (bid) . 2,89,500
Selling Overhf3ads 1,34,340 Dividend Received 2,500
Net Profit 59,660
2,92,000 · 2,92,000
The cost records show:
(1) Closing Stock balance f7,95,400. -
(it) Direct wages absorbed during the year f2,18,800.
(ii,) Factory overheads absorbed f4,6~,noo.
(iv) Administrative overheads absorbed@ 2.5% on sales.
(v) Selling overheads charged@ 5% of the value of sales. (2012, 2013)
..... .
 .,,

Q. 3. The following is the P&L Account of a manufacturer for the year 2012:
r. · Profit & Loss Account · Cr.
D · ·•· . · PirliciiiJi~ffJflt/!11iifl lfllti/l:1 · .";·· Particulars I r
To Materials 48,000 By Sales / 96,000
To Labour 36,000 By Closing Stock (Finished goods) 20,400
To Works expenses 24,000 By WIP:
To Gross Profit 14,400 Materials 3,000
Labour 1,800
Overheads 1.200 I s.ooo
1,22,400 1,22,400
To Administrative expenses _ 6,000 By Gross Profit 14,400 -
To Net Profit 8.400
14,400 14,400
During the year 6,000 units were manufactured and 4,800 of them were sold.
The costing records show that works overheads have been estimated at ~3 per
unit produced and administrative overheads at ~1.50 per unit produced. -
Required: , '·-, (2013)
(a) Prepare the cost sheet for- the year-2012. ·
(b) Prepare a statement reconciling proflt s~own by financial and cost books.
/4s. The touow1n~ 1s tne summarized version of Trading and Profit and
O·5 count of Continental Enterprise Ltd. for the year ended Dec. 31, 2012:
l,0 ~ ~ )llyW,~ farticu/ms .· . /.f
.: ·· f
ro Material · 48,000· By Sale~ 1,00,000
To Wages 36,000 By Closing Stock of finished goods 20.400
To Work e,xpenses ·24,000 By Work in progress: ·
To Gross profits · 1-8,400 · Material 3,000
Wages 1,800
. Work expenses 1,200 I 6,000
1,26,400 . 1,26,400
To Administration expenses . 6;000 ~ys~ross:·pfofits '' 18,400
To Se_
lling overheads +Y 110Qg
To Net profi~ ··: fitB;~qQ.
·:;J;8,4QQ:••· 18,400
During the year 6,00C(M1N~il'~~rl 11lanufactured and 4,800 of them were sold.
·-· · ;-.11 . ·• . :_:_..

The costing records show)that works overheads have to be absorbed @ 50% of

direct wages, administration overheads at '1.50 p.u. produced & selling overheads
@ n p.u. sold. Financial and Cost A/c books ·show different profits. (2014 June) .
Required: (i) Calculate profit as per cost accounts books. \
(it) Prepare a statement reconciling two profits disclosed in two sets
of books, clearly bringing out the reasons for the difference.
 Q. 6. The Profit and Loss account of XYZ Ltd. for the year ended~

.::f:t~ii!~:;;~~'ftil:~;3/~~ijl
Materials 4,80,000 Sales
/ ·P'arti.culais · 9,60,~
. Wages _ 3,60,000 Closing stock 1,80,~
Factory expenses 2,40,000· Work~in-progress:
Gross Profit 1,20,000 · Materials 30,000
Wages · _ 18,000 ,.
Factory O(H.. 12,000 60,000
12,00,000 ; ,< _ _ _ 12,00,000
A.dministration Expenses · - -• 60,00Q · ~ros~pf9fi(:r, :. • :.-.·
._ 1,20,000
Net profit .· -· 66,QQP D1ytd~1:1crt~c~ived ·, · 6,000
' -/1,2&,009. _. ·- 1,2s·,ooo
As per the costing records the indir~~t factory overheads have been absorbed
at f 30 pe~ unit and· administration· overhea,ds at f15 per unit of finished
product. During the year 6,000 units were manufactured and 4,800 units were
. sold. Prepare a statement of "cost arid profit as per -cost accounts and reconcile
_th~ ~osting pro9t with the _financial pr~~it. ·
/ 7 f ouow1110 0 w ·1::s nave Deen extracted from p• -·a1 A
. ·
a. d for the year end.1ng 31st March 2015: 11
manc1 _ ((mmf9 of PV

t ·· works Overheads;ifa,- \,,-,'>n-,'

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A.J.-,n,strative Ovetheaaca
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Prehnunary Expen5e$-~ _ tmJit0.fi~::,". ":;;~,:,y;~~;:;;~~~::;~f;;tiii;.-: t·-J;,,:,~,~4*r,~'11Wfe$J_t:;~ ·,·- r'. -$l806'-

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Interest received on banl</le1•1ts-<~$Z;,,F{,0-/:N,tiittt;{J.t'.ii{l"i.';' -..:/'.,>' ;,,--:- :·-, ,' ' -:, 3,,,0QO
-Sales (12,-0.00 ; - : -:,,,:I~ii>-.:,/:;:i)/J;JJ-f1}~£t:1ftt;\iti\l1::t,liwi~h3,::::~9;(:.,-:1;*;rL,,,:,, ,, _ . -_: -· ,-
. units) , : Jt:-( <-~1i7:-,,:,,-;/\/:f-h,s ;,};~·ftc:,-f%\:;,;t;{\:';"K%a&:t+s-f;;-t,,¼.f:.i6½ifif!1\}i'1'{s<:·W\ :,_ ./ 18,00,,000 '
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Closing stock: ·- :>f --.::9;f;,JJ;w:0Jjt1;::t,::fitli!¼{l!f~~,Jl\sii~~:J~'1l\l~J~~1!~i~:;,\:!t\

L
The Cost Accounts for the same period show that Direct Material
Consumption was fS,40,000. Works overheads are recovered@ 20% of Prime
Cost. Administrative overheads are recovered @ f9 per unit of production.
Selling and Distribution overheads are recovered @ ,12 per unit sold.
Prepare the Trading and Profit & Loss· Account as per financial records and
cost sheet. Als.o reconcile the profit shown by two records.
 '-!· books of a company reveal the following data for the ye;ir
7 • .1. .11~ 1..111anc1a1
ended 3pt March, 2016. · . (2016(Marl))

74r375
32,,000

7~80,[)0Q
 ·~,·~-· · -D·i,_•.' ,. <-t•· -- - - -...- .-.
. 1r~ .1a00
--. · · .,;_, -··· · --· :,.;-,-,: . ,-· ···
ur . .
·· ·: · 4-50
' .'
·ooo

· (i) Factory overheads are absorbed at 60% of direct wages.

(ii) Administration overheads are recovered at 20% of factory cost.·
(iii) Selling & distribution overheads are charged at ~4 per unit sold.
(iv) Opening stock of finished goods is valued at ~104 per unit.
The company values work-in-progress at factory cost for both financial ·&
cost profit ·reporting. ··
Required:
(a) Profit and Loss Account for the year ended 31-3-2016.
(b) A statement of cost and profit for the year e~ded 31-3-2016.
(c) A statement reconciling the profit as per costing records with the profit
as per financial records.