. ELEMENTS OF COST AND COST SHEET Probler VK Ltd., a manofacturing company, incurred the folk ing expenses during a certain period. You are required to prepare a statement showing the sut sion of total c Rs. ‘ Re Materials used on jobs 1,20,540 Depreciation of plant) 3,800 Wages traceable to jobs > . 86,650 Depreciation of delivery vans 1,600 Wages paid to meno 3s. Insurance on finished goods“ 2,500 maintenance work «SS 12,600 Lubricatiig oif ©) 250 Salosmen’s salaries (> 15,100+ Bad debts 300 Directors’ fees 10,000 ® Commission to salesmen “> 2,850 Carriage inwards on raw materials 860 . Cost of idle time in factory © 510 Corriage ostwands C2 2,800 Auditors’ feed 3.300 Factory rent and rates. ©) * 8,300 Dividends paid 6.300 Works salaries 20,400. Lighting of showroom@> 1,500 Hire of cFane far jab no. 132.Q.- 1.300 Office salaries ond expenses<—- 7.000 Consumable stares'y, * _, M0 © Tncome-tax 8,600 Solution : ; Statement of Cost Direct Materials 120,540 ‘Add : Carriage Inwards 860} 1.21.00 ° Diroct Wages . 86,650 . Direct Expenses (hire-of crane for Job-No-132}-———-- 1.300% Prime Cost : 2,09.350 Works Overhead : ? . ‘Wages paid to Men on Maintenance Work 12,600 Factory Rent and Rates 8.300 Works Sataries . : 20.400 Consumable Stores | z 40 Depreciation of Phint i 3,800 Lubricating Oil * 250} | : Cost of Idle Time in Factory (sce Note 1)“ sto | 46.200 Works Cost 255,550 ‘Administration Overhead : y Directors’ Fees . 10,000 Auditors’ Foes 3.800 Office Sataries and Expenses 7,000 Cost of Production Selling and Distribution Overhead ; Salesmen's Salaries ’ J ts,100 Carriage Outwards 2,800 Depreciation of Delivery Vans . 1,600 Insurance of Finished Goods . 2,500 Commission to Salesmen : 2,850 Lighting of Showroom 1,500 Bud Debts (sce Note 2) 300 Total Cost ee eS4 THEORY AND PRACTICE OF COSTING : Notes: (1) Assumed that the idle time and bad debt are within normal limits, ‘ } @) pith -tax Rs. 8,600 have not been ile ne ene cost, because thete are appropriation of profits and not expenses ofthe business. The sécounts of P. K, Manufacturers Lid. for the year ending on 3st December, 2001, show the following : : es sa ‘ Rs, ‘Stock of materials on Ist January, 200i. - a + 67,200 Materials purchased : “ _22,59,060 Bad debts written off <> ‘ 9,100 Travellers" salaries and commission . . = 10,780 Depreciation written off on office furniture, = - —— "429 Rent, rates, taxes and insurance (factory) te —_ 15,900 Productive wages. . 1,76,400 Directors’ fees — . - 8400, Gefieral expenses <> ° : 4,160 Gas and water (Factory) (y : 1,680 Travelling expenses Vy 2,940 _ Sales . 6,00,000 Madina , Manager's salary (3 rds forTactory, 5 1d for office)... “x 15,000 Depreciation on plant and machinery Le . 18,200 Cash discounts allowed * : ot 4,060 _- Repairs to plant and machinery) = a 6x0 Carriage 'wnd cdrtage outwardsey 6,020 Direct expenses : 10,010 Rent, rates and insurance (office) cost ; (ilj) Fuctory cost ; (iv) Cost of production ; f¥) Cost of sules ; ahd fui) Net profit,: exemeNTS OF COST AND COST SHEET : ements or costanocosrsnger , Statement of Cost Period : year ended 31.12.01 Materials Consumed : Opening Stock Purchases Less: Closing Stock Productive Wages Direct Expenses Prime Cost Factory Expenses : Rent, Rates, Taxes and Insurance Gas and Water Manager's Salary (3 x 15,000) Depreciation on Pant and Machinery Repairs to Plant and Machinery Factory Cost Office and Administration Expenses : Directors’ Fees General Expenses + Manager's Silary (4° 15,900} 1 Rent, Rates and Insurance Gas and Water Depreciation on Furniture < Cost of Production Selling and Distribution Expenses : Travellers’ Saluries ‘and Commission Travelling Expenses (see Note 1) Bad Debts Carriage and Cartage Ourwards Cost of Sales Net Profit (balancing figure) Sales 1 Notes: (1) Mhas been assumed that travelling expenses have been incurred in connection with sales: Vas sh discount has been treated as a financial charge and excluded from cost accounts. Probie : ; The following figures are, extracigd from tye books of a manufacturing company for the year ended 3ist March, 2002. Prepare & cost sheet showing cleaily the cost per unit under the various elements and alo the profivlos per unitRs. THEORY AND PRACTIGE OF COSTING Direct materials 25,00,000 Branch office expenses 8 3000 Direct labour 8,00,000 Depreciation of office builling [% 10,000 Depreciation of fastory building 16,000 Depreciation of staffcars A - 15,000 Insurance : Bleich (clung R500. Staff cars 2,000 ive office) ’* 35,000 Office building 1,500 Kivnomen 18,000 Factory buikding (¢ 2,000 Sundey faejory expenses \W a Delivery van — meintchance and Sales promotion S running cxpenees 12,000 Office administration expenses } com Salaries (inctuding that of Expenses for participating in sales manager Rs. 20,000 and indusuial exhibition’ 8,000 factory chief engineer Sales (10,000 nits) 50,00,000 Rs. 25,800) 2.75,000 Units produced — 10,000 Finished goods warchouse <2) expenses 15,000: Solution : : ' Output: 10,008 reves Cost Sheet Petiod : year ended 31.3.02 Direct Labour Prime con Works Overhcad ~ Depeecinion of Factory Building Tasurance of Faciory Building - Salary of Factory Chief Engineer + Blecwty (35,000 5,000) Sundry Factory Expenses Works Cost Office and Administration Overhead : Depreciation of Office Building Depreciation of Staff Cars Jasurance of Staff Cars I of Office Building Sularies (2,75,000 - 20,000 ~ 25,000) Electricity y Other Office Administration Expenses - Cost of Production Selling and Distribution Overttead ; Sales Manager's Salury Advertisement Tecate a srr ie Finished Goods Warehouse Expenses Delivery Van Maintenance and Running Expenses of Sales Profit (balancing figure) Sales 3235 24,800 Manager's salary 48,000 ‘The manager's tine is shared between the fuctory and the office in the ratio of 20 : 80. From the above details you are requifed to prepaye a statement showing (a) Prime Cost ; (b) Factory Overhead ; (c) Factory Cost; (d) General Overhead ; and (¢) Total Cost . . = [ICWA, Inter.) Om the following particulars, prepare a statement showing clearly all t{y Elements of Cost in the manner you consider best + Rs. Stock of materials on 1.4.01 5,00,000 - Purchase of materiuls'during the year 2001-02 14,00,000 Materials returned to suppliers 40,000 Stock of materials as on 31,3,02 3,76,000 Wages paid to productive workmen 3,60,000 ‘Wages paid to rion-productive workmen 40,000 Salaries paid to office staff 1,00,000 Carriage on materials purchased 10,000 Carriage on goods sold, 30,000 Rent, rates and taxes on the works 50,000 Depreciation on machinery See 28,000 i Maintenance and repairs to plant and machinery 12,000 Office stationery and other expenses 30,008 Abnormal loss of materials oe Chorgsble expenses 24,00ELEMENTS OF COST AND COST SHEET ao 8, Compute Cost of Raw Materials purchased from the data given below : : Rs, pening stock of raw materials ; Chedng tek of aw materials teen Expenses on purchases. 5,000 Direct wages $0,000 Prime cost 1,00,000 From the following information, compute the Raw Materials purchased : Rs. Opening stock of raw materi wy 20,000 Closing stock of raw materials : ; 30,000 Direct wages 2,10,000 Factory overhead 60% of direct wages General overhead 10% of works cost Cost of production 6,88,600 e [CU,, B.Com: (Hons.) "00] () Froma the following particulars prepare a Cogt S the Profit or Los for the year /* fo (2,) Fe December, 2001 : or a Me if inuary 1, 2 December 31, wr e “bb fe t Stock of raw materials Prepare: (i) Statement of Cost of Production of Goods Manufactured ; and (ii) Statement of Cost of Production of Finished Goods Sold. From the following particulars relating to production and sales for the year ended 31st December, 2001, prepare Statements of Production Cost and of Cost of Goods sold showing ite alia the Prime Cost andthe Cost per Unit. Also prepare the Costing Profit and Loss Account. Rs. - Raw materials as-on 1.1.01 25,000 Work-in-progress as dn 1.1.01 36,000 Finished goods as dn 1.1.01 (8,000 units) “144,000 (at cost) Raw materials purchased 2,00,000 Factory wages 2,170,000 Factory expenses 1,44,000- Administration expenses 90,000 Selling expenses t 54,000 Distribution expenses 36,000 Sule proceeds of finished goods (30,000 units) 9,00,000 Raw materials as on 31.12.01 45,000 Work-in-progress as on 31,12.01 $4,000. | Finished goods as on 31.12.01 (10,000 units) at cost IC.U,, B.Com. (Hons.)] The following extract of costing information relates to a commodity for the year ended 31st March, 2002 ; Stock on 1st April, 2001 : ' re Raw materials 5,000, Finished products (1,000 tons) . } 4000 (Cane