0 — ll PRODUCTION AND COSTING. 20” (eo reardown'time, Tear-dowo time starts, when tie lass Part or element of operation has been. completed. - fooled les the Temoval of all tools used on the operation For expe, ober turret is cleared of all cutting tools ; tools a6, “i. ee eeavea rate! places j all arose slide tools are removed.) Je ea time bed 4 released from the machine and s0 of. So teardown time tte time taken to remove job, tools and other MUNITY Foe completed. the machine after the last element of oper ne ‘Tear-down time is much less than the set UP 1" sides above factors there (0) eee a eke epee while calculating the are other factors which are ta rker 4. Re other factors which are t22o* Sra batch of provusts., Chciency » cartbot work for 8 heurs continuously WitOU TT” ge also reqitires decreases as the time passes due {0 fatigue ete. Bead personnel decreases as the time Pig, checking Meaeureren'’segory. These Hime for tool sharpeyances come, Under Te oa Uet us discuss + Allowances generally consume | 15% © pt some of the important allowances: : ‘This time allowed toa worker for (i) Personal allowante. king, having a cup- i seal est rooms, smoking, ga Bilperone neods lies, 6 fo re Owater for personal cleanliness Ste ie catled the personal allowance. ‘This is generally 5% of the rc. is called the Persea factories allow one OF, oO A Pres " total working time; | ‘gation. ‘hese are times of i ie £idto 15 minute daring tne od are very seldom utilized by the ‘employees for personal needs. Therefore, 2 personal allowance must be added to the estimate in addition to the rest period. -k whole of the ii) Fatigue allowance. A worker cannot worl » day Date speed. Afier some time he starts feeling some Gay wecaused by excessive work, poor lighting, poor ventilation and machine noises etc. All these are caused due to fatigue. Also. and mne of the work reduces his efficiency towards the end of the Tay. For alll these reasons fatigue allowance is given. Nearly 5% of the total time is considered as fatigue allowance. (iii) Teol changing and grinding allowances. It is the time required to remove the tool and its holder to walk upto the grinder ‘to grind the tool, to come back to the machine and then to fix the tool again in the machine. 5 _ (iv) Checking allorance. It isthe time taken for checking the dimensions. Rough dimensions take less time while accurate dimensions require more time. This allowance should be consi- dered only when the operator is doing checking, only and no work on the machine. the checking is done during machinin; i i should not be considered. . 2 ae (v) Oiling and clearing. It is the time required for cleaning the machine and to lubricate its various parts for smooth functionin, patts foi of the machine.Se | puemantts oF Cost eo (ui) Billing coolany the reservoirs ‘of the coo! i tools. 49 st reservoir. It is the time ‘is ‘ant which are used for seared for Siting sand ing off scraps and surplus stocks, Tt ; Dispose om the seraps and other surplus stokes ‘te ,iscellaneous allowances should be added to t! the oertiantand tear down oe to anes ae clement. set up, te see iabour cost, we should kn ___ For calculating gir ect productive labour and his nate os total time spen’ 0 Weach factory daily attendance of the labourers ie a factory cards oF Gate cards, On this card is cimting and Snishing up the work fool once “Sometimes 2 time sheet is issued to each produc- 8 3 ork to be performed by the worker cates the Wir time sheet shows the name and dance oof the department, date, works name ime expended on each job and or fe worker for the work carried out by him, Fost is shown below = (Speciznen) Worker’s Name Worker’s No. (viii) consumed Time Sheet Date.-- Department, Time Total Time | Rate | Amount Works | Description Forder No. | wf work expended done Start |Finish { Workman’s Signature. Forman’s/Supervisor’s Signature: 6, Expenses Apart from material and lab i u our cost in . eral other expenditures such as cost of ay peat . » designsete s hire of special tools and equipments ; depreciation charges of plants and factory building ; building rent ; cost o pendituresd salaries and commissions to salermen etc. All tne ee er thane are known as overheads or expenses. So, from above it is cle: : n expendi- except for direct material and direct labour cost, all other exp: 4 ; = indi aterial tures are known as expenses, Thus expenses include indirect m: cost and indirect labour cost and such other expenses. . Expenses can be divided into two classes : @) Direct Expenses (ii) Indirect Expenses. () Direct Expenses. Direct expenses also known as charge-; able expenses include. any expenditure other than direct material, or direct labour incurred on a specific cost unit, These are) expenses which can be charged directly to a particular job ani on done for that specific job only. For example, hire of special tool A or equipment, cost of special jigs and fixtures or some special if patterns and its maintenance cost, costs of layouts, designs andz drawings or experimental work on a particular job etc. ii) Indirect Expenses, These’ are known as overhead charges, burden or oncost. All the expenses cver and above prime cost ara indirect expenses. Overhead is the sum of indirect labour, cost, indirect material cost and other expenses including servic which cannot be conveniently charged to specific cost unit. ‘These can be further classified as : 1, Factory Expenses or Production Expenses 2. Administrtive Expenses 3. Selling Expenses 4, Distribution Expenses. 7 Y oncost, production ‘overhead, works “oncost, works overhead ete expensés or production expenses ar factory overhead, 4 Some examples of factory’ (i) Rent, rates and insurance (+4) Indirect labour e, “supervisors, factory managet (iit), Consumab! as cotton waste, grea: chargable against the works, g. supervision such as salar: T etc, le stores and all forms of ij se, oil etc. (iv) Depreciation, Plant, machine tools etc. {0} Power such as steam, gas, electricity, hydraulic or com air, internal transport etc, ies of foreman; indirect material suc maintenance and repair of buildings, ‘pressePRODUCTION AND COSTING Prime Cost. Prime cost or Direct cost is the sum of the cost of direct material, direct labour and other direct expenses. Thus Prime cost=Direct labour cost-+Direct material cost +Other direct charges. Factory Cost, Factory cost includes all the expenses ee tory iy to produce the various articles. {hus factory cost includes Malev) management expenses, also the technical, supervisory ons on the staffs ; timekeepers ; storekeepers ; labourers ; rent and rat’ a” ity, factory ; charges for power and heat ; expenses COPMCC ong running of various machines ; the maintenance of the Di other equipment ; depreciation on machines and to - . oncost. In short, it is the sum of prime cost and factory Thus Factory cost-=Prime cost +Factory oncott- cost is also called Works cost. Factory inis~ Production Cost, It is the sum of factory cost and adminis trative expenses. inistrati es. Thus Production cost=Factory cost +Administrative expenst g expenses - Total Cost. It is the sum of production cost, sellin ) and distribution expenses, Total cost=Production cost +Selling expenses +Distribution | expenses, Total cost is also called ultimate cost or selling cost. Selling Price, If we add profit in the total cost of the pro~ duct then it is called selling price. Selling price=Total cost+-Profit. The selling price is a question of policy and comes within the purview of the Manager or Board of Directors, In addition to the total cost there are several other factors which control the selling price such as the present and prospective demand, existing competi- tion or trade agreements, comparison with other goods ete. | Market Price or Catalogue Price. Some percentage of discount allowed to the distributors of product is added into the selling price and the result obtained is called the market price or catalogue price. By the cost structure shown below we can know how different elements of cost are built up.£ SLEMENTS OF Cost 2. Administrative Expenses. There expenses includ the expenses incurred on managerial or sdoninistrial staff for planning and policy making work. Some examples . ive expenses are : (8) Salaries of directors and managing directors, (is) Salaries of cost, finance and secretary office staff including clerks and peons. (iis) Expenses of direct amenities like telephone, coolers and other modern equipments. (iv) Travelling expenses for attending meetings etc. (2) Charges for electric consumption for light, heating and cooling. (vi) Stationery, auditing expenses. | . (vii) Insurance of building and employees, repairs, mai tenance and depreciation of building and furniture. Selling Expenses. These consist of the expenditures spent towards securing orders, and finding or retaining markets for the products manufactured. Following is the list of selling expenses : (i) Advertising and publicity expenses. Gi) Salaries of the sales department staff including sales manager, salesman etc. (iii) Travelling expenses of sales engineers. (iv) Cost of preparing tenders and estimates. (v) Expenses of making blocks and posters. (vi) Sales stock storage charges. Distribution Expenses. ‘These are the expenses which are paid for the distribution of the product. It includes the expenditure le on holding finished stock, packing cost and dispatching them. to the customer. This type of expenses include : (é) Finished stock storage charges. (4) Cost of packing. Loading, unloading charges ; freight and warfare, (iv) Expenses of transportation and vehicles, (») Salaries of dispatch clerks and labourers, a a 27, Cost of Product (Ladder of Cost) The different co: “summarised below : f 1. Prime cost. 2. Factory or Works cost. 3. Production or Manufacturing cost, 4. Total or Gross cost, 5. Selling price, mponents of cost and their relations areg (3809 Jo topped) : JaBYY eNJoTLAIg SOK) yersazeyy Wa snoge’y e211 $09 SUIT, oo [predea yar! : WOISIION, THE | 30 ae 4809 ArojoN,y Axoyor gy | es ey yoo Bayes soo uoyonporg _— Isasuadxe aati | soud onfoeg yoo emia -ensrmupy | angio] \ woud oo oud Sungjeg | 3809 joy, ~= | ———| vested “x8 won? . qin g “5 pur Sunfag 5 : .& 6 ayor, 2 id & = yonoosiqy aPRODUCTION ‘54 each di Problem 2:25, Find out the prime coat of it also. 7 4 cost/unit al of production, selling cost. Find ou ed Given, 6000 copies to bs printed and p Material cost AND CCSTi primer, coe Be. 3,000 : Paper Re. 420 Printing deptt Te : Fe. 1850 Compositors Be 350 Proof-reader Ra, 720 Printers Works oncost= 40% of prime cost Binding deptt : 750 Leather ee Cloth Re. 625 Card-board Re. 225 oa ‘Ro. 150 Sundries Re 20 Cuttings Poe eed Re. 75 Bina Re. 150 Fintabtdy Re. 75 Works oncost= 80%, of Prime cost : "Office oncost =15% of Factory cost aD Solation, Printing deptt : 4 Material cost =Rs. (30004420) y =Rs. 3420-00 Bi Lobour cost =Rs. (1850-+350-4.720) 4 =Rs. 292600 4 Prime cost =Rs. (342042990) i =Rs. 6340°N0 4 Works oncost =6340 x 9 (40% of prime cost) { =Rs. 253600 al Factory cost =Rs. (6340-42536) { , =Rs. 8876-00 | Binding deptt; F =Rs. 2100-00 =Rs. (20-4404.75 =Rs. 36000 Labour cost “. Prime cost =Rs. (2100-4360) =Rs, 2460 =Rs, (750+450+525 4.2954 150) =Material cost-++Labour cost + 150+ 75) a 4 2ese MENTS 1 NTS OF COST : 5 i.” Works oncost = 30%, of prime cost 30 =2460% ay =Rs. 738°00 Factory cost =Prime cost-+Works oncost Rs, (2460-+738) s. 3198-00 Factory cost of Printing and Binding deptt. =Rs, (8876 +3198) =Rs. 12,074'00 + Office oncost =15% of factory cost 15. =12,074X Tog =Rs, 1811'10 ¢. Total Production cost =Rs. (12,074+1811°10) ! =Rs. 13,885°10 13,885°10 2. Cost per copy = Ziq =Rs, 2:3014 Le A =Say Rs. 2:30. Ans. exp aA SF Problem 2-26. The catalogue price of afcertain machine is Re, 1050, the discount allowed to the distributors( being 20%. Data collected at a certain period show that the selling cost and factory cost are equal, and that the relations among material cost, labour cost and oncoat in the factory are1:3:2 If the labour cost is Ra, 200, what profit ie being made on the machine ? ( Solution, Catalogue price = =Rs. 1050 Discount =20% Selling price of the factory 80 = 1050 Tay Rs. 840 Hence S=Rs. 840 © ‘Total cost-+ Profit = Factory cost-++ Administrative and selling expenses-+ Profit , S=F+A+P olf) But selling expenses =Factory cost A=P ee if56 PRODUCTION AND Cog; yy S=F+F+P =2F+P 7 S S=2F-+P ” Now, Factory cost. =Material cost-+Labour cost-+Overhead + F=M+W+E Also M:W:8=1:3:2 or and and & PoM+W+E 200 400 Faz +2004 SP 1200 =e . =Rs. 400 or F: From equation (ii) S=2F+P 840=2 x 400-+P (tgp oes P=Rs, 40 Profit=Rs. 40. Ans. Problem 2:27, 4 certain product is manufactured in batch F100. Phe direct matzrial cost ia found to be Rs. 16, direct la coat Rs. 28, and overheads chargeabie to be Re. 21. If the selling t@ 50% of the factory cost, what must be the selling price of eachi eel ‘0 realise a profit of 18% (i.e. profit is 15% of the selling price). Solution, Total no. of articles, =109 Direct material cost (M) Direct labour cost (17) s. Overheads (2) =Rs. 21 <. Factory cost, F=M+W+E a F=16428+-21=Rs. 65PF samants OF cost gb Now Selling goft _ =50% of factory cost 50 100 x65 =Rs. 32°50 Total cost — Factory cost-+Selling gost CAA = 6543250 =Rs, 97°50 Let Selling price = Total cost. Selling price—Profit [’! Profit 15% of 3] 15 97°50=S— 99° s 97°50=0°85 9 g=Rs. 114-70 s. 114-70 ‘Thus selling price Hence selling price per article 11470 ps 1 aE Rs. 1147. Ans. WRrrobiem 228, An article can be made either on a lathe or on an automatic ‘machine. In the former case the time taken is 2 On an nd factory overheads are 100% of the labour cost. In the latter vase the factory overhead expenses are 200% of the labour cost. The operator i paid at a rate of h.. 4 and Rs. 8 per day respectively (for _ Shours working day). Lf the material cost ia Re. 4 per arttelgs how many articles can be made per day on the automatic machine, #0 that the factory cost is same in both the cases. Solution, Ona lathe : One article is made in 2 hours So labour cost per article 2 =aXteRs 1 [(‘" For 8 hours wages are Rs. 4] Factory overbeads . =100% of labour cost =Rs. 1 Material cost for one article=Rs. 4 Factory cost per article = Material Cost-}+Labour Cost ~+ Factory overheads ~ F=4+1+1 Rs. 6 per article w(t) On automatic machine : Let n=no, of articles produced in one day58 . PRODUCTION AND cosrnt Material cost for one article =Rs. Labour cost for one article 8 i = ("Labour cost=Rs. 8 for one day] Factory overheads=200% of labour cost aSyxq =18 ; a n Fact icle E ‘ory cost per arti a, 18 =44+ ota 24 or Patt = From equations (i) and (i) 24 6=44+—— Por 24 6—4=9 , ” an n= 24 212 Ans. i SA~rcrsem 2-29. ' Pwo operators engaged neni poping machine complete 20 jobs, each weighing 3 kg., ina shift 0) 13. They are paid at the vate of Re. 6, ani Re. 4 per day. ‘The forged materiat 4 costs Rs. 2 per kg. If the overhead and administrative expenses are | 150% of labour cost, find the cost of production per unit. Solution. Total labour cost for one day ) ‘ =Rs. 6+Rs. 4 W=Rs. 10 Now weight of material for 20 jobs ' =20x5 =100 kg. ao ‘ “Material cost ~=2x100=Rs. 200 Administrative and factory overhead =150%,Labour cost —_150x10 Tey =Rs. 15 = Total Cost=Material Cost+ Labour Cost ++Administrativetand factory overhead «Total Cost for 20 jobs =200+ 10415" =Rs. 225 i‘MENTS* OF COST ‘Hence cost of production per unit = 225. Rs. 1125 Ans. 20 AS" oroptem 2:30, A firm producing air, oiroula 7 rm tor want place an improved design’ in the market. Suggest a selling rie, covering the oncost and Keeping the Prt coat ue Proportions on sales. The material in ™ model will coat Ka. 360 and the direct ew ; wages would be Rs. 200. ‘The following figures relate to the previous year. Stock of material on 1st April, 1976 =Rs. 25,000 Sloch of material on glat March, 1975 =e. 27,000 rials in this pertod —=Re. 50,000 ‘Purchase of raw mate? Manufacturing wages 3. 15,000 Works oncost =Rs, 7,500 Adsiniatrative and sales oncost =Re. 7,500 Sales during the year =Re. 95,000 Solution, Works oncost=Rs- 7,500" The rate of works oncost as a percentage of Direct wages 6 during the year 197) 7500 = L500 50% 15,000 50% The rate of administrative and sales oncost as a percentage of ear 1976-77 f Direct wages during the y t 7500 =ig000 750% i Direct material cost=25,000 +50,000—27,000 i M=Rs. 48,000 — i W=Rs. 15,000 E=Rs. 7500 ipa A=Rs. 7500 ~ \ Selling cost of the year 1976-77 : =Direct material cost-+ Direct Wages + Works on cost-+Administrative and sales onvost Rs. 48,000-+-Rs. 15,000-+Rs. 7,500+Rs. 7500 =Rs. 78,000 tae Sales during the year 1976-77 =Rs. 95,000 <. Profit during the year 1976-77 : =Rs, 95,000—Rs. 78,000 i =Rs. 17,00060 PRODUCTION AND. COST! Percentage of profit over the selling cost —17,000 _ 17, . 78,000 78 Now, for the new model, Direct material cost=Rs. 350 Direct labour cost=Rs. 200 Works oncost @ 50% of Direct Wages = 200 x50 _ Rs, 100 . 100 Administrative and sales oncost @ 50% of Direct wages —200x50__Rs, 100 100 “Selling cost of the new model 50 + 200-+-100-+100 s. 750 179, , st Profits = FF % on selling co! 17 | = 0 7B x 75 =Rs. 163°50 Selling price of new model > =750-++ 163°50 | =Rs. 913'50 Ans. oF Problem 231. The market price of a lathe is Re. 5000 and the discount allowed to the distributors is 20% of the market price. It is found that the selling cost is ith of the factory cost and tf the material cost, labour cost and overhead charges are in the raito of i 4:2, what profit is made by the factory on each lati material cost is Rs, 400. ) Solution. Material cost =Rs. 400 Also Material cost : Labour cost : Ts Labour cost Overhead charges and Overhead charges 400 X2=Rs, 800 =Rs.(400 +1600 4-800) =Rs. 2800 “. Factory costBMENTS OF Cosr “| Selliny cae B cost Ith of the factory cost =x 2800 7 =Rs. 700 + Total cost =Factory Cost+ Selling cost =2800-+700 =Rs. 3500 But the selling price of the lathe =Market prict 20 =5000—5000 X 9g e— Discount =5000—1000 =Rs. 4000 But Selling price =Total Cost-+Profit or Profit =Selling price—Total cost =4000—3500 =Rs. 500 Ans, A eroricen 9:32, A person buys a car of Re. 25,000 and runs it at the rate of 6000 km a month. The cor consumes one litre of petrol for at the rate Of ad tne oumer has to spend Re. 7.200 avery Yan on the car for its maintenance, repairs and replacements. Find out the total cost Aer sunning the car per kom. - Take useful life of the car as 120,000 km. LG cost of petrol as Bes, 1°50 per litre. . vtlse find the rate which he should charge per km, if he wants to {int earn Re. 600 per month. Distance run the car as @ taxi 9 run ity the car per month, when run as a taad remains unaltered. Solution, Distance covered per month =6000 km Petrol consumption per month =6000 x Cc =1000 litres Cost of petrol per litre =Rs, 1°50 i ena Sr petrol per month 000 x 1°5 s. 1500 Maintenance and repairs charges per year s. 7200 ad Maintenance and repairs charges per month Hl ie 3 3 sy 62 PRODUCTION AND Cosi Total expenses on the car per month =Rs. (1500-+600) + m=Rs, 2100 Since the car runs 6000 km per month, Cost perkm = 20 =Re. 0°35 Ans. Now when car is used as a taxi, the income per month =Re. 600 Monthly expenses on car . =Rs, 2100+Rs, 600 =Rs, 2700 ~. Rate for one km =2700 =6000 . =Re. 0°45 “ Depreciation cost per km =Rs. 0°21 (App.) Rate he should charge per km =45-++21 =66 paise per km Ans, APeroptern 2:33. A worker's ordinary pay is Re, 0°90 per hour ; he ia engaged on a machine operation, his output being 6 pieces per hour, The overheads to be allocated to work done on his machine amount to Re. 0°60 per hour. Find the factory cost per piece (fgnore material cost). ‘The man ia put on piece work, the rate being fixed at 15 paise ger piece, He increases hia output fo 15 pieces per hour, Find his new rate per hour and new cost per piece. ; Solution, First case: Output per hour =6 pieces Work er’s pay per hour =Re. 0°90 Worker’s pay per piece 0°90 oe =Re. 015 ‘ Overheads per hour=Re; 0°60sit “op cost ! , Overheads per piece a a 6 =Re, 0'10 Factory cost per piece =Re. 0'15-+Re. O10 =Re. 0°25 Ans. ‘When the man is put om piece-work : Worker's pay per piece =Re. O15 =15 pieces 0°60 Output per hour Overheads per hour=Re. Overheads per piece 0°60 “TS ~ =Re. 0°04 (1. Factory cost per piece =Re, 0°15-+Re. 0°04 =Re, 0119 Ans. Worker’s pay pet hour a =15x015 > =Rs.2:25 Ans. -— GP peoblem 234, Find the sales price of a component made out ‘and 2om in diameter. The machining of mild steel bar 6 cm long eration requires 12% hours. Assume the following data : (a) Cost of mild steel ia Rs. 2 per kg- (b) Density of mild steel és 8 gmlo.c. (c) Labour charges Ra, 4 per hour. (d) Overhead charges are 100% of direct labour cost, (e) Profit us 20% of the total cost. Solution, We know, Factory cost =Direct material cost-+Direct labour cost “+ Overhead expenses. Now the volume of the material used == (2)*x6 cu. cm, We. of material =8 x 18°85 50°80 gm. =0°1508 kg.oF PRODUCTION AND Costin Direct material cost =2x0'1508 =Re, 03016 =Re. 0'30 Direct labour cost. =4% + =Rs. 5 Overhead expenses =100% of direct labour cost. 3.5 Total cost =0°30+5+5 =Rs. 10°30 Profit 20% of 10°30 20 " = x 10°30 100 a Hence selling price o =Rs. 12°36 Ans. Problem 2:35. The selling price of @ Product is fixed Re. 40°00. Allowing 2 nel profit of 10% om the selling price, and ovemy head expenses amount to 20% of the total factory cost, find the. factory cost of the component. Solution, Selling price of the product =Rs. 40:00 Profit =10% on selling price =u x10 Pp SRE A _Rs 4-00 w. Total cost. =Rs. (40—4) . =Rs, 36°00 od) Suppose the factory cost of the component =F Overhead expenses =20%, of factory cost Total cost =l12F o(Gi) From equation (i) and (i) 1'2 F=36 - F=Rs, 3000 Ans.SF COST 65 Wr Problem 2°36. A factory ia producing 1000 bolts’ and nuts + Nour on a machine. "Its material coat ia Re. 400, labour cost Re. 50 and direct enpense is Re. 75. ‘The factory oncost ia 160% of the total labour cost and office oncost is 25%, of the total factory cost. If he selling price of each bolt and nut ie Re. 1°75, calculate whether the factory is going in loss or gain and by what amount. * Solution, Material cost ‘ M=Rs. 400 Labour cost W=Rs. 350 Direct expense =Rs. 75 Overhead charges =150% labour cost 150 To0 ~ 359 =Rs. 525 Hence total factory cost =400-+350-+4+75+525 =Rs. 1350 Now, office oncost is 25% of total factory cost 25 o “Office oncost. =7qg7* 1350 =Rs. 337°50 Hence total cost of production per 1000 bolts and nuts =Factory cost-+Office oncost Rs. 1350-+-Rs. 337°50 Rs. 1687°50 Production cost per piece 1687°50 ="To00 s. 1°687 or say Rs. 1°69 per piece But the selling price of management is Rs. 1°75 per piece Hence the factory is earning a profit of Rs. 0°06 per piece. Ams. WS Problem 237. Anarticle can be made either by hand or in quantity by mass production methods. In the first case, the time taken Bhours and overheads are 25% of labour cost. In the latter case lime taken ts fourteen hour per 100 articles, but overheads amount No 130% of labour cost. The material cost per piece is Re. 2 and Finte of pay per hour is 80 Pin each case. Compare the factory costs ith two cases. - Solution. First Case Material cost per article =Rs, 2"66 PRODUCTION Labour cost per article =2x0°80=Rs. 1°60 Over heads =25% of labour cost 25 ; =x 1'60=Rs, 0°40 = Fg9-* H60=Rs Factory cost =24+1'604040=Rs, 4 Mass Production Method Material cost =Rs. 2 Labour cost per article Overheads 30 of labour cost 130 = "112=0°1456 Too X0'112=0'145 +0°112-+0°1456 “2576 Hence ratio of factory cost 4 : 2°25 77:1 Ans. Factory cost Jellowing data Also calculate the selling price per article if the of products manufactured are 10,000. Raw materials used =70 tonnes Oost of raw material =Re. 200 per tonne Wages paid to labour =Ras, 21,900 Salaries of works manager and depart: mental work overheads Carriage inwards Blectricity Gas charges © Rent and rates of factory Rent and rates of office building Stationery Sor works and Office each Depreciation on factory building Depreciation on plant and machinery Depreciation on office building Postage and telegrams Selling aud distribut _ Profit ive expenses67 0887 oF cosT ‘Solution, Cost of raw materials used : 70 x 200=Rs.14,000 Direct labour =Rs. 21,900 Carriage inwards a =Rs. 1,600 Rs. 37,500 Prime Cost Works on cost Salaries of works manager and departmental 24 15,400 work overheads eae “400 Electricity used =Rs. Gas charges Rent and rates’ of factory Stationery used for Works 5, Depreciation on factory puilding | Depreciation on plant y nd machinery Works oncost Factory cost or Works cost _=Prime cost-+Works oncost Rs, 37.500-+Rs. 31,400 =Rs. 68,900 Now Office oncost : Stationery used for office Rent rates of office building. Depreciation on office building Postage and telegrams 1. Total office oncost Production cost =Works or factory cost-++office oncost s. 68900+Rs. 2380 s. 71280 Selling and distributive expenses =Rs, 3,720 .. Total cost =Production cost+Selling and distribu- tive expenses Rs. 71,280+Rs. 3,720 ; Rs. 75,000 rofit =10% on total cost oot = Fqg7% 75000 =Rs, 7500 Hu F . ence selling price for 10,000 products =Total cost+ Profit 75,000-++ 7,500 =82,500= PI , RODUCTION AND co, tng al 68 # ="J0000 =Rs. 8'25 Ans. Selling Price/article 92,500 eta Exercises main elements of costs suitable examples. ? Ex py direct material cost 2 1. What fare the element in detail giving s 2, What do you mean 3, Estimate the volume facture of an eccentric as shown in Fig. 247. Assu facture Ped material to be lost in different shop picceiaee ee ott [Aus. 97912 c.¢}), plain cach | 4 of material consumed in the m: anu- a rem L som home 246 I RO 4 Fig 248 ah Fig. 2°47 __ 4, Fig. 2°48 shows the orthographi i r r Estimate the weight of the te OF the Beck ihe eee weighs 7°2 gm/cu.cm. -block if the material ft seh a] — 425 besdkes.l 625 iD ab K 625-—>}< 62-5 >| - 5. Cal Fig. 248 as shown in Pate, material cost. of manufacturing V-block of material as 7-8 pm/e: ich is made of “mild steel. Assume density gm/c.c, and its cost as Rs, 1=00 per kg. [Ans. } Rs. 0195 kg] Nl