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CA Saurav Jindal
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 COST YOUTUBE QUESTIONS 1

RECONCILIATION COSTING
Question‐ 1
Prepare Statement Reconciling Cost & Financial Profits:
Particulars ₹
Net profit as per the financial accounts 1,28,755
Net profit as per the cost accounts 1,72,400
Works overheads under ‐recovered 3,120
Administrative overheads over‐recovered 1,700
Depreciation charged in the financial accounts 11,200
Depreciation charged in the cost accounts 12,500
Interest received but not included in the cost accounts 8,000
Loss due to obsolescence charged in the financial accounts 5,700
Income‐tax provided in the financial accounts 40,300
Stores adjustment credited in the financial accounts 475
Depreciation of stock charged in the financial accounts 6,750
Bank interest credited in the financial accounts 750

Question‐ 2
From the following figures prepare a reconciliation statement:
Particulars ₹
Net loss as per costing records 1,72,400
Works overheads under – recovered in costing 3,120
Administrative overheads recovered in excess 1,700
Depreciation charged in the financial records 11,200
Depreciation recovered in costing 12,500
Interest received not included in costing 8,000
Obsolescence charged (loss) in financial records 5,700
Income‐tax provided in the financial books 40,300
Bank interest credited in financial books 750
Stores adjustment (credit) in financial books 475
Value of opening stock in: Cost accounts 52,600
: Financial Accounts 54,000
Value of closing stock in: Cost accounts 52,000
Financial accounts 49,600
Interest charged in cost accounts but not in financial accounts 6,000
Preliminary expenses written off in financial accounts 800
Provision for doubtful debts in financial accounts 150

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 COST YOUTUBE QUESTIONS 2

Question‐ 3

M/s Rana Traders have furnished the following information from financial books for the
year ended 30th June 1998.

Trading and Profit and Loss A/c

For the year ended 30th June 1998
Particulars ₹ Particulars ₹
To Opening stock (500 units at 17,500 By Sales (10,250 units) 7,17,500
₹ 35 each)
To Materials consumed 2,60,000 By Closing Stock (250 units at ₹ 12,500
50 each)
To Wages 1,50,000
To Gross profit 3,02,500
7,30,000 7,30,000
To Factory Overheads 94,700 By Gross Profit 3,02,500
To Office Overheads 1,06,000 By interest 250
To Selling Expenses 55,000 By Rent 10,000
To Provisions for Bad Debts 4,000
To Goodwill (written off) 5,000
To Net profit 48,050
3,12,750 3,12,750

The cost sheet shows the following:

(a) Cost of material at ₹ 26 per unit and labour cost ₹ 15 per unit produced.
(b) Factory overheads are absorbed at 60% of labour cost
(c) Office overheads are absorbed at 20% of factory cost.
(d) Selling expenses are charged at ₹ 6 per unit.
(e) Opening stock of finished goods is valued at ₹ 45 per unit and closing stock as in financial
books.

You are required to prepare:

(i) A statement showing cost and profit as per cost accounts for the year ended 30th
June 1998: and
(ii) Statement showing the reconciliation of profit disclosed in cost accounts with the
profits shown in financial accounts.

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 COST YOUTUBE QUESTIONS 3

Question‐ 4
The following figures are available from the financial records of ABC Manufacturing Co.
Ltd. for the year ended 31‐03‐1999.

Particulars ₹
Sales (20,000 units) 25,00,000
Materials 10,00,000
Wages 5,00,000
Factory Overheads 4,50,000
Office and administrative Overheads 2,60,000
Selling and distribution Overheads 1,80,000
Finished goods (1,230 units) 1,50,000
Work‐in‐Progress: ₹
Materials 30,000
Labour 20,000
Factory overheads 20,000 70,000
Goodwill written off 2,00,000
Interest on capital 20,000

In the costing records, factory overhead is charged at 100% wages, administration

overhead 10% of factory cost and selling and distribution overheads at the rate of ₹ 10 per
unit sold.

Prepare a statement reconciling the profit as per cost records with the profit as per
financial records.

Question‐ 5
The profit and loss account of Oil India (Pvt.) Ltd. for the year ended 31st March 1997 is as
follows:
Particulars ₹ Particulars ₹
To Materials 4,80,000 By Sales 9,60,000
To Wages 3,60,000 By Closing Stock 1,80,000
To Direct Expenses 2,40,000 Materials 30,000
Wages 18,000
Direct Expenses 12,000 60,000
To Gross Profit 1,20,000
12,00,000 12,00,000

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 COST YOUTUBE QUESTIONS 4

To Administrative Expenses 60,000 By Gross Profit 1,20,000

To Net Profit 60,000
1,20,000 1,20,000

As per the records the direct expenses have been estimated at a cost of ₹ 30 per kg. and
administrative expenses at ₹ 15 per kg. The profits as per the costing records are ₹ 1,10,400.
During the year 6,000 kgs. were manufactured and 4,800 kgs. were sold. Prepare a statement of
costing profit and loss account and reconcile the profit with financial records.

Question‐ 6
From the following Profit and Loss Account draw up a Memorandum Reconciliation
account showing the profit as per cost accounts.

Profit and Loss account (31‐12‐1999)

₹ ₹
To Office salaries 11,282 By Gross profit 54,648
To Office expenses 6,514 By Dividend 400
To Salesmen’s salaries 4,922 By Interest on deposit 150
To Sales expenses 9,304
To Distribution expenses 2,990
To Loss on sale of machinery 1,950
To Fines 200
To Discount of debentures 100
To Net profit 17,936
55,198 55,198
To Income tax 8,000 By Net profit 17,936
To Reserve 1,000
To Dividend 4,000
To Balance c/d 4,936
17,936 17,936

The cost accountant of company has ascertained a profit of ₹ 19,636 as per books.

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