Scribd Logo
Upload

Welcome to Scribd!

  • Chapter 6 Unit Costing

    Uploaded by

    lipika goel
    11 views33 pages

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    11 views33 pages

    Chapter 6 Unit Costing

    Uploaded by

    lipika goel

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 33
    6 SS UNIT OR OUTPUT COSTING ue of cost accounting in which the cost of Produ stained. By this technique we can know the ee | etc. Generally this method is applied in i Unit costing or output costing is that techniqt unit of output and total cost of production is asce! product per unit, per tonne, per litre, per kg, per quintal industries where: (i) production is uniform and continuous, (ii) the units of output are homogeneous or identical, (iii) the cost units are natural, and {iv) the cost per unit of output is to be known e.g., per kilogram, per litre, per metre, per tonng etc. This method is applied in the industries like coal, textile, brick making, sugar, cement etc. The cog is calculated on the basis of the following units in the industries using unit costing: Name of Industry Cost unit Coal Industry Per tonne Textile industry Per metre Cement Industry Per tonne Brick-making Industry Per 1000 bricks Mining Industry Per tonne Milk, Dairy Industry Per ltre/kg Petroleum Industry Per gallon Distillery Per barrel Flour Industry Per quintal, et ™@ Objectives of Unit Costing The unit costing method is used in an industry to achieve the following objectives: (i) To ascertain the total cost and per unit cost of products after a definite period. (ii) To know the proportion of each component cost in total cost such as prime cost, works cost of production. (iii) To make relationship of every element of cost to total cost in the form of percentage: (iv) 2 make comparative study of the costs of any two periods of a product in order to cont \e cost. (v) To estimate the seling price of the product in order to acquire a desired level of Pt (vi) To ascertain the tender price of a work which is to be done in future. 249 costing ao of Ascertaining Cost per unit tries adopting unit costing method can ascertain cost in three ways: preparing cost sheet, reparing cost statement, and reparing production account. ods ‘ wet indust (i) BY (i) BYP (ii) BYP ’ ; . f Cost Sheet: Cost sheet is a document of cost prepared to indicate the total cost and unit cost of 7 in detailed form. It can be prepared weekly, monthly, quarterly etc. as per the requirement. ic p pefinitions . ; / according to1.C.M.A. London, “Cost sheet is a document which provides for the assembly of the detailed 1 of a cost centre or cost unit According to Harold J. Wheldon, “Cost sheets are prepared for the use of the management and ~ Consequently, they must include all the essential details which will assist the management in checking the efficiency of production. s Advantages of Cost Sheet (i) We can have the knowledge of the total cost and per unit cost of units produced during a particular period. (ii) Ithelps in determining selling price of the production. (ii) A ddefinite and efficient production policy can be framed with the help of analytical study of cost sheet. With the help of analytical study of different cost sheets related to different periods of time, a producer can estimate the expected reduction in selling price during the time of competition. Ithelps to keep control over cost of production through a comparative study of the costs of any two periods. (vi) It helps to ascertain the tender price of a work which is to be done in future. "Difference between Cost Sheet and Cost Account The main differences between cost sheet and cost account are as follows: (i) The cost sheet is a statement of information which is not prepared by following the rules of double entry system, while cost account is based on double entry system having two sides as debit and credit. (ii) With the help of cost sheet we can know the various components of the total cost of output clearly, but cost account does not provide this information. \ii) With the help of cost sheet cost of one period can be compared with another period, whereas no such comparison is possible in cost account. (Ww) Wecan have the knowledge of the total cost and per unit cost of a product under various | | (iv) (v) headings through a cost sheet but not with the help of cost account. Cost sheet is based on estimated expenses while cost account is always prepared on the basis of actual expenses. Cost accounts can be prepared with the help of cost sheets, while cost sheets cannot be Prepared with the help of cost accounts. Cost sheet cannot be audited but auditing of cost account is possible. (v) (vi) (vii) 280 eet : . Types of aaeeeem into following thre categories LL Simple cost sheet 1 Comparative cost sheet swith Statement of Prof . ey Specimen of Simple Cost Sheet cost shee forthe month ending o to Pariclars ‘Ad: Profit (may be ‘on ttal costo sales) Seliog Price IL. “Specimen of Comparative Cost Sheet” Cost sheet for the month ending on... Output Units perio Product Total Cost] Peruntcost | Partcuare we pou cosing ML “Specimen of Cost 5 Coat Sheet forthe tral Materal Consumed 0 en LOU" pec oe Expenees ) Prime Cost = = a: Facanios overads = = fadoywors Cost = < lice and Adrian overage - = cesta Prowsctnloce Cost = = “Statement of Profit” Parteuars T Taw cout | Cont Per Unt u penng Stock a Finished Goods ie a: Production during the period Lass Closing slock of Finished Goods 1 ba % on Total Cost or Sales) ee ee pofiadicfes - ‘Direct material Material consumed FatoryWorks Cont ‘Add: Office and Administration overheads Cost of Productin/Oice Cost ‘Ad: Seling and Distribution Expenses ‘Total CostCost of Sales: ‘Ad: rl may be on Teal Cos or Sales) Seling Price, reaper fir fiche ition of Some Important Terms ‘of Work-in-Progress: The work-in-progress isthe incomplete pat of work, which is ss of manufacture. Where the opening and casing balances of wot in-progress are given, ‘of work-in-progress is ascertained as under: TT (i Valuation of Wore vow ai tims tat ncn woone ton Cin Sab one Valuation of Wrkrpogrene WLP) at Factory Cost oF Works Cost: iw Maas tance na cot Fst Oran Open Sh tee Chega of WIP Note: In oe, tho bo fo the valuation of worn progress has not been given vse ha ths as ben mac the bass of Factary Cost of works cost (8) Cost of Goods Sold Cost of god sod ofa product canbe ascertained Won cay Ca Oceana vt contr reuetan yous es we 4) Computation of Prt Ten cn be ascertained by adding the expected profit to total yarn ameunt of ptt ghee a eae ta 1 eye made as under question “a ua centage of Profit on Total Coat: i) Pr eee bg fling mane ooelpoble pence relent ter rete “ “otal Cost % of Profit prali iw ty Percentage of Profit on Sales: I te percentage of oft gen on selina ie, paced in he Fling manne. tage of profits given on seling price, then nt ‘of Prot pott Total Cos» Prof Te ma For example, If production costs € 8.000 and expected proto be (a) 20% on total cos, and cent {1) 20% on sales, the amount of profit in both ofthe cases wil be as: Total Cost x" of Profit _ 800020 1 gay 100 1097 (a) Profit ol Poi 20 20 rrolit = Total Cost x )x ———— or — (6) Peat = Tos 100-% of Profit 100-20 ee 80 cco (5) Treatment of Srap or Detectives: ‘Treatment of Serap: Scrapisincidental residue om certain types of manufacture, The amount seed fom sale of strap shouldbe deducted frm the cos before calculating Factory Cost ‘Treatment of Defective Products: The products which ae not upto the standard are owen a Aclecives detectives arse de tonormal reasons. they can be included infactory cost defectives arse tue to abnormal reasons, they shouldbe transfered to costing P&L Account ‘Mstration 1. From the following details prepare the cot sheet fr the month ening on Sst Mah, 2015, i st Ft nts Ls: cag vs raked i Poncuan = Coat aoe ot me Nas oe 1 Hele clopingank aa hand 7 ec pmaantCoasecktinhegoeds re ghen.heameva att | a ~ i luo peg sack in rate stl hee ighen bathe vale of sng ck Peon a Silane soem ‘of cosng tek canbe dane onthe bal of Oho a ne andy cmp he cng soko ahd gpd a ang shade SO a con 3 parunt, nsaaeMeae BE |< Oneon nous = 00000 (i) the vals of sock wee hon cig sek ted onthe bass both are not given, in such 2 case of per uni Pe uni cost [cost of production) of curent Pte Seg Total output ~ 1,000 units raaw | yoo toe 10 2a 2 1200 two roe} r900 roo roo ry a tao 100 So So smaan] x0 S000 so 1000 10 100 100 290 20 raw} 1200 200 28 1000 too 0 ow {__se 0] xxow] 2400 ro ons 290 29 1,000 a 2800 so 256 Wareheuse Choges ‘sample Expenses Delivery Van Expenses Ccalection Charges od-dotts Aer sales service expenses cost of Sale Proft Sales Reda veuam,peare 3 ct shot or the month of une, 216; ing pat From the fol panculrs Direct Motels Diwct Wages Factory Fue! lecine Power Repairs to Machinery Haulage ‘Drawing Office Salary Lighting and Water (Factory) Factory Rent Factory Insurance (Buiing) Insurance of Plant Depreciation on Machinery ‘Administaton Overheads ‘Seng and Distrbuton Overheads Sales Number of units produced during the month 1,000 units Solution: Cost Sheet for the Month of June, 2015 Partculars Direct Mates Diet Labour Prime Cost Fue! 1 rt 15000 1500 ete ache 500 500 000 50 10% gga Sal0"Y 8.000 600 203 att 8.000 300 7 800 500 ewrance(Buidna) 10.000 1000 ott be) Mel - Machinery 3000 300 jation OF ve +000 1100 a 7 Works Coat [226 00 725.00 raion eee 10000 1000 8 isnbuton Overheads 2.36.00 2.36.000 ana +2000 1200 Tata cost | 248 00 748.00 Prone 52000 5200 aise [300000 | 300000 jaulage, Drawing office 7 eel ae Ct salary, Depresiaton on machinery and Repairs to machinery ‘ Comparative Cost Sheets identical products are manufactured by a manufacture rif io cost sheets for two different pevods of ime are prepared by a manufacture, insucha caseitis alvaysbeter to prepare con sheets ma comparative form. stration 4. From the following particulars, prepare a comparative cost sheet per unt for each of the two petnds Particulars ‘Ste months ended on s06201¢ | 31122014 2 ie 150.000 | 2.80.00 £0,000 | 1,10.000 30.000} 50,000 4.000 4.000 6.000 8,000 7.000 7,000 3.000 3.000 4.000 7.000 40.000] 40,000, 80,000 | 120,000 420.000 | 7.00.00 1.000 units | 1,100 units uk COStT noo" 298 cverheads come to 100% on labour and Works fice overheads to 25% on works cost tion sol Cost Sheet Product "B’ Qutput 1,500 units Partculars % Teta Cost | Coat per Unt ( e) Materials 230 150 beeccd 45,000 30.00 Prima cout | 67500 4500 Works Overheads (100% on Labour 45.000 2000 Werks Coat | 1,12.500 7500 fice Overheads (25% an works cot mae 875 Tota Cost| 1.40625 90.75 Prom | 9375 625 Sates 150,000 100.00 a Solution: Comparative Cost Sheet ‘Six months eng ea da on 31.12.2014 on 306-2014 Output 1000 units saatatts Coe pa | Tota Cost") Ut) [ 15000 | 1,50,000 | Raw Matenats 41,10,000 coo | 60.000 | Facory Wages 000 | 30000 | rect Expenses = zao00 | 240,000 Works overheats: 400 4.000 | Factory Taxes and Insurance 2 600 (6.000 | Light and Water bee Py 7.000 | Depeeiaton on Machiney 7g 300 | 3000 | Factory Ren i 400 44000 | Factory Power ba 10.00 | 20.000 | tnarect Wages 1208) sao | 344000 Se,009 40.0 40.000 | Adminsraton Overnesds soo | 364000 36.00 3000 42000 | 420000 Mustration 6. Prepare a cos! sheet showing cost and profit per unit from the following particulars: Labour (pr unt) 0 Seting Price (par wy 180 No.of ui produced and sold tan saa Mastration 6. ation: The cost account of a manufacturing company gives the following, Closing Stock of Raw Maori Closing stock of Finished Materials Purchases of Raw Materials Work--Progress (opening) ‘Work-in-Progress (closing) Opening stock of Raw Matar Opening stock of Finished Goods Sales of Finished Goods © 46000 3.000 75000 6000 10.000 20000 39.000 2.40000 Workin-progress Is to be made at works cost. Statement of Cost Partials ‘Opening Stock ol Raw Matenas ‘dd: Purchases Less: osng tock of Raw Materials (2) Costof Materia Consumed ‘A Direct Labour Wien progress (opening) Works Ovameads Less: Workin progress (Closing) ‘Add: Offce Expenses (©)Costet Production ‘Ads: Opening Stock of Finished Goods ‘Less: Closing Stock of Finished Goods of Goode sold © (6) Proton Goods Sold Prime Cost Works Cost i) ‘.s7t00 21 1,03,000 13,000 90,000 ion 7- ‘The following extract ‘of costing information relates to a commodity forthe six months ended 30th wo 160,000 0,000 20.000 8,000 19,120 16,000 Preparea: Cost Statement For the stx months ended 30th June, 2015. statement showing (a) Value of Raw Maierials used; (b) Cost of output for the period: /tumover for the period: (d) Net profit for the period; (e) Net profit per ton of the commodity, Panicuars ie ce] 240000 ‘Stock of Raw Materials on 1-1-2015 fchases of Raw Materials Carag wars 10.000 60,000 70.720 282 15 ean: sinc Raw Mats 09 30620 tne Mates Ue ne Werk roe 1 on ax progres on 30-6205 owe arenes Morse rou 22028) ee pe 112095 280728) Frshed Products on 30 ‘add: Advertsing, iscouns et. 025 = 30,000 tonnes) (6) Costof Tumover: Sales fr he perio (90.000 Tons) (4) Net Profit rte period (e) Net Profit per ton 2800190,000 = £0.75 = Cost Sheet of Slates, Mustration 8. , Bricks, etc. ‘ost ot Goode Sold (30,000 Tons) (3,000 + 2,000 ~ 4,000 = 30,000 Tons) Prepare a cost and profit statement from the following particulars related to aslate mat company: Slate quarried 10,000 tons on which royalty @ & 4 per ton is paid. Coal Wages Internal Transport Works on Cost Office overhead Opening Stock Manufactured slates purchased Slate sold ‘Closing Stock expenses: € 0.12 per slate sold. LM 80,000 10% on prime cost 10% on works cost 20,000 slates * 60,000 @ & 1.30 per slate. 200,000 @ € 2,00 per slate 80,000 slates yoo ae 23 Cost —— (Output: 2.00,000 units Tots Con | Cost Por Unt aried 10,000 0n8 @° 4 perton m1 ay ene ae cool 40000 . 50.000 a vaneon eres somo Prima coat | 2.20000 | son cast 10% Pre Cost ar = Worta coat | 242.000 aceon cos ow was Cat aoe Contot Production [266.200 Statement of Profit Parictrs oot | Amount(®) Sines pang stock of sats BE 1391 20.000 25820 vonage of manufactured lates 1.0 rsa ae aay (.)cost of Production zope | 2.68200 zoo | 3.70820 (o osing stock f manuactured Salas @ 1331 per sae tooo | _ 1.08480 Coster site sort | 200000) 264340 1) ng and Packing expanses @E 0.12 perl sk = 24000 Teta Contot aoe | 200000] 288340 prt (Galancng Figure) =| 131860 sang Price @E 2.00 por sat zona | «00.000 (1) No.of Slates manufactured Units Slates Sold 2,00,000 Add: Closing Stock of Sites 130,000 30,000 Less: Opening Stock of Slates 20,000 Purchases of Manufactured Sales 60,000 80,000 No. of Slates manufactured OO 265 550.00 per S bricks SBricks = 247250 the Sandbline Brgy Z (Not S = 09 prot per Behe = LTTE iy of production during the period is ascerained a Stock of Bricks 600s add: Soles of Bricks 3.5005 4.1008 ese: Opening Sock of Bricks 100 ustratlo” 10. a cost sheet from the unit cos of prod Prepare luction per tonne of special paper, manufactured March, 2015 from the following informations —— st Pulp ‘500 tons @ % 50 per ton Coat Sheet ther Materials 100 tons @& 30 per ton (Output: 4000 S) men @ 3 per day for 25 days 40 unskilled men @ & 2 per day for 25 days Direct Expenses Special Equipment © 3,000 Special dyes 21,000 Works Overhead Variable @100% and Fixed @ 60% on Direct Wages, Administration overhead @10%, and ‘and Distribution overhead @15% on works cost {special paper was manufactured and & 800 was realised by the sale of waste mater ‘of manufacture. The scrap value of the special equipment after utiisation in (CA Inter) cos out 0 i” cd ‘ending 31st March, 2015 made: 1.01.52, 284 (alow for waste at |! 2° oF ou packs gets 0K 80.0000 2 € 40 per 1.009 «yack of Brick on Ist January 20,00,000 at ©30 per 1.000 sjck of Bik on 3s Deeb 4000.09 3 #39 eg " f iw Statement of Cost foF the yea! Pareulrs ([Dorect materia Paper pup 500 tors @E 50 PHO? ‘omer Mater 100 tors @E 30 ="10" ution" sates ut: 101522, 1, 2 oF waste 152.284)» 100,00, 000 Bricks Coat Sheet Less: Sale of waste reaksed s Esperses ee kn 2 00 38 ‘on Plant & Machinery (10% on & 3.00000) 0.000 100 7 (10% of wages & coal) (2,25, es a Ad: Woks ovaead ers overroad ( 000 0) 22500 225 \arale 100% on Dect Wages : verta cou | ane Ls Foxes 60% of Dret Wages qnce ovens (2101 wage and cod 2.25.00 52.800) sees] 05628 CoatotProtcton [ —ana5 | 0000s a: Admire Ovread 10% of Werks Cost Statement of Prot Panes ‘Ad: Seng ad Distbuon overhead 15% on Works Cost Mustration 11. From the under mentioned particulars, prepare a Cost Sheet of a brick works sho profit per 1,000 bricks: Wages 1,50,000 Sales Iustration 12. “The following particulars are given from the records of a factory Material issued & 64,000, wages % 56,000, Factory overheads 60% of wages. Out ofthe materials isued % 800 are returned to stores and % 400 are transferred to other jobs. 10% of he production hos twen scrapped as bad and further 20% has been brought upto the specication by increasing factory the production cost per unit of x) be 100 units (B.Com. KUK) Works overhead: 10% of wages and coal. tice Overhead: 225% of wages and coal eee wa9es st ess 58 cost sovrtead th tiahed ret rg 1 abe aiga ae met 4 Finished Casting gant st wo en on a Serrano a oe ‘Amount (2) ‘and Profit and Loss Account given below for the 2.000 televsion-set were manulactared Trading and Profit and Loss Account (For the year ending on 31st December 2014) Parvculars | sac | Parca ‘Arrount @ 2 By Sales 90,000 40.000 | 8y Cosing Sock 20.000 | Raw Matenals 20.000 20,000 | Finishes TV. Sets (200) 40,000 80.000 Works overheads (50% of direct labour) 10.000 Store overheads (10% on cost of material) 00 110% of the castings were rejected being not up to specification and a sum of ® 800 wa So. sale as scrap 10% of the finished casting were found to be defective in production and were rec ne expenditure of additional works overheads charges to the extent of 20% of the propo 2.000 waaes 6500 ‘The total gross output ofthe casting during the year was 2,000 tons. Find out the = Tl costo the saleable casting per ton. a 50.000 50.000 ee Sow ot 08d 270 00 | By Gross Prof bid wa . : “ savor er ToPrintng and Sioneh neo, Toten Sales a solaris el To Genera Expense® ie | To Traveling Expanses a : : : 1 Disrbution Expense . = Statem wen (2.000 7.v) To Advertemert - ToNa Prot ; i ‘maxtor [Ti Ament ssason IstJanuary 2014, amount tan ho ana rs bE op Proouston 2007, 2 ft ‘ paronens nN ‘00 waias | 282500 7 206 15.000 08 tock of. V) wi 7 (tesa § Youarerequitedto prepare @ venue : =: per T Vand profit earned per = Solution: i /Goodt Statement of Output: 2,000 TV Pancalar ‘Opening sock of Rew Matera ‘Add: Purchases . Ccarage Inward on Purchases cer 1) Total Cost per T.V, = 322:500 _ 2 169 24 Less: Closing Stock of Raw Matos 1,300 Materal Consumed (i) Profit per TV. = 177.500 _ 95 49 Dent Woges 1,900 Prime Cost Sales Amount per T.V. = 52000 = 263.16 Works Overhead: 900 nia Woes Opening Stock of TV. 20,000 -§,000 = 15,000 Cos and Powe Stock of T.V. 40,000 - 10,000 = 30,000 rat lance of One Product to other is given Rapa to Pant Depeciaton on Pat Mc. Ganesh manufactures Stools, Chairs and Tables. The materials and wages cot are separated Ade Vownrogen (12014 i Stools 6 Lone: Workin Progress (31 chairs bel < Tables 40 120 Works Cost jee € 6,00,000. You ate asked to wat one table is equivalent to Fou wean ‘Chairs 3000 Total Cost | Cost per chair a (2 1.20000] 60 120000] 40 met oo ed Prime Cost depipones 8333 +¥6.00.000 (552) zsooo0| 4167 2.50000 38 Wors Cost zs4c00| 12567 550,000 Note 4 Stools = 1 Table; 2 Chairs = 1 Table; 1 Table = 1 Table 6,000 = 1. 3,000 = 1,500; 600 = 600 Ratio = 1,500: 1,500: 600 or 15: 15:6 or 5 5:2 Mlustration 16. ‘Acompany manufactures three types of products A, Band C. The costs ofthese produc follows: Seling and Distrbuton overheads Calculate the total cost ofallthe three products assuming that one B products equal to Two Aad One C i equal to five A. Output in units are a 8 © Solution: o © 5 6 45,000 18,000 £30,000 2,500 units 1.250 units ane 250 units Different types of overheads are apportioned on the following basis: ‘we ate given output: A ~2,500; B - 1,250; C - 250 and 1B = 2A and 1C = 54, s ad averting all products on the basis ofp; a con a = 2,500 A ; 1,250 B= ‘i 2500 rol 221 25004 250C = 1.250 4 Cost Sheet ae en = i Tea | eat | aa 2sdunte wea} agp | | oom] ie | | s@] re | 2000 znm00 2s0| sm] sz0| 170 ; seo) a0 sof an780) «ron Boe srt ae ium | sic ee gall te an seme} 1820 ue Taso] —aozeo | ncn Comp 240] saol 40| sa00| 1200 “Aco ) 70) x0 |u| zarso] os00 12000} 490] 2000] m0] nom] 2400 seam | 20] —aro| wan] arm en tmustration 17. Swasti Ltd. makes two types of cars ‘Sonata’ and ‘Accent’. The total expenses during a period are f Materials wages Stores Overneads Depreciation Machine Expenses Labour welfare expenses General Works expenses ‘Administration and Seling exp. Additonal information: Material Cost ratio per unit Labour Cost ratio per unt Machine Expenses ratio per unit Sonata a own by the books for assembly 2,500 of Sonata and 3,750 of Accent as under. © +10,00,000 2,00,000 50,000 +190,000 1.50.00 14.000 110,000 423,500 Accent 2 2 1 Calculate costo each car. Make assumptions supported by proper easons wherever necessary rect Materials rect Wages eae Factory Overheads {2000 48,000 Werks Overheads ‘Stores Overhead (5% of Mater) Machine expenses (23) Depreciabon (23) Labour Weltare ex. (7% of wa9es) 03) which which 1,00,000 were sold 36.00, were sold. Speed’ type 1.20.000 pens of (a) Seling prices were € 7 perpen of With wpe and ¢§ perpen of pepsin son bea otppe ene apa oar on soltion: erincravn & Sting exp (25% 0 wars os) Tota Cost Working Notes Different types of expenses are apportioned on the follwing basis: (1) Matera = 25009 = 7500) 4 Cost Skeet Accent = 3,750%2 = 7,500 Panis Tat | wigtyp anne [sacoye mone @) Labour: ©) | tam Tren vay reomn Sonata = 2500x1 = 2,500], 1.5 in © Accent = 3,750x2 = 7,500, Direct Materia 0,000 200 20.000 i: ie 52,000x 100 ove wanes somo] 10] r200| 000 (3) Stores Overheads: As a percentages of material cost i.e. Tooq000" 75% sneaeaeh or am “ fry Ovetheads rzao| 030| sew | 020 Factory Cont roo] 390] 2280] 190 den Ovenands sowo| 200 | 1a400| 120 scan Senn epee an Late wl expense apportioned on he bs Coat of Production fame | Taso'l arvoes [CPE rraioie id te = General Works expenses = 100100 = 50% wi-4000@° 50, Labour Welare expenses = 140007100 _ 7 contotceods sot | sc0000] 15000) 500] 1000] 910 2,00,000 Satin sps.@t025 por unit suow| sao | 025/250 | 02s (6) Administration and Seling expenses overheads are apportioned on the basis works col Tota cost soaco| tanec] 555] dasco0] 935 4,23,500%100 _ pee, prom | 217200| s220| __145| 185000] 165 164,000 saes[ 73200] 25200] 700] sooo] soo —. teratiod 5 9 er the protuctan ol1B 59) "St cerns Seiavone 5 10, Mate dred cg, beach te t peotac (21) 3023) ad en erie the sling prez of which is © 500 is 28 under: Duero anc increase 1 ensing material pnce by 20% and in the labour The exon joe net coe doany WV #the sina price remains the same bi, gee 2 ange seemed cos. Ht and ales pce under te pg excise 2 ute ava pce hee singe sare Pecan clas a unten preset cordinans has tobe caved (B.Com. KUK 2g ‘Solution: Let Total Cos per unit = X Proft per unit =Y * She price = 2 500 perunit Statement Showing Anticipated Total Cost ° Paasers Preven Cost increase | erecta] awa osox | 20%=010x | tow 030% 10% = 0.03 x Oneses ozox = » Tota Coat x 0.13% 419%, |n elation to present velira price, profit is reduced by 30% Ye 112% +070Y 259 By shen equction (i) ad), we et X= 39 v= 150 Sale = 350 + 150 = 560) 150 3 1100 =42.85% (Working Notes) >= 42.85) 395% 42.85 100 = 2169 IMustration 20. ‘A manufacturer finds that an increase in the cost of producton has taken place Formenty his cost Pou Materials 30%; Wages 20%; Rent rates etc. 5%; Fuel 10%. General Expenses 15% Now there has teen crease of 50% in fuel; 30% in materials. 25% in wages and 207 in rent and rates ete He consults you as to what percentage he must ado the seling price inorder to obtain the samme rrofit? What would be the result of your calculations and how would you prove to him that they were conec?” ‘BCom MDU stn pst tt! 278 “othe, ms Mlustration 21 jon 22- sor 1.500 Annas 15% incon og sw has received an order for thee dere ter, iy 10% of therew materi wedare waged nee ‘of casting weighing 18, 45 and 27 tons ea" ce of raw materials. rulacuingand ae sold as scrap for 20% of te selng price giving the same percentage of tm Material costs have been 45% of cost of sales Labour costs have been 40% of cost of sales. Overhead costs have been 15% of (iv) The anticipated increase in costs in rel ie cos Pe The roovesectvey. The consol hemeuls tr ete eee PS GE A £10500 3 hs 7360 respectively. vee diferent types of castings are 2920: £1,050 sony oerendSelirg expenses aretobe expeced SSoliengpice Fede 0% o be price per ono present sales prices would ca ‘casting if the profit to be takenis 25% offinal cost fit. wea, decrease in the amount of the present gross Solution: ae (BCom MDU) solution: Selling Price = & 1,500 Statement of Cost of Production Let us assume Total Cost = x and Profit=y_ Pariculars Statement Showing Anticipated Total Cost per unit casing A 8 c tems Present Cost Increase Sates Matar 04s 18% | w]e paris @% 250 per ton on input (wich s 20; 50 nd 30 on. oa all econ: bauad fate bide asx Sao of Sorap2(at€ $0 per ton) a pa oe ooo us = cost of Materials Used fan | Caceres ‘eel ; I ae a | seco tes Total cost can be calculated by forming following equation: Cont Meutss szo| 1980 350, xty=1 500 Prime Cost sam] mam] 120 1.1075x+0.65y=1,500 Factory overhead (40% of Wages) 1,600, 4.200, 2.200. By solving equation (i) and (ii), we get ‘Works Cost 11.420 28,000 15,400, x= 1,147.50 Office Overheads (50% of factory overheads) 800 2.100, 41,100, y=% 35250 ‘costof Production v220| 30.100] 16500 Sales =1,147.50+352.50=1,500 sang overneads3 (5% of sale) ais | __2007, 4.100, Comparative Statement of Cost, Profit and Sales Price ola Cost 13.035, 32.107 17,600 Pertcders. Present Cost Expected Cost Profit (25% on Cost of Sales) ja sa sa00. a sah vee] aoa] 2200 os] over] swat Matenals 45% 516.375, Labour 40% 459.000 (10%) 45.9 504.800 Seog Price per ton Working Notes: vertnads 155 ima = ‘Actual weight Jal weight: Total Cost 1.147500 1234 « A=18. 180 _ 99 ton 5-45, 102 soma C227 3) = 208 i ooo 0 informed Selling Price = 500 » %1,270.90 calories eee 55 (2) The sale of scrap will be made @ & SO Pe 20% of the cost price of raw materials. = 271,661 (approx. approx.) (3) Selling overheads are coloulated as follows: — lll ae ce ’ : Direct wages paid were & 36,000 in case of p wo) Spportioning Wages and salaries ang ‘and & 32.000 for B, Th i pou made ese a This basis s used for (a) A50. Production ofthe these poducs-P, 350 w ‘ on the Ae dstbution overheads ote oo S88 of rpc cmveson cos (uy Al the production was sold out ‘he als realsasons Youare required 1 Prepare cos sheet of bth the products and on workout feamed on each of c= $3, 16500= 1.100 375 Mastration 23. a Engineering Works hasa machine shop in which itmanufacturestWo auto pats Pjangp oo FiandFp Forte quar eningon Dec, 2016 he flowinge dant vatadle { rs Of Raw Material =F = oe See © |, won|. am] re Heft aes] sa es ee eS wo] sass] a sin owten eee aa laa Coste Production zea} as708 79.340 ae | iaw] |e st4oo | 392060) 4.1840 taneo| ssw] rorseo aon] soso] 520000 |) Production and Sale of P, and P, were as under P, Production (pieces) are known as 6000 ished goods fallen eae ‘onversion Costs: The cos’ of converting the raw mater nt version cost. It includes direc labour cost and manufacturing verhenss FEEEETE , june Lean: sot ol nanan gone tT | | soteann at Genes Frat oo RAH NAD fy Geos Prof OM To Seling Evrenses Yraveltors Wages & To Gutman Canage | sopea soos n ood Rectan | Saye cae ncaa Heaeston Swen Pae Repaes sad COA AOKSH | cana Crags te Co Peet | Saar Ca Prater seus oa ane sho rgthe cote each femal RE mgat cust prtew, working 1 ORR a 024 038 008 oy By conan Preskcton of 1.85.00 nn ct S00 | 928.000 By Sates (112.000 ‘264 00 By Cone Prxncton Ne $00 | 324.000 (85.000 ers) ByCiosing Se (15000%08) | 500] 78.000 20s 2.000 we A CMW os By Costaf Pancton of tows By Sees ol ANOS) ANAY | a cosy Se Stew! sane | sa) Se Jd Ss OOD ANN + A ———— “a Tie prot: Buty 256 eater "egy se He - si senses BOE WO wens recur as Se Se A crap % pene tipes ' wres B = neuen FEI ES 1 pa J han eat ot EOD “m5 sys ST tt dP 05 eran bape a eepecnter ets od ia ren om espe ee ery ete seas rrp YR ADL CT AEG PED 28, etal nev hatin Se heb LI BEALL SEPIEP ACK EAR Gy oer ha 009 tet h 2lom Ubi oeg = 21873500- 215000 = 2.37500 (20% on Seles) 3. Total Cost of Production: A= 25,000 B= 54,000 C = 72,000 To VO YM Depppe naga | PCs 000 ooh wes, ‘nin at | 97 eM we nn am genie WAKA He ° Prete, eng Ss bm Co (5 20009) oyna suo cen wah 2110 8) Les: Gales a0 Chonieg Shark (40,00 * SAL) tages f 0109 “Traraterted to th Proticon ble ae com ol yarn transfered to doth production Ne 2 6,42,000 _, 9 £6,000 tbs 17,96,000 Ibs = £354,430 Cloth Production Account ‘ova Production Ac ToSto0s 2,40,000 Ibs, for weaving stores, Solution: Yarn Production Account Padticstars Woight ‘Amount Particulars: ‘Weight | Amon in toe (ul in tos. ul To Cotton 20,80,000 | 5,20,000 | By Salos of Waste 4,22,000 ‘4000 Tost 00] somo | oy Cott potcton ToWogoe 60,000 | at € 0.3493 por 16,66,000 | 42/0 Toh com Reais] psn nomo| as we ee eter aig eer rest of I er Sein of Slog F 21.000, G ere 7 2 Wares TE 232 Se ee ar [CO Tyo of Raw Matenal on st APA, 2015 ‘Add: Matenals Purchased ‘Sam Lest tok of Raw Natal 07 206 2015 “- Nateals Consumed ne im ia a: apes oxo = rime Cost aS eae an ay Ad: nde charges = costof reduction Mien ‘tna Statement of Profit Cons 4 ( f, i ‘Completed Stock on 142015 Pariculars | pe Con Pron sg Ta uae Camp Sek 3062015 Re costt cae ine Pit mon Se) “is ss Soe ia Tender Price (for 3,000 machines) Pate Pernod | Ta | 733] i 50,000 Ine Expenses | £2922 3.000] Quotaton/Tender Price Prime Cost Cost of Production ou Tompites txkin and on [_comeetes S “Te numberof fans manufoctured during the sx meni induding Tred for are to be of uniform sae and quay, and Sakari fae nadntee hg ea ‘as rom Ist August, the cost of factor labour has increased by 10% and that of matenal by 15% opening Stock of Material ‘add: Purchase of Materials std 233 there iS change in the prices of — rials and Labou rin Future en (Output: 12,009 i 6 wo 430. Per Machine | we ‘os, 2014 9 COIN) Wes QU que From the folowingdata, prepareastatemen'shouingihe pa ac ng oN oe 'e price to be quoted to give the same 50.000 reted Stock in hand on 30-6:2014 1.00.00 sngthe six months to 30th June,2014 7 5.40,000 Statement Showing Cost of 4,000 Fans (forthe year ending 2014) a Total Cost " 1.00.00 -1s0.900 250,000 Less: Closing Stock sion Materials consumed ‘Ade: Factory Wages 2am ome cost | 5.35005 ‘Ade: Indirect Charges isi costal Procvcon | 585 000 Statement Showing Profit ee : Opening Stock < Cost of Production ee 508.00 Less: Closing Stock Sa Costa goods 08 =e 4.000 Profit (10% on Tumover) Satin Pree =p es renee a | | ceca Wages = | ase 108 nena ss | wsrect rarges | oft 10% on seling se oF (18 f oS) m When Material and Labour for Tender are Given Mustration 31. Baia) Enterprises i the manufacturer of scooters It finds that in 2014, it costs € 7 * smanuiacane 173 rosters which i sold for ¥ 5.400 each. The cost was made up of: Statement of oe os (175 « 61600) soe wages 17S E180) ae: Fry ova 48600 90 158] arson | x28,000 [ 100, ea ‘add: Often overheads he (65460. oo 10] 642280. 2 (50 [sey Coste Pehcsen | 7: Pro Seang rea | 91 5 When There is Change in Overhead Also Materials ~ ¢ 282,000: ai nustration 32. : “rhe following figueshave been extracted rom he cosrecor la compan forthe ent 2018

    You might also like