Accounts II COST SHEET

COST SHEET
Format
Cost Sheet for the year ended ___________
Particulars Rs. Rs.
Direct Cost
Raw Material Consumed
Opening Stock of Raw Material X
Add: Purchases of Raw Material X
Add: Carriage/Freight Inward, Loading & Unloading charges X
insurance-in-transit, octroi charges, dock charges, XX
Import duties, Expenses on purchases.

(-) Closing Stock of Raw Material X

(-) Purchase Return or Return outward X XX
(-) Sale of raw material scrap
Cost of Raw Material Consumed
Direct Labour/Wages, Factory Wages/Productive Wages
Direct Expenses
1) Hire Charges of Specalised Machinery
2) Cost of special Dies
PRIME COST(Main Cost/Basic Cost)

Indirect Cost
Add: Factory/Manufacturing/Production/Work Overheads:

(-) Sale of Factory Scrap/ Wastage X XX

XXX

Add: Opening Stock of W.I.P X

XXX
Less: Closing Stock of W.I.P X
FACTORY /WORK COST

Add: Office & Administration Overheads(General O/H /

Establishment O/H)

Cost of Production XXX

Add: Opening Stock of Finished Goods X
Purchases of Finished Goods X

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 Accounts II COST SHEET

XXX
Less: Closing Stock of Finished Goods X
Cost of Goods Sold XXX
Add: Selling & Distribution Overheads
X
X
X
X XX
Total Cost/ Cost of Sales XXX
Add/Less: Profit or Loss (Bal fig) XX
Sales - sales return(return inward) XXX

1. The Accounts of Artistic Manufacturing Ltd for the year ended 31 st December, 1988 showed
the following :

Rs.
Stock of Materials 1.1.1998 67,200.
Materials purchased. 2,59,000
Drawing office salaries 9,100
General Office salaries 17,640
Bad debts written Off 9,100
Traveler’s Salaries and Commission. 10,780
Depreciation Written Off on office furniture. 420
Rent, Rates, Taxes, and Insurance (Factory) 11,900
Productive Wages. 1,76,400
General Expenses. 4,760
Gas and Water.(Factory) 1,680
Travelling Expenses. 2,940
Sales. 6,45,540
Manager’s salary (two third factory, one third office) 15,000
Depreciation written off on plant, machinery and
Tools. 9,100
Cash Discount Allowed. 4,060
Repairs of Plant, Machinery and tools 6,230
Carriage Outwards.. 6,020
Direct Expenses. 10,010
Rent, Rates, Taxes, and Insurance(office) 2,800
Gas and Water(office). 560
Stock of Materials 31.12.1998 87,920

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You are required to prepare a cost Sheet showing Prime Cost ,Factory Cost, Total Cost and
Net profit for year ended 31.12.1998

2. Prepare a cost sheet showing the total and per tonne cost of paper manufacture by Times
Paper Mills Ltd. for the month of March, 2004. There were 26 working days in the month.
Also find the profit earned by the company.
The details are as under:
Direct Raw Materials:
Paper pulp : 6,000 tons @ ` 900 tonne.
Direct Labour:
280 skilled workmen : ` 250 per day.
300 Semiskilled workmen : ` 150 per day.
470 Unskilled workmen : ` 100 per day.
Direct Expenses:
Special equipments hire charges : ` 12000 per day.
Special dyes : ` 250 per tonne of total raw material input.
Work overheads:
Variable : @ 50% of direct wages.
Fixed : ` 2, 70,000 p.m.

Administrative overheads : @ 12% of works cost.

Selling and Distribution Overheads : ` 80 per tonne sold.
Opening stock of paper : 500 tonne valued @ ` 2,501.60 Per ton.
Closing stock of paper : 300 tons valued at cost of Production.
This paper is sold @ ` 3,000per tonne.

3. The following figure are Extracted from the trial Balance of Gogetter Co. on 30 th September,
1986.
Inventories
Finished Goods 80,000
Raw Materials 1,40,000
Work- in Progress 2,00,000
Office Appliances 17,400

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Plant & Machinery 4,60,500

Buildings 2,00,000
Sales 7,68,000
Sales Return & Rebates 14,000
Materials Purchased 3,20,000
Freight incurred on materials 16,000
Purchase Returns 4,800
Direct labour 1,60,000
Indirect Labour 18,000
Factory Supervision 10,000
Repairs & Upkeep-Factory 14,000
Heat, Light & Power 65,000
Rates and Taxes 6,300
Miscellaneous Factory Expenses 18,700
Sales Commission 33,600
Sales Travelling 11,000
Sales Promotion 22,500
Distribution Deptt. Salaries and Expenses 18,000
Office Salaries & Expenses 8,600
Interest on Borrowed Funds 2,000
Further details are available as follows:
(i) Closing Inventories:
Finished Goods 1,15,000
Raw Materials 1,80,000
Work-in-progress 1,92,000
(ii) Accrued Expenses on:
Direct Labour 8,200
Indirect Labour 1,200
Interest on Borrowed Funds 2,000
(iii) Deprecation to be provided on:
Office Appliances 5%
Plant & Machinery 10%
Buildings 4%
(iv) Distribution of the following costs :
Heat, Light, and power to Factory, Office and Distribution in the ratio 8:1:1.

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Rates and Taxes two-thirds to Factory and one-third to office.

Depreciation on Building to Factory, Office and selling in the Ratio 8:1:1.
With the help of the above information, you are required to prepare a condensed Profit & loss
Statement of Gogetter Co. for the year ended 30 th, September,1986 along with supporting
schedules of :
i) Cost of Sales.
ii) Selling and distribution Expenses.
iii) Administration Expenses.

4. American sprayers Ltd. manufactured and sold 1000 sprayers during the year ended 31 st
March 1989. The summarised accounts are set out below.

To Cost of material 80,000 By Sales 4,00,000

To Direct Wages 1,20,000
To Manufacturing Cost 50,000
To Gross Profit 1,50,000
4,00,000 4,00,000
To Management & Staff Salaries 60,000 By Gross profit 1,50,000
To Rent Rates & Insurance 10,000
To Selling expenses 30,000
To General Expenses 20,000
To Net Profit 30,000

1,50,000 1,50,000
For the year ending 31st March 1990 it is estimated that::
a. Out put and sales will be 1,200 sprayers.
b. Price of materials will rise by 20% on the previous year’s level.
c. Wages per unit will rise by 5%
d. Manufacturing cost will rise in proportion to the combined cost of Materials and Wages.
e. Other expenses will remain unaffected by the rise in output.
f. Selling Expenses per unit will remain unchanged.
Prepare a cost statement, showing the price at which the Sprayer should be marked so as
to show a profit of 10% on the selling price.

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5. A Factory produces uniform type of articles and has a capacity of 2,000 unit per week. The
following information shows the different elements of cost for three consecutive weeks when
the output has changed from week to week.
Units produced Direct Material Direct Labour Factory Overhead
(Partly variable&
Partly fixed).
Rs. Rs. Rs.
800 3,200 1,200 5,600
1,000 4,000 1,500 6,400
1,600 6,400 2,400 8,800

The Factory has received an order for 2,400 units upon the selling price of which it wants a
profit of 25% find out what price per unit it should quote.
6. M/s. M.T. Shoe Co. manufactures two types of shoes A and B. Production costs for the
year ended 3 1st March, 1993 were :
Rs.
Direct Material 15,00,000
Direct Wages 8,40,000
Production Overheads 3,60,000
27,00,000

There was no work - in - progress at the beginning or at the end of the year. It is
ascertained that:

1) Direct material per pair in type A shoes consist twice as much as that in type B shoes.
2) The direct wages per pair for type B shoes were 60% of those for type A shoes.
3) Production overhead was the same per pair of A and B type.
4) Administrative overheads for each type was 150% of direct wages.
5) Production during the year were :
a. Type A : 40,000 pairs of which 36,000 were sold.
b. Type B: 1,20,000 pairs of which 1,00,000 were sold.
6) Selling cost was Rs.1.50 per pair.
7) Selling price was Rs. 44 for type A and Rs. 28 per pair for type B.

Prepare statement showing cost and profit.

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7. A factory can produce 60,000 unit per annum at its optimum (100%) capacity. The estimated
costs of production are as under :
Direct Materials Rs.3 per unit
Direct Labour RS.2 per unit
Indirect expenses:(Factory Overheads)
Fixed Rs. 1,50,000 per annum
Variable Rs. 5 per unit
Semi-Variable Rs. 50,000 per annum up to 50 % Capacity and an
extra expenses of Rs. 10,000 for every 25 % increase
in capacity or part there of.

The factory produces only against orders and not for own stock.
If the production programme of the factory is as indicated below, and the management desires
to insure a profit of Rs 1,00,000 for the year, work out the average selling price at which each
unit should be quoted:
First three month of the year 50% of the capacity.
Remaining 9 months 80% of capacity.
Ignore selling, Distribution and Administration overhead.

8. Tidy Home limited manufactures domestic vacuum cleaners. For the year ending 3 1 s t March
1993, expenses incurred are as follows for an output of 1,000 units.

Raw materials consume 1,00,000

Direct wages 50,000
Factory overheads 80,000
Administrative overheads 23,000
Selling overheads (which are 10% of sales value) 35,000
Distribution overheads (for sale of 900 units) 18,000

For the year 1986-87 following changes are expected:

i) Raw material price are expected to rise by 10% but per unit consumption is accepted to fall
by 5%
ii) Direct wages may rise by 15% but productivity of Labour may bring down the cost of wages
per unit by 10%.
iii) Of the factory overhead, Rs 30,000/- are fixed costs and are expected to remain at the
same level, but variable component thereof is likely to have the same relationship to wages as
if has for the year 1985-86.
iv) Administrative overheads may rise by 20%.

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v) Selling overheads as a percentage of sale value may remain at the same level as that for
1985-86.
vi) Distribution overhead per unit may remain the same.
vii) Output for the year 1986-87 is accepted to be 1,500 units.
You are required to work out the cost per vacuum cleaner for 1986-87 and the selling price at
which it should be marketed in order to make a profit of 20% on sale value.

9. The books and records of Kunal manufacturing company present the following data for the
month of August, 1987.
Direct Labour cost Rs 16,000 (160% of Factory overheads)
Cost of goods sold Rs 56,000
Inventory accounts showed these opening and closing balances:
August 1 August 31
Rs Rs
Raw Materials 8,000 8,600
Work-in-progress 8,000 12,000
Finished goods 14,000 18,000
Selling Expenses 3,400
General and administration 2,600
expenses.
You are required to prepare a statement showing cost of goods manufactured and sold and
profit earned. Sales was Rs 65,000/=

10. M/s. Delhi Hand Press Company produces a standard type of the product. The following
particulars are given from which you are required to prepare cost sheet and statement of profit
for the period ended 31st October 1986:

Opening stock of raw materials 22,000

Purchase of raw materials 68,000
Closing stock of raw materials 10,000
Productive Labour 14% of factory on cost
Factory on cost 25,000
Office overheads 15% of works cost
Selling and distribution expenses 10,000
There was no opening or closing stock of work-in-progress. However the following details of
finished products are available.
Production of finished items Units 10,000

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Opening stock in the beginning for 1,500 units 25,000

Closing stock Units 3,500
You are required to find out what will be the profit which is uniformly earned at 20% on
the selling price.

11. X and Y shoe polish company Ltd, manufactures black and brown polish in one standard
size of tin retailing at Rs 1.08 and Rs 1.20 respectively. The following data is supplied to you
Direct Materials : Polish 7,38,000
Tins 2,88,000
Production Overhead 3,67,200
Administrative and selling O\H 1,22,400
Sales for year were : Black 14,40,000 tins and Brown 6,00,000 tins. The opening and closing
were :
Black Brown
Opening Stock 48,000 1,60,000
Closing Stock 1,08,000 60,000

The Opening Stock of black and brown polish was valued at its production cost of paisa 80.4
per tin and paisa 86.4 per tin resp .The cost of raw material for Brown polish is 10% higher
than that for Black but there is no difference in the cost of tins. Direct wages for Brown at 8%
higher than those for Black polish and production overheads are considered to vary with
direct wages. Administrative and selling overheads are absorbed at a uniform rate per tin of
polish sold. Prepare a statement to show the cost and profit per tin of polish.

12. From the following particulars you are required prepare statement showing the cost of
materials consumed. Prime cost, work cost, Total cost , the percentage of works on cost to
productive wages and percentage of general on cost to work cost

Stock of finished Goods 1-1-1989 72,800

Stock of Raw Material, 1-1-1989 33,280
Purchases of Raw Materials 7,59,200
Productive Wages 5,16,880
Sales of Finished Goods 15,39,200
Stock of Finished Goods 31-12-1989 78,000
Stock of Raw Material, 31-12-1989 35,360
Works overhead charges 1,29,220
Office & General Expenses 70,161
The Company is about to send a tender for a Large plant. The costing department estimates
that the materials required would cost Rs.53,000 and the wages to workmen for making the

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plant would cost Rs.31,200. The tender is to be made at a net profit 20% on the selling price.
Show what the amount of the tender would be, if based on the above percentages.

13. From the following information, prepare a cost and production statement of a Stove
manufacturing company for a year 1989.

Stock of materials 1-1-189 35,000

Stock of materials 31-12-189 4,900
Purchase of material 52,500
Factory expenses 17,500
Factory Wages 95,000
Establishment expenses 10,000
No Opening stock of finished goods
Closing stock of finished goods 35,000
Sales 1,89,000

The number of stoves manufactured during the year 1989 was 4,000.
The company wants to quote for a contract for the supply of 1,000 electric stoves to be
manufactured during the year 1990. The stoves to be manufactured are of uniform quality
and similar to those manufactured in the previous year, but cost of materials has increased
by 15% and cost of factory labour by 10%.
Prepare a statement showing the price to be quoted to give the same percentage of net profit
on sales as was realized during year1989 assuming the cost per unit of overheads charges will
be the same as in the previous year.

14. The operating results of a manufacturing company for the year ending 31-3-81 are
summarised below:
Rs.(in Lakhs)
Sales(40,000 units) 48.00
Less:- Trade discount 2.40
Net Sales 45.60
Cost of sales:
Direct materials 14.40
Direct Labour 12.60
Factory overheads 6.30
Administration expenses 3.60
Selling & Distribution 4.50

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The following changes are anticipated during the year 1981-82:

(a) Units to be sold – to increase by 25%
(b) Materials price – to increase by 15%
(c) Direct Wages - to increase by 12%
(d) Factory overheads - will be limited to Rs 6.56 Lakhs. Administration and selling and
Distribution expenses are estimated to increase by 8% and 14% respectively
(e) Inventory – No change in the opening and closing inventories in quantity. The change in
value may be ignored.
(f) Trade discount – No change in the rate.
(g) Profit Target for the year – Rs 6 lakhs
You are requested to calculate the unit selling price by preparing a cost statement for 1981-
82.

15. Bajaj Electrical Ltd. manufactured and sold 1,000 Electric irons during the year ended 31 st
December 1986.
Following are the expenses for manufacture of 1,000 Electric Irons:

Materials Rs 80,000
Direct Wages 1,20,000
Manufacturing cost 50,000
Selling Expenses 40,000
Other overhead expenses 90,000

For the year ending 0n 31 st December, 1987 it was estimated

(a) Output and sales will be 1,500 Electric irons.
(b) Cost of materials will rise by 25% per unit.
(c) Wages per unit will decrease by 10%
(d) Manufacturing cost will rise in proportion to the combined cost of material and wages.
(e) Selling Expenses per unit will remain unchanged.
(f) Other overheads will increase by Rs 60,000.
Prepare cost statement, showing at which the Electric Irons should be marketed so as to have
a profit of 20 % on Selling price. Workings will form part of the answer.

16. A factory produces a uniform type of articles and has a capacity of producing 1,500 units per
week of 48 hours. The following information shows the different elements of cost for 3
consecutive weeks of 48 hours each when the output has changed from week to week.

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Units produced Direct Material Direct Labour Factory Overhead

in 48 hours (Partly variable&
partly fixed).
Rs. Rs. Rs.
400 800 1,600 3,800
500 1,000 2,000 4,000
800 1,600 3,200 4,600
You are asked to find out the selling price per unit when the weekly output will be 1,000 units
and profit of 8 1/3% on sale price will be made.

17. The following particulars have been extracted from books of M. Manufacturing Co .Ltd.,
Calcutta for the year ended 31st March, 1976

Stock of materials as on 31st March 1975 47,000

Stock of materials as on 31st March 1976 50,000
Material Purchased 2,08,000
Office salaries 9,600
Counting house salaries 14,000
Carriage inward 8,200
Carriage Outward 5,100
Cash discount allowed 3,400
Bad Debts written off 4,700
Repairs of Plant, machinery and tools 10,600
Rent, Rates, Taxes & Insurance(Factory) 3,000
Rent, Rates, Taxes & Insurance(office) 1,000
Travelling expenses 3,100
Travelling salaries & Commission 8,400
Productive wages 1,40,000
Deprecation written off on machinery plant & tools 7,100
Deprecation written off on furniture 600
Directors fees 6,000
Gas & water Charges (factory) 1,500
Gas & water Charges (office) 300
General Charges 5,000
Manager's Salary 12,000

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Out of 48 hours in a week, the time devoted by the manager to the factory and office was on
Average 40 hours and 8 hours, respectively, throughout the accounting year.
Prepare a statement giving the following information:
(a) Prime cost (b) Factory overheads and the percentage on production wages.
(c) Factory cost (d) General overheads and percentage on factory cost.
(e) Total cost.

18. The following information is available from the records of a company making two types
of Electric Ovens, i.e. Deluxe type and Economy type

Material consumed 20,00,000

Direct Wages 12,00,000
Factory Overheads 10,00,000
42,00,000

Other information:

(a) Materials cost per unit in the Deluxe type was twice as much as in the Economy
type.
(b) Direct wages per unit in the Economy type were 50% of the direct wages per unit in
the Deluxe type.
(c) Factory Overheads are the same per unit both in the Deluxe type and Economy type.
(d) Administrative overheads are to be taken at 120% of direct wages b oth in Deluxe
type and Economy type.
(e) Selling overheads are to be taken at Rs 20 per unit sold in Deluxe type and Economy
type.
(f) Production during the year was 7,500 Deluxe and 5,000 Economy and all the units
produced were sold.
(g) Profit charged is 25% of selling price in Deluxe type and 20% of selling price in
Economy type.
Prepare a cost statement with maximum possible break - up of cost per unit and total cost
both for Deluxe type and Economy type

19. Economic Products Ltd. manufactures a standard product. In 1984 the cost of manufacture
of 4,000 units were:
Rs.
Direct Materials 28,000

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 Accounts II COST SHEET

Direct Wages 32,000

Direct Expenses 1,000
Overheads:
Fixed 20,000
Variable 4000 24,000

Sales 1,06,250
It is proposed to manufacture in 1985, 6,000 units.
For production of every 1,000 extra units over 1984 product, the cost of production increases
as follows:
Materials Proportionately
Wages 10% lower than proportionate
Variable overheads 25% lower than proportionate
Fixed costs Rs 500 more
Direct expenses remain same at all level of activity.
From the above ascertain the cost of production for 6,000 units as well as per units; and the
sales price per unit to give the same margin as in 1984.

20. Ajay, Bharat and Chetan are partners doing business as Engineers sharing profit
and losses the ratio of 2 : 1 : I respectively. Ajay is a sleeping partner, Bharat looks
after factory and Chetan looks after administration. The following figures are
extracted from their books for the year ended 30th June, 1985

Raw materials purchased 5,00,000

Wages- direct 3,00,000
Wages - indirect 50,000
Office Salaries 1,00,000
Carriage Inward 10,000
Carriage Outward 30,000
Sales 20,00,000
Opening Stock :
Raw Materials 2,00,000
Finished Goods 50,000
Travelling Expenses 10,000
Advertising 30,000
Power 10,000

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Agent's commission 50,000

Plant maintenance 40,000
Rent, rates, taxes etc. 10,000
(9/10 for works, 1/10 for office)
Sundry Expenses :
Works 10,000
Office 20,000
Building repairs 10,000
Salary to partners :
Bharat 20,000
Chetan 10,000
Deprecation
Plant and Machinery 20,000
Building 10,000
Closing Stock
Raw Materials 2,00,000
Finished Goods 30,000

Building is occupied 9/10 by factory and 1/10 by office.

You are required to prepare a detailed cost statement assuming that 1,00,000 units
were produced during the year.

21. The State Government granted licence to Sweet Sugar Ltd. to manufacture and sell sugar
with a stipulation that 40% of the output should be sold to the State Government at a
controlled price of ` 3,000 per ton and the balance Output can be sold in the open market at
any price.
Following are the details of Sweet Sugar Ltd. for the year ended 31st March, 2004.
During the year 3,600 tons Sugarcane was consumed @ ` 1,000 per Ton.
Direct Labour amounted to ` 825 per ton of sugar produced.
The details of other expenditure are as follows:

Particulars Amount (`)

Direct Expenses 4,20,000
Telephone Charge 3,52,695

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Accounts II COST SHEET

Office Computer purchased 2,75,350

Factory Rent and insurance 3,54,760
Machinery purchased 4,25,560
Machinery Repairs 98,847
Commission on sales 3,37,650
Factory Salaries 2,19,588
Carriage Outward 1,54,090
Packing Expenses 1,94,450
Bank interest 1,65,895
Factory Electricity 2,61,880
Delivery Van Expenses 1,06,850
Coal Consumed 3,80,125
Depreciation Machinery 2,49,600
Depreciation on Computer 2,04,180
Depreciation on Delivery Van 1,57,360
Office Salaries 1,89,325
Printing and stationery 1,13,000

During the year 2,400 tons of Sugar was produced.

The company’s Profit target for the year, for fixing the open market selling price on the basis
of cost sheet, is 10% of its average paid-up capital of ` 1, 42,56,000.
Prepare cost sheet and find various components of total cost and per unit cost and suggest
the Selling Price for Open-Market.

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