Questions:-

1) Dunkel ltd. Started a factory in Navi mumbai on 1st April 2003. Following details are furnished about its activity during the year ended 31st March, 2004:- (Royalty,Works OH @ Machine hour)

Raw Material consumed-40,000 units @ Rs 7 per unit.

Direct wages :-

(a)Skilled worker Rs 9 per unit.(b)Unskilled worker Rs 6 pere unit.

Royalty (on raw material consumed) @ Rs 3 per unit.

Works overheads @ Rs 8 per machine hour.

Machine Hours worked : 25,000

Office Overheads at 1/3rd of works cost.

Sales comission @ Rs 4 per unit.

Units produced 40,000.

Stock of units at the end : 4,000 units to be valued at cost of production per unit.

Sale price is Rs 50 per unit.

Prepare cost sheet showing the various elements of cost both in total and per unit.

2) Prepare a cost sheet showing the total and per tonne cost of paper manufactured by Times Paper Mills ltd. For the month of March, 2004. There were 2 working days in the month. Also find the profit earned bu the company. The details are as under:- ( Computing each element of direct cost)

Direct raw materials:Paper pulp : 6,000 tons @ Rs 9000 tonne. Direct labour : 280 Skilled workmen : Rs 250 per day300 semiskilled workmen : Rs 150 per day 470 unskilled workmen : Rs 100 per dayDirect expenses: Special equipments hire charges : Rs 12,000 per day Special dyes : Rs 250 per tonne of total raw material inputWork overheads: variable : @ 50% of direct wages Fixed : Rs 2,70,000 p.m.Adiministration overheads : @12% of works cost.Selling and distribution Overheads : Rs 80 per tonne sold.Opening stock of paper : 500 tonnes valued @ Rs 2,501.60 per tonClosing stock of paper : 300 tonnes valued at cost of production.The paper is sold @ Rs 3,000 per tonne.:

3) 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 Rs 3,000 per ton and the balance output can sold in the open market at any price. Following are the details of the Sweet Sugar Ltd. for the year ended 31st March,2004.During the year 3,600 tons Sugarcane was consumed @ Rs 1,000 per ton.Direct labour amounted to Rs 825 per ton of sugar produced.(Dual Pricing)The details of other expenditure are as follows:-

Particulars Rs

Direct wagesTelephone ChargesOffice computer purchasedFactory rent and insuranceMachinery purchasedMachinery repairsCommission on salesFactory salariesCarriage OutwardPacking ExpensesBank interestFactory electricityDelivery van expensesCoal consumedDepreciation on machineryDepreciation on computerDepreciation on delivery vanOffice salariesPrinting and stationery

4,20,0003,52,6952,75,3503,54,7604,25,56098,8473,37,6502,19,5881,54,0901,94,4501,65,8952,61,8801,06,8503,80,1252,49,6002,04,1801,57,3601,89,3251,13,000

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 Rs 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.

4) The cost of sale of production ‘A’ is made up as follows:-

Material used in manufacturing Rs 5,500

Material used in packing material Rs 1,000

Material used in selling the product Rs 150

Material used in the factory Rs 175

Material used in the office Rs 125

Labour required in production Rs 1,000

Labour required for supervision in factory Rs 200

Expenses direct factory Rs 500

Expenses indirect factory Rs 100

Expenses office Rs 125

Depreciation of office building Rs 75

Depreciation on factory plant Rs 175

Selling expenses Rs 350

Freight on material Rs 500

Advertising Rs 125

Assuming that all products manufactured and sold, what should be the selling price be fixed to obtain a profit of 20% on selling price.

5) Prepare a statement of cost from the following trading and P/L account for the year ending March 31, 2008

Particular Amount (Rs) Particular Amount (Rs)

To opening stock material 12,000 By sales 2,00,000

Finished goods 40,000 By closing stock material

20,000

To purchases 1,20,000 Finished goods 50,000

To cost of moulds 3,000

To salary of factory manger 1,000

To depreciation of machine 800

To gross profit 63,200

-------------- ---------------

2,70,000

--------------

2,70,000

-------------

To office salary 9,000 By Gross profit 63,200

To salesman salary 6,000 By interest from bank

800

To insurance of office building

1,000 By dividend received

200

To godown expenses 800 By rent received 900

To directors fees 2,000

To telephone charges 700

To showroom expenses 1,200

To delivery van expenses 1,500

To preliminary expenses 2,000

To interest on deb. 700

To market research exp. 600

To net profit 39,000

-------------- --------------

65,100

--------------

65,100

--------------

Answers:-

1)

DUNKEL LIMITED

COST SHEET FOR THE YEAR ENDED 31-3-2004(OUTPUT : 40,000 UNITS)

ELEMENTS OF COST Rs Total Cost

Rs.

Units

No.

Units Cost

Rs.

A. Direct materialsRaw Materials(40,000x7)

B. Direct wages-Skilled workers(40,000x9) 3,60,000-unskilled workers(40,000x6) 2,40,000

C. Direct ExpensesRoyalty on Raw Materials (40,000x3) 1,20,000

D. Prime CostE. Works overheads (25,000x8)

F. Works Cost

G. Office overheads (1/3 of works Cost)

H. COST OF PRODUCTION

I. Less: Stock of finished goods(4,000x40)

J. COST OF GOODS SOLDK. Sales overheads:

-sales commission (36,000 x 4)

L. COST OF SALES

2,80,000

6,00,000

40,000

10,00,000

2,00,000

12,00,000

4,00,000

16,00,00

1,60,000

40,000

40,000

3.00

40,000

40,000

40,000

40,000

40,000

4,000

36,00

7.00

15.00

25.00

5.00

30.00

10.00

40.00

40.00

4.00

44.00

6.00

50.00

M. PROFITN. SALES

14,40,000

1,44,000

15,84,000

2,16,000

18,00,000

0

36,000

36,000

36,000

36,000

2)

TIMES PAPER MILLS LIMITED

Cost sheet for the month ended 31-3-2004

ELEMENTS OF COST Total Cost(Rs)

Tons Cost per Ton(Rs)

A. Direct Materials:-Raw Materials (6,000 x 900)

B. Direct Wages:-Skilled Workmen (280 x 250x26)-Semi-skilled workmen(300x150x26)-Unskilled Workmen (470x100x26)

C. Direct Expenses:-Equipment hire charges(12,000x26)-Special dyes(250x6,000)

D. PRIME COST

18,20,00011,70,00012,22,000

3,12,00015,00,000

21,06,0002,70,000

54,00,000

42,12,000

18,12,000

1,14,24,000

23,76,000

6,000

6,000

6,000

6,000

6,000

900

702

302

1,904

396

E. Works Overheads-Variable (50%of direct wages)-Fixed

F. WORKS COSTG. Administrative Overheads

(12% of works cost)

H. COST OF PRODUCTIONI. Add:Opening stock of finished

goods(500x2,501.60)

J. Less: Closing Stock of Finished goods(300x2,576)

K. COST OF GOODS SOLDL. SELLING AND DISTRIBUTION

O/H(80 x 6,200)

M. COST OF SALESN. PROFITO. SALES

1,38,00,00016,56,000

1,54,56,000

12,50,800

1,67,06,8007,72,800

1,59,34,0004,96,000

1,64,30,00021,70,0001,86,00,000

6,0006,000

6,000

500

6,500300

6,2006,200

6,2006,2006,200

2,300276

2,576

2,57080

2,6503503,000

3)SWEET SUGAR LIMITED

Cost sheet for the year Ended 31st March 2004(Output:2400 Tons)

ELEMENTS OF COST TOTAL COST COST PER TONRs Rs TONS Rs

A. Direct Material:SugarcaneB. Direct LabourC. Direct ExpenseD. PRIME COSTE. Factory Overheads:

Factory rentCoal consumedFactory salaryMachinery repairsFactory electricityMachinery depreciation

F. WORKS COSTG. Office Overheads:

SalaryPrinting and stationeryTelephoneDepreciation on computer

H. COST OF PRODUCTION

3,54,7603,80,1252,19,58898,8472,61,8802,49,600

1,89,3251,13,0003,52,6952,04,180

36,00,00019,80,0004,20,00060,00,000

15,64,800

75,64,800

8,59,200

84,24,000

2,4002,4002,4002,400

2,400

2,400

2,400

2,400

1,5008251752,500

652

3,152

358

3,510

I. Sales Overheads:CommissionCarriage outwardPacking expensesDelivery van expensesDepreciation on vans

J. COST OF SALESLess: Sold to Govt. (960 tons x 3000)

K. PROFIT (10% of Rs 1,42,56,000)

L. SALES (Open Market)

3,37,6501,54,0901,94,4501,06,8501,57,360 9,50,400

93,74,40028,80,00064,94,40014,25,60079,20,000

2,400

2,4009601,440-1,440

396

3,906-------5,500

4)

Cost Sheet

Particular Amount (Rs)

Amount (Rs)

Amount (Rs)

Direct material:-

Material used in manufacturing 5,500

Material used in Packing material 1,000

Freight on material 500

------------- 7,000

Direct wages:-

labour require in production 1,000

Direct expenses:- Direct factory 500

------------

Prime cost 8,500

Add:- Factory overhead

Indirect material used in factory 75

Indirect labour required for supervision 200

Indirect factory expenses 100

Depreciation factory 175

------------- 275

------------- 550

Factory on works cost 9050

Add:- office & administrative expenses

Indirect material 125

Indirect expenses office 125

Indirect depreciation 75

------------ 200

------------- 325

Total cost of production 9375

Add:- selling and distribution overhead:-

Indirect material 150

Indirect expenses 350

Advertisement 125

------------ 475

------------- 625

Cost of sales 10,000

Profit 2,500

-----------

Sales 12,500

5)

Statement of cost

(For the year ending 31st March 2008)

Particular Details (Rs) Amount (Rs)

Direct material:-

Raw material purchased 1,20,000

Add:- opening stock of raw materials 12,000

---------------

Raw material for consumption 1,32,000

Less:- Closing sock of raw materials 20,000

---------------

Raw material consumed 1,12,000

Add:- Direct labour 30,000

---------------

Prime cost 1,42,000

Add:- Factory overhead:-

Cost of moulds 3,000

Factory manager salary 1,000

Depreciation on machinery 800

--------------- 4,800

---------------

Factory cost 1,46,800

Add:- office and administrate overhead

Salary 9,000

Insurance 1,000

Directors fees 2,000

Telephone charges 700

--------------- 12,700

-------------

Cost of production 1,59,500

Add:- Opening stock of finished goods 40,000

--------------

Goods available for sales 1,99,500

Less:- Closing stock of finished goods 50,000

--------------

Cost of goods sold 1,49,500

Add:- selling & distribution ext:-

Salesman’s salary 6,000

Insurance (godown) 800

Showroom expenses 1,200

Expenses of delivery van 1,500

Market research expenses 600

------------- 10,100

----------------

Cost of sales 1,59,600

Profit 40,400

----------------

Sales 2,00,000