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
Direct labour :
280 Skilled workmen
300 semiskilled workmen
470 unskilled workmen
Direct expenses:
Special equipments hire charges
Special dyes
Work overheads: variable
Fixed
Adiministration overheads
Selling and distribution Overheads
Opening stock of paper
Closing stock of paper
The paper is sold @ Rs 3,000 per tonne.:

: 6,000 tons @ Rs 9000 tonne.

: Rs 250 per day
: Rs 150 per day
: Rs 100 per day
: Rs 12,000 per day
: Rs 250 per tonne of total raw material input
: @ 50% of direct wages
: Rs 2,70,000 p.m.
: @12% of works cost.
: Rs 80 per tonne sold.
: 500 tonnes valued @ Rs 2,501.60 per ton
: 300 tonnes valued at cost of production.

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 wages
Telephone Charges
Office computer purchased
Factory rent and insurance
Machinery purchased
Machinery repairs
Commission on sales
Factory salaries
Carriage Outward
Packing Expenses
Bank interest
Factory electricity
Delivery van expenses
Coal consumed
Depreciation on machinery
Depreciation on computer
Depreciation on delivery van
Office salaries
Printing and stationery

4,20,000
3,52,695
2,75,350
3,54,760
4,25,560
98,847
3,37,650
2,19,588
1,54,090
1,94,450
1,65,895
2,61,880
1,06,850
3,80,125
2,49,600
2,04,180
1,57,360
1,89,325
1,13,000

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

The companys 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

To opening stock material

Amount (Rs)

12,000

Particular

By sales

Amount (Rs)

2,00,000

Finished goods
To purchases

40,000
1,20,000

To cost of moulds

3,000

To salary of factory manger

1,000

To depreciation of machine

800

To gross profit

By
closing
material

stock

Finished goods

20,000
50,000

63,200
--------------

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

2,70,000

2,70,000

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

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

To office salary

9,000

By Gross profit

To salesman salary

6,000

By interest from bank

800

To insurance of office building

1,000

By dividend received

200

By rent received

900

To godown expenses
To directors fees
To telephone charges

800
2,000
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

63,200

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

Units
No.

Rs.
A. Direct materials
Raw Materials(40,000x7)
B. Direct wages
-Skilled workers(40,000x9)
3,60,000
-unskilled workers(40,000x6)
2,40,000
C. Direct Expenses
Royalty on Raw Materials (40,000x3)
1,20,000
D. Prime Cost
E. 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 SOLD
K. Sales overheads:
-sales commission (36,000 x 4)
L. COST OF SALES
M. PROFIT
N. SALES

Units
Cost
Rs.

2,80,000

40,000

7.00

6,00,000

40,000

15.00

40,000

3.00

10,00,00
0

40,000

25.00

40,000

5.00

40,000

30.00

12,00,00
0

40,000

10.00

4,00,000

40,000

40.00

2,00,000

16,00,00
4,000
1,60,000

36,000

40.00

14,40,00
0

36,000

4.00

36,000

44.00

1,44,000

36,000

6.00

15,84,00
0

36,000

50.00

2,16,000
18,00,00
0

2)
TIMES PAPER MILLS LIMITED
Cost sheet for the month ended 31-3-2004
ELEMENTS OF COST

Total
Cost(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
E. Works Overheads
-Variable (50%of direct wages)
-Fixed
F. WORKS COST
G. Administrative Overheads
(12% of works cost)
H. COST OF PRODUCTION
I. Add:Opening stock of finished
goods
(500x2,501.60)
J. Less: Closing Stock of Finished
goods
(300x2,576)
K. COST OF GOODS SOLD
L. SELLING AND DISTRIBUTION O/H
(80 x 6,200)
M. COST OF SALES
N. PROFIT
O. SALES

Tons

Cost per
Ton(Rs)

54,00,000

6,000

900

18,20,000
11,70,000
12,22,000

42,12,000

6,000

702

3,12,000
15,00,000

18,12,000

6,000

302

1,14,24,000

6,000

1,904

23,76,000

6,000

396

1,38,00,000
16,56,000

6,000
6,000

2,300
276

1,54,56,000

6,000

2,576

12,50,800

500

1,67,06,800
7,72,800

6,500
300

1,59,34,000
4,96,000

6,200
6,200

2,570
80

1,64,30,000
21,70,000

6,200
6,200

2,650
350

21,06,000
2,70,000

1,86,00,000

6,200

3,000

3)
SWEET SUGAR LIMITED
Cost sheet for the year Ended 31st March 2004
(Output:2400 Tons)
ELEMENTS OF COST
TOTAL COST
COST PER TON

Rs
A.
B.
C.
D.
E.

Direct Material:Sugarcane
Direct Labour
Direct Expense
PRIME COST
Factory Overheads:
Factory rent
Coal consumed
Factory salary
Machinery repairs
Factory electricity
Machinery depreciation

F. WORKS COST
G. Office Overheads:
Salary
Printing and stationery
Telephone
Depreciation on computer
H. COST OF PRODUCTION
I. Sales Overheads:
Commission
Carriage outward
Packing expenses
Delivery van expenses
Depreciation on vans
J. COST OF SALES
Less: Sold to Govt. (960 tons x
3000)

3,54,760
3,80,125
2,19,588
98,847
2,61,880
2,49,600

1,89,325
1,13,000
3,52,695
2,04,180

3,37,650
1,54,090
1,94,450
1,06,850
1,57,360

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

L. SALES (Open Market)

Rs

TONS

Rs

36,00,000
19,80,000
4,20,000
60,00,000

2,400
2,400
2,400
2,400

1,500
825
175
2,500

15,64,800

2,400

652

75,64,800

2,400

3,152

8,59,200

2,400

358

84,24,000

2,400

3,510

9,50,400

2,400

396

93,74,400
28,80,000
64,94,400
14,25,600
79,20,000

2,400
960
1,440
1,440

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

Factory on works cost

550
9050

Add:- office & administrative expenses

Indirect material
Indirect expenses office
Indirect depreciation

125
125
75
------------

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

Total cost of production

325
9375

Add:- selling and distribution overhead:Indirect material

150

Indirect expenses

350

Advertisement

125
------------

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

Cost of sales

625
10,000

Profit

2,500
----------Sales

12,500

5)
Statement of cost
(For the year ending 31st March 2008)
Particular

Direct material:-

Details (Rs)

Amount (Rs)

Raw material purchased

Add:- opening stock of raw materials

1,20,000
12,000
---------------

Raw material for consumption

Less:- Closing sock of raw materials

1,32,000
20,000
---------------

Raw material consumed

Add:- Direct labour

1,12,000
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
Add:- Opening stock of finished goods

1,59,500
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:Salesmans 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