Income statement Cost Sheet - Functional Cost Sheet - Behavioural

Sales (Revenue) 19500 Direct Materials 12,900 Sales 19,430

From S N Maheshwari, Tenth edition, Vol-1 (Page:1.203) (Prob-1) (-) Sales returns 70 Direct labour 2,000 Variable costs:
Net sales 19,430 Import duty 200 Direct Materials 12,900
Particulars Amount (Rs.) Opening stock of raw materials 400 Prime cost 15,100 Direct labour 2,000
Purchase of raw materials 13,195.00 (+) Purchases of raw materials 13195 Factory expenses 1,840 Import duty 200
Sales returns 70.00 (+) Purchasing expenses 600 Carriage inwards 100 Cash discount on sales 0 10
Stock on 31-03-2014 (-) Purchase returns -85 Depreciation on machinery 500 * Export duty 0 300
Raw materials 1,210.00 (-) Closing stock of raw materials -1210 Repairs of machinery 100 * Total variable cost 15,410
Work-in-progress 1,000.00 Raw materials consumed 12900 Opening stock of work-in-progress 300 Opening stock of work-in- 300
Finished goods 1,370.00 (-) Direct and factory expenses (-) Closing stock of work-in-progress 1,000 -700 (-) Closing stock of work- 1000 -700
Productive wages 2,000.00 Productive Wages 2000 Factory (Works) cost 16,940 Adjusted variable cost 14,710
Factory expenses 1,840.00 Factory expenses 1840 General office expenses 300 Contribution 4,720
General office expenses 300.00 Carriage inwards 100 Salaries 600 Fixed costs:
Salaries 600.00 Import duty 200 Depreciation on furniture 40 Factory expenses 0 1,840
Distributing expenses 100.00 Total manufacturing cost 17040 Cost of production 17,880 Carriage inwards 0 100
Selling expenses 700.00 Opening stock of work-in-progress 300 Opening stock of finished goods 410 Depreciation on machinery 0 500
Purchasing expenses 600.00 (-) Closing stock of work-in-progress 1000 -700 (-) Closing stock of finished goods 1,370 -960 Repairs of machinery 0 100
Export duty 300.00 Cost of goods manufactured 16340 Cost of goods sold 16,920 General office expenses 0 300
Import duty 200.00 Opening stock of finished goods 410 Distributing expenses 100 Salaries 0 600
Interest on bank loan 600.00 (-) Closing stock of finished goods 1370 -960 Selling expenses 700 Depreciation on furniture 0 40
Stock on 01-04-2013 Cost of goods sold 15380 Cash discount on sales 10 Distributing expenses 0 100
Raw materials 400.00 Gross margin 4,050 Export duty 300 Selling expenses 0 700
Work-in-progress 300.00 (-) General, Selling and Administrative expenses Carriage outwards 105 Carriage outwards 0 105
Finished goods 410.00 General office expenses 300 Cost of sales 18,135 Total fixed costs 4,385
Sales 19,500.00 Salaries 600 Profit 1,295 Opening stock of finished 410
Purchase returns 85.00 Export duty 300 Sales 19,430 (-) Closing stock of finis 1,370 -960
Carriage outward 105.00 Distributing expenses 100 Adjusted fixed cost 3,425
Carriage inward 100.00 Selling expenses 700 Operating profit 1,295
Cash discount on sales 10.00 Cash discount on sales 10
Sale of scrap 20.00 Depreciation on machinery 500
Depreciation of machinery 500.00 Depreciation on furniture 40
Repairs of machinery 100.00 Repairs of machinery 100
Depreciation of office furniture 40.00 Carriage outwards 105
Total operating expenses 2755
Earnings before interest and tax 1,295
(-) Interest charges 600
Earnings before interest 695
(+) Sale of scrap 20
Taxable income 715
(-) Tax
Earnings after tax 715
Appropriations
Dividends
Retained earnings
The following figures for the month of May 2002 were extracted from the records of a factory:

Particulars Units Cost

Opening stock of finished goods 5,000 50,000.00
Raw materials consumed 300,000.00
Direct wages 100,000.00
Factory overheads 100% of direct wages
Administrative overheads 1 per unit
Selling and distribution overheads 10% of sales
Sales 45,000 675,000.00
Closing stock of finished goods 10,000

Prepare a cost sheet for the month of May 2002, assuming that sales are made on the basis of FIFO principle.

Cost sheet - Functional Units Cost per unit Cost

Raw materials consumed 50,000 6.00 300,000.00
Direct wages 50,000 2.00 100,000.00
Prime Cost 50,000 8.00 400,000.00
Factory overheads 50,000 2.00 100,000.00
Factory / Works Cost 50,000 10.00 500,000.00
Admn. Overheads 50,000 1.00 50,000.00
Cost of Production 50,000 11.00 550,000.00
(+) Opening stock of finished goods 5000 10.00 50,000.00
(-) Closing stock of finished goods 10000 11.00 110,000.00
Cost of Goods Sold 45,000 10.89 490,000.00
Selling and distribution expenses 45,000 1.50 67,500.00
Cost of Sales 45,000 12.39 557,500.00
Profit (Balancing figure) 45,000 2.61 117,500.00
Sales 45,000 15.00 675,000.00

No. of units produced 50,000

Cost sheet - Functional
Units (#) Per unit cost (Rs.) Total (Rs.)
Raw materials (Opening) 6,000
Raw materials (Purchases) 72,000
(-) Raw materials (closing) -7,000
Direct materials consumed 8,200 8.66 71,000
Direct labour 8,200 2.20 18,000
Chargeable expenses (Direct o/h) 8,200 2.00 16,400
Prime Cost 8,200 12.85 105,400
Machine running cost 8,200 3.95 32,400
Work-in-Progress (Opening) 9,600
(-) Work-in-Progress (closing) 8,000 1,600
Factory (Works) cost 8,200 17.00 139,400
Office and administrative expenses 8,200 1.00 8,200
Cost of Production 8,200 18.00 147,600
Finished goods (Opening) 13,680
(-) Finished goods (Closing) 1200 18.00 21,600 -7,920
Cost of Goods Sold 8,000 17.46 139,680
Selling overheads 7,200
Cost of sales 146,880
Profit 16,320 163200
Sales 20.40 163,200

Finished goods

Opening stock 1000 13.68 13,680

Units produced 8200 147,600
(-) Closing stock 1200 18.00 21,600
Units sold 8000
 Functional cost sheet Behavioural cost sheet
No. of units produced 50,000
Particulars Cost (Rs.'000) Cost per unit Particulars Cost (Rs.'000) Cost per unit
Raw material and components 100,000.00 2 Sales
Direct wages paid on piece rate basis 25,000.00 0.5 Variable costs
Power 550.00 0.011 Raw material and components 100,000.00 2
Prime cost 125,550.00 Direct wages paid on piece rate basis 25,000.00 0.5
Depreciation of the plant 1,000.00 0.02 Power 550.00 0.011
Supervisorys' salary 2,500.00 0.05 Sales persons' commission 1,000.00 0.02
Lighting expense 50.00 0.001 Total variable cost 126,550.00 2.53 Marginal cost of production
Factory cost 129,100.00 Contribution -126,550.00 -2.53
Depreciation of other fixed assets 500.00 0.01 Fixed costs
Corporate office expenses 1,000.00 0.02 Depreciation of the plant 1,000.00 0.02
Cost of production 130,600.00 Supervisorys' salary 2,500.00 0.05
Marketing expenses (Fixed) 500.00 0.01 Lighting expense 50.00 0.001
Sales persons' commission 1,000.00 0.02 Depreciation of other fixed assets 500.00 0.01
Cost of sales 132,100.00 2.642 Corporate office expenses 1,000.00 0.02
Marketing expenses (Fixed) 500.00 0.01
Total fixed costs 5,550.00 0.111
Profit -132,100.00 -2.64
Solution
No. of fans sold 2000
Cost sheet - Functional Cost sheet - Behavioural
No.of units sold 2,000
Per unit cost Total Per unit cost Total
Opening stock 20,000 Sales 300 600,000
Purchases 130,000 Direct material 60 120,000
Closing stock 30,000 Direct wages 90 180,000
Direct material consumed 60 120,000 Manufacturing expenses 30 60,000
Direct wages 90 180,000 Selling and distribution expenses 23 45,000
Prime cost 150 300,000 Total variable cost 203 405,000
Manufacturing expenses 38 75,000 Contribution 98 195,000
Rent, rates and taxes 10 20,000 Manufacturing expenses 8 15,000
Factory (Works) cost 198 395,000 Rent, rates and taxes 10 20,000
Administrative expenses 50 100,000 Administrative expenses 50 100,000
Preliminary expenses 4 8,000 Preliminary expenses 4 8,000
Cost of production 252 503,000 Total fixed cost 72 143,000
Selling and distribution expenses 23 45,000 26 52,000
Cost of sales 274 548,000
Profit (Balancing figure) 26 52,000
Sales 300 600,000

No.of units sold 3,000 For the year 2003

Per unit cost Total No.of units sold 3000
Opening stock 20,000 Per unit cost Total
Purchases 130,000 Sales 270 810,000
Closing stock 30,000 Direct material 72 216,000
Direct material consumed 72 216,000 Direct wages 99 297,000
Direct wages 99 297,000 Manufacturing expenses 34.20 102,600
Prime cost 171 513,000 Selling and distribution expenses 23 67,500
Manufacturing expenses 39 117,600 Total variable cost 228 683,100
Rent, rates and taxes 7 20,000 Contribution 42 126,900
Factory (Works) cost 217 650,600 Manufacturing expenses 5 15,000
Administrative expenses 55 164,709 Rent, rates and taxes 7 20,000
Cost of production 272 815,309 Administrative expenses 55 164,709
Selling and distribution expenses 23 67,500 Total fixed cost 67 199,709
Cost of sales 294 882,809 Operating Profit / -loss -24 -72,809
Profit (Balancing figure) -24 -72,809
Sales 270 810,000