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Cost Sheet & Tender Problems:

(Unit & Output Costing) 1) The following information received from the books of R
manufacturing co. for the year ended 31/12/2005.
Prepare Cost Sheet.
Format of Cost Sheet Particulars Amount
Particulars Units Amt Opening stock of Raw Materials 3,00,000
Opening stock of Raw Materials xxx Closing stock of Raw Materials 1,00,000
Add: Purchases of R. M. xxx Purchases of Raw Materials 22,00,000
Carriage inward, Custom duty, Depreciation of factory building 15,000
Salaries 3,00,000
Dock charges, Freight, haulage,
Warehouse exp 20,000
Purchase exp xxx
Office administration exp 40,000
Less: Closing stock of Raw Materials (xxx)
Direct wages 5,00,000
Less: Scrap realized from materials (xxx) Indirect wages 10,000
RAW MATERIALS CONSUMED XXX Electricity (3/4th factory, 1/4th office) 40,000
Add: Direct wages, Productive Advertisement 20,000
wages, direct exp xxx Factory exp 3,40,000
PRIME COST XXX Sales commission 5,000
Add: Factory on cost/ works on cost Rent (2/3rd factory, 1/3rd office) 60,000
or overheads: Exp for participating in an exhibition 10,000
Indirect exp, Power, Fuel, Oil, Sales 40,00,000
Depreciation & repairs of plant & Units produced & sold 10,000
machinery, Factory building & 30% salaries belong to factory, 50 % belong to
maintenance, Factory rent, rates, office & the rest belongs to sales department.
taxes, & insurance, Internal
transportation, Drawing office 2) From the following information prepare a statement of
salary & other factory exp, cost for the year ended 31/12/2004.
Factory lighting, Supervision, Particulars Amount
Opening stock: Raw Materials 16,000
clearing, stationery, Motive power,
Finished Goods 4,500
Laboratory exp, welfare exp, Loose
Work in Progress 8,100
tools written off, Works manager’s
Closing Stock: Raw Materials 7,000
salary xxx Finished Goods 5,800
Add: Opening stock of Work In Work in Progress 4,400
Progress (W I P) xxx Purchases of Raw materials 54,000
Less: Closing stock of Work In Sales 1,30,000
Progress (W I P) (xxx) Direct wages 22,000
FACTORY / WORKS COST XXX Indirect wages 1,800
Add: Office on cost/ Administrative Rent of factory building 6,000
overheads: Rent of office building 3,600
Salary of office staff, Postage, Depreciation of office furniture 1,200
Telephone, & Telegram, Carriage inwards 1,000
Stationery, General exp, Carriage outwards 400
Depreciation on furniture, Audit & Advertisement exp 2,400
legal fees, Bank charges, Director Depreciation of machinery 2,000
fees, Office exp, Counting house Salaries of office staff 12,000
salaries, Legal exp xxx Sales commission 2,800
Motive power 3,500
COST OF PRODUCTION XXX
Direct exp 1,700
Add: Opening stock of Finished
Goods (F G) xxx 3) Accounts of S Ltd. a manufacturing company show
Less: Closing stock of Finished the following details for the year ended 31/12/2005:
Goods (F G) (xxx) Particulars Amount
COST OF GOODS SOLD XXX Stock of Materials on 1st Jan 05 67,200
Add: Selling & Distribution Materials purchased 2,59,000
overheads/ Exp / on cost: Counting house salaries 17,640
Go down rent, Advertisement, Bad debts written off 9,100
Trade discount, Bad debts, Traveler’s salaries & commission 10,780
Traveling exp, Salesman salary & Depreciation on office furniture 420
commission, Carriage outwards, Drawing office salaries 9,100
Showroom exp, Delivery van exp Rent, Rates, & taxes (factory) 11,900
& depreciation, Rent of ware Productive wages 1,76,400
house xxx Director fees 8,400
TOTAL COST XXX General exp 4,760
Add: PROFIT / LOSS XXX Gas, water, factory 1,680
SALES / SELLING PRICE XXX Traveling exp 2,940
Sales 6,45,540
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Manager’s salary (2/3rd factory,1/3rd office) 15,000 Productive wages 1,54,000
Depreciation on plant & machinery 9,100 Depreciation on equipments 7,500
Cash discount allowed 4,000 Depreciation on furniture 4,400
Repairs to plant & machinery 6,200 Directors fees 6,800
Carriage outwards 6,000 Gas, Water (factory) 7,700
Direct exp 10,000 Gas, Water (office) 5,900
Rent, Rates & taxes 2,800 General expenses 11,500
Stock of Materials on 31st Dec 05 87,920 Salary of manager 48,000
Gas & water office 560 Sales 8,67,000
Dividend paid 5,000 Out of total working hours (48 hrs per week),
Income tax paid 8,100 manager supervise 40 hrs on factory and remaining on
office. Also find out percentage of factory on cost to
4) From the following information prepare cost statement wages and percentage of office on cost to factory cost.
for SHIV Trading Co. for the half year ended 30/6/05
Particulars Amount 7) A manufacturer produces one type of product and
Raw Materials purchased 7,00,000 sold out @ Rs.40 per unit. He submits you the
Productive wages 4,00,000 following information.
Stock on 1st Jan 05: Raw Materials 1,10,000 Particulars Amount
Work in Progress 20,000 Stock on 1/10/2005 : Raw Materials 50,000
Finished Goods 60,000 Work in Progress 28,000
Selling & Distribution exp 6,500 Finished goods (7,000 units) 2,01,000
Stock on 31st Dec 05: Raw Materials 1,25,000 Raw materials purchased 4,00,000
Work in Progress 50,000 Direct Wages 1,00,000
Finished Goods 75,000 Indirect wages 10,000
Factory rent & taxes 50,000 Salary of factory inspector 15,000
Factory lighting & insurance 20,000 Administrative expenses 63,000
Carriage inwards 7,000 Factory rent & taxes 2,000
Office overheads 25,000 Stock on 31/10/2005: Raw Materials 30,000
Ascertain selling price so as to earn a profit of Work in Progress 19,000
10% on total cost. Finished goods (2,000 units) 70,000
During the month production was of 20,000
5) Following extracts are from Z Manufacturing Co. for units. Selling & Distribution expenses were @Rs.1.10
the quarter ended31/12/2005. per unit.
Particulars Amount
Purchase of Raw Materials 1,20,000 8) The following date relates to a manufacturing concern
Works on cost 40,000 for the month ended on March 2005.
Direct wages 1,00,000 Raw Materials 8,00,000; Direct Wages 4,80,000.
Carriage inwards 1,440 Machine hour rate @ Rs.4. Machine hours worked
Stock of Materials (1/10/2005) 10,000 12,000 hrs. Office on cost @ 10% of works cost. Selling
Finished Goods (1/10/2005) (1,000 tones) 16,000 con cost Rs.3.25 per unit. Units produced 40,000
Work in Progress (1/10/2005) 4,800 units and units sold 36,000 @ Rs.50 per unit. You are
Stock of Materials (31/12/05) 22,240 required to prepare cost sheet and find out profit per
Finished Goods (31/12/05) (2,000 tons) 32,000 unit.
Work in Progress (31/12/05) 16,000
Sale of finished Goods (15,000 tons) 3,00,000 9) Find out selling price per ton of special paper
Office on cost 8,000 manufactured by a Paper Mill for the Government for
Factory on cost 15,560 the month ended on January 2006. The statement of
Advertisement, selling exp were @ Re.1/tones cost to be prepared with reference to the data given
sold. below:
1) Direct Materials:
6) The following information relates to Prasanna a) Paper Pulp 500 tones @ Rs.500/ton
Company Ltd. for the year ended 31/12/2005. Prepare b) Other materials 100 tones @ Rs.300/ton
Cost Sheet. 2) Direct Labour:
Particulars Amount a) 80 skilled men @ Rs.30 per day for 25 days
Opening Stock of Raw Materials 55,000 b) 40 unskilled men @ Rs.20 per day for 25 days
Closing Stock of Raw Materials 64,000 3) Direct Expenses:
Materials purchased 2,25,000 a) Special equipments Rs.30,000
Salary of drawing office 16,000 b) Special dyes Rs.1,000
Research Expenses 22,000 4) Works Overheads:
Salary of counting House 14,000 a) Variable @ 100% on direct wages
Carriage inward 5,600 b) Fixed @ 60% on direct wages
Carriage outward 8,100 5) Administration overheads @ 10% on works cost
Cash discount paid 3,800 6) Selling & Distribution overheads @ 15% work cost
Bad debts written off 4,800 7) Profit @ 10% of total cost
Rent, Rates, Taxes (office) 3,300 8) Finished paper manufactured 400 tones
Rent, Rates, Taxes (factory) 5,100 9) Credit on account of sale of manufacture of waste
Traveling expenses 8,900 Rs.8,000
Salary & commission of traveling agent 10,000
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There was no work in progress at the beginning Tender or Quotations
or at the end of the month. Calculations are to be
made to the nearest of a rupee.
Problems:
1) In the year 2003 production cost of 6,000 units of a
commodity is as follows:
10) The following information is available form the
Particulars Amount
records of Kanhan Bricks Co. for the month of
Opening stock of Raw Materials 50,000
January 2006. From that you are require to prepare
Closing stock of Raw Materials 7,000
Cost Sheet and find out profit for each 1,000 bricks.
Materials Purchased 75,000
Particulars Amount
Factory Wages 1,50,000
1) Wages:
Indirect Expenses 25,000
A) For making bricks 3,10,000
Sales 2,70,000
B) For digging 80,000
Closing Stock of Finished Goods 50,000
2) Materials:
Company intends to submit a tender for 2,500
A) Lime stone (1,360 tones) 5,76,000
units. Cost of materials and wages has increased by
B) Coal (1,240 tones) 2,85,200
20% and 12 ½ % resp. Calculate Tender price to earn
C) Sand 35,000
a profit of 20% on sales.
D) Stone 92,200
3) Factory on cost @30% of prime cost and office on
2) The following figures relate to the costing of Canvases
cost @ 12 ½ % of factory cost.
manufactured in respect of a certain type of sheet for
4) Opening stock 2,50,000 bricks for Rs.88,850
three months ended on Sept.2004.
5) Closing stock 8,50,000 bricks for Rs.3,02,090
Particulars Amount
6) Sale 50,00,000 Rs.20,31,200
Stock of materials on 1/7/04 5,500
7) Production 60,00,000 bricks (out of this 4,00,000
Stock of materials on 30/9/04 3,500
bricks destroyed)
Factory wages 83,000
Materials Purchased 61,500
11) From the following particulars of a Bricks Works Co.
Sales 1,41,500
you are required to prepare a monthly cost sheet of
Indirect Expenses 13,000
bricks for the month of March 2006 showing cost and
Completed Stock on 30/9/04 29,000
profit per 1,000 bricks.
The number of sheets manufactured during the
Particulars Amount
period was 2,200, and the price to be quoted for 648
Materials: A) Coal 31,500
sheets in order of realize the same % of profits as for
B) Royalty 5,500
the period under review assuming no alteration in the
C) Stores 1,50,000
rates of materials & wages. Prepare a statement of
Labour: A) Direct 1,50,000
Cost and Quotation.
B) Brick making 5,00,000
Overheads: A) Works 25% of prime cost
3) A manufacturer of a vehicle, finds that in 2004 it
B) Office 10% on works cost
costs Rs.7,20,060 to manufacturer 175 vehicles which
Production per month 74,00,000 bricks. Sales
is sold for Rs.5,400 each. Cost was made up of:
per month @ Rs.27.50 (70,00,000 bricks. Stock on
Particulars Amount
1/3/2006 was 2,00,000 bricks whereas on 31/3/2006
Material 2,82,000
was 6,00,000 bricks. You may assume that stock was
Direct Wages 3,24,000
valued at the same rate per 1,000 bricks as the
Factory Overheads 48,600
production for March 06.
Establishment & General Exp 65,460
For 2005, It was estimated that:
12) The Books and records of Anand Manufacturing
1) Each vehicle will require material to the extent of
Company present the following data for the month of
Rs.1,600 and wages of Rs.1,800
August 2005.
2) The factory overheads will bear the same relation to
1) Labour Cost Rs.16,000 (160% of Works O.H.)
direct wages as in the previous period
2) Cost of Goods Sold Rs.56,000
3) The percentage of establishment and general exp on
Inventory Accounts showed these opening & closing
factory cost will be same as in the previous period.
balances:
Prepare a statement showing the profit that
Particulars 1 August
st 31 August
st
should be made per unit if the price of vehicle reduces
Raw Materials 8,000 8,600
by Rs.200.
Work in Progress 8,000 12,000
Finished Goods 14,000 18,000
4) From the following particulars, extracted from the
General expenses 3,400
books of Wox Coolers Ltd Nagpur. You are required to
General & Administration Expenses 2,600
prepare a statement of cost.
Sales for the month 75,000
Particulars Amount
You are required to prepare a statement showing
Stock of Finished Goods on 31/12/05 16,912
cost of goods manufactured & sold and profit earned.
Stock of Raw Materials on 31/12/05 42,000
Purchase of Raw Materials 4,45,500
Productive wages 2,98,000
Sales 8,88,000
Stock of Finished Goods on 31/12/05 45,400
Stock of Raw Materials on 31/12/06 20,500
Works Overheads 65,560
Office & General Overheads 41,528
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The company is about to send a tender for Profit 4,20,000
Coolers. The costing department of the company A work order has been executed in 2005 and the
estimated that required would cost Rs.30,000 & wages following exp have been incurred:
for workmen could cost Rs.18,000. Tender is to be Material Rs.8,000, Labour Rs.5,000. Assuming that in
prepared at a net profit of 20% on selling price. 2005 rate of factory overheads has gone up by 20%,
distribution charges have gone down by 10%. Selling &
5) The following is the financial statement of a company Administration charges have gone up by 12 ½ %. At
which manufactured 1,000 raincoats during the year what price the product be sold so as to earn the same
2005. rate of profit on selling price as in 2004. Factory
Particulars Amt Particulars Amt overhead is based on direct wages & Administration,
To Materials 50,000 By Sales 1,20,000 Selling & Distribution overheads are based on Factory
To Wages 25,000 cost.
To Works OH 15,000
To G. Profit 30,000 8) Bharat Electrical furnished the following information
1,20,000 1,20,000 for 10,000 TV sets manufactured during the year
To Salaries 8,000 By Gross 2005.
To Rent 2,000 Profit 30,000 Particulars Amount
To Gen Exp 12,000 Materials 90,000
To Selling OH 2,000 Direct Wages 60,000
To Packing OH 1,000 Power & Consumable stores 12,000
To Net Profit 5,000 Factory indirect charges 15,000
30,000 30,000 Lighting charges (factory) 5,500
Company is about to send a tender for 500 Salary & Administration charges 3,000
raincoats during 2006. It is estimated that: Selling exp 36,500
1) Materials cost will go up by 20% & wages by 10%. Sale of factory scraps 2,000
2) Manufacturing exp will increase in combined Depreciation of plant & machinery 11,500
proportion of materials & wages Net selling price per unit was Rs.32.50 & all
3) Selling exp and packing exp per unit will remain units were sold. From 1st Jan 2006 the selling price
same. Other exp will remain unaffected by the change will be reduced to Rs.31/unit. It is estimated that the
in output. Prepare Tender so as to yield a profit of 20 capacity of factory will increase by 50% & the rates of
% on selling price. material & wages will rise by 10%. Prepare tender for
2006 if the % of factory on cost to wages & general on
6) A firm manufactured & sold 1,000 typewriters in the cost to factory cost will be same as in the previous
year 2004. Its summarized financial statement for the level.
year is as below.
Particulars Amt Particulars Amt 9) A cooler company manufactured & sold 500 coolers
To Materials 80,000 By Sales 4,00,000 during the previous year 2005. The cost details are as
To Wages 1,20,000 follows:
To Works OH 50,000 Particulars Amount
To G. Profit 1,50,000 Materials 1,20,000
4,00,000 4,00,000 Direct Labour 60,000
To Salaries 60,000 By G.Profit 1,50,000 Direct Expenses 10,000
To R,R& Taxes 10,000 Factory Overheads 70,000
To Gen Exp 20,000 Office Overheads 28,000
To Selling OH 30,000 Selling Expenses 32,000
To Net Profit 30,000 Profit 4,800
1,50,000 1,50,000 Factory overheads are 50% variable of
For the year 2005 it is estimated that: 1) Output & production & selling overheads 60% variable of sales.
sales will be of 1,200 typewriters. 2) Price of material Prepare a tender for 2,500 coolers. Direct Exp
will rise by 20% & of wages by 5% over previous year decreases by 20% & fixed factory overheads increases
level. 3) Manufacturing exp will rise in combined by Rs.30,000. Office overheads & fixed selling
proportion of materials & wages. 4) Selling cost per overheads will show an increase of 25%. No other
unit will remain unchanged. 5) Other exp will remain changes are anticipated. Prepare tender on the basis of
constant by the rise in output. above information it profit is same as was realized
Prepare a statement showing the price at which during 2005 on sales.
the typewriters to be manufactured & sold so as to
earn a profit of 10% on selling price.

7) In respect of a Factory the following figures have been

obtained for the year ended 2004.
Particulars Amount
Cost of Materials 6,00,000
Direct Labour 5,00,000
Factory Overheads 3,00,000
Administration Overheads 3,36,000
Selling Expense 2,24,000
Distribution Overheads 1,40,000
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10) The summarized Trading & P & L A/c of a company
for the half year ended on Sept. 2004 is as under:
Particulars Amt Particulars Amt
To Materials 20,000 By Sales 1,16,000
To Wages 30,000
To Works OH 16,000
To G. Profit 50,000
1,16,000 1,16,000
To Salaries 12,000 By Gross
To Rent 2,000 Profit 50,000
To Gen Exp 8,000
To Selling OH 10,000
To Net Profit 18,000
50,000 50,000
During the half year, the company
manufactured 200 units. For the next half year it is
estimated that:
1) Output & sales will be of 210 units 2) Cost of
materials will rise by 30% 3) Cost of wages will
increase by 331/3 % 4) Manufacturing cost will rise by
25% 5) A bonus of 1/6th of salary is expected to be
paid to office staff 6) Selling & other exp will rise in
proportion to cost of materials. Submit a tender to
earn a profit of 10% on selling price.

11) The Managing Director of a company consults you as

to the minimum price at which he can sell the output
of one of the department of the company which is
intended for mass production in future. The company
records show the following result.
Particulars Amount
Materials 1,30,000
Direct Labour 70,000
Direct Charges 10,000
Works overheads 70,000
Office on cost 28,000
Selling on cost 32,000
Profit 50,000
Sales 3,90,000
It is ascertained that 40% of the works
overheads fluctuates directly with production & 70% of
the selling on cost fluctuates with sales. It is
anticipated that the department would produce 500
units pa. Labour charges per unit will reduce by 20%
while fixed works on cost charges will increase by
Rs.15,000. Office on cost charges & fixed selling on
cost charges are expected to show an increase of 25%.
Otherwise no other charges are anticipated.