COST SHEET QUESTIONS

1. The following particulars have been extracted from the books of J K Production
Co. Ltd., for the year ended 31 March 2012.

Stock of materials as on 1 April 2011 47,000

Stock of materials as on 31 March 2012 45,000
Materials purchased 2,08,000
Drawing office salaries 9,600
Counting house salaries 14,000
Carriage inwards 8,200
Carriage outwards 5,100
Donations to relief fund 4,300
Sales 4,87,000
Bad debts written off 4,700
Repairs of plant, machinery and tools 8,600
Rent, rates, taxes and insurance (factory) 3,000
Rent, rates, taxes and insurance (office) 1,000
Travelling expenses (sales department) 3,700
Travelling salaries and commission 7,800
Production wages 1,45,000
Depreciation written off on machinery, plant and tools 9,100
Depreciation written off on office furniture 600
Director’s fees 6,000
Gas and water charges (factory) 1,000
Gas and water charges (office) 300
General charges 5,000
Manager’s salary 18,000

Out of 48 working hours in a week, the time devoted by the manager to the
factory and office was on an average 30 hours and 18 hours, respectively,
throughout the accounting year. Prepare a cost sheet showing different elements
of cost.
2. The following extract of costing information relates to commodity A for the year
ending 31 December 2012:

Purchases of raw materials 60,000

Direct wages 50,000
Rent, rates, insurance and works on cost 20,000
Carriage inward 1,000
Stock-1 January 2012:
Raw materials 10,000
Finished products – 2,000 Tonnes 8,000
Stock-31 December 2012:
Raw materials 11,000
Finished products – 4,000 Tonnes ––
Work-in-progress-1 January 2012 2,400
Work-in-progress-31 December 2012 8,000
Cost of factory supervision 4,000
Sales of finished products 1,50,000

Advertising, discount allowed and selling costs were 0.40 per tonne sold.
32,000 tonnes of the commodity were produced during the period. Prepare a
Production Statement to ascertain:
(a) the cost of the output of the period and the cost per tonne of production;
(b) the net profit.

3. From, the books of account of M/s ZYX Enterprises, the following details have
been extracted for the year ending 31 March 2012:

Stock of materials – Opening 1,88,000

Closing 2,00,000
Materials purchased during the year 8,32,000
Direct wages paid 2,38,400
Indirect wages 16,000
Salaries to administrative staff 40,000
Freight – Inward 32,000
Outward 20,000
Sales 15,79,800
Cash discount allowed 14,000
Bad debts written off 18,800
Repairs of plant and machinery 42,400
Rent, rates and taxes – Factory 12,000
Office 6,400
Travelling expenses 12,400
Salesmen's salaries and commissions 33,600
Depreciation written off – Plant and Machinery 28,900
Furniture 2,400
Director's fees 24,000
Electricity charges (factory) 48,000
Fuel (for boiler) 64,000
Sale of scrap 500
General charges 24,800
Manager's salary 48,000
The manager’s time is shared between the factory and the office in the ratio of
20:80.
From the above details you are required to prepare a cost sheet to show:
(a) Prime Cost; (b) Factory Cost; (c) Cost of Production; (d) Total Cost;
(e) Profit.

4. The PET Chemicals Co. supplies you the following details from its cost records:

Stock of raw materials on 1 September 2012 75,000

Stock of raw materials on 30 September 2012 91,500
Direct wages 52,500
Indirect wages 2,750
Sales 2,00,000
Work-in-progress on 1 September 2012 28,000
Work-in-progress on 30 September 2012 35,000
Purchases of raw materials 66,000
Factory rent, rates and power 15,000
Depreciation of plant and machinery 3,500
Expenses on purchases 1,500
Carriage outward 1,000
Advertising 5,000
Office rent and taxes 2,500
Traveller’s wages and commission 6,500
Stock of finished goods on 1 September 2012 54,000
Stock of finished goods on 30 September 2012 31,000

Prepare a cost sheet giving the maximum possible break-up of cost and profit.
5. Usha Engineering Works Ltd manufactured and sold 1,000 sewing machines in
2010. Following are the particulars obtained from the records of the company.

Cost of materials 80,000

Wages paid 1,20,000
Factory expenses 50,000
Salaries of managerial staff 60,000
Rent, rates and insurance(office) 10,000
Selling expenses 30,000
General expenses 20,000
Sales 4,00,000

The company plans to manufacture 1,200 sewing machines in 2011. You are
required to submit a statement showing the price at which machines would be
sold so as to show a profit of 10 per cent on the selling price. The following,
additional information is supplied to you:
(a) The price of materials will rise by 20 per cent over the previous year's
level.
(b) Wages rates will rise by 5 per cent.
(c) Manufacturing expenses per unit will rise in proportion to the combined
cost of materials and wages.
(d) Selling expenses per unit will remain unchanged.
(e) Other expenses will remain unaffected by the rise in output.

6. On 30 June 2010, a flash flood damaged the warehouse and factory of ABC
Corporation destroying completely the work-in-progress inventory. There was
no damage to either the raw materials or finished goods inventories. A physical
verification taken after the flood revealed the following valuations.

Raw materials 62,000

Work-in-progress 0
Finished Goods 1,19,000
The inventory on 1 January 2010, consisted of the
following :
Raw materials 30,000
Work-in-progress 1,00,000
Finished goods 1,40,000
2,70,000

A review of the books and records disclosed that the gross profit margin
historically approximated 25% of sales. The sales for the first six months of
2010 were 3,40,000. Raw material purchases were 1,15,000. Direct labour
costs for this period were 80,000 and manufacturing overhead has historically
been 50% of direct labour.
Compute the cost of work-in-progress inventory lost at 30 June 2010 by
preparing a statement of cost and profit.
7. A company manufactures radios, which are sold at 1,600 per unit. The total
cost is composed of 30% for direct materials, 40% for direct wages and 30%
for overheads. An increase in material price by 30% and in wage rates by 10%
is expected in the forthcoming year, as a result of which the profit at current
selling price may decrease by 40% of the present profit per unit. You are
required to prepare a statement showing current and future profit at present
selling price.
How much should selling price be increased to maintain the present rate of
profit(as % of costs)?
8. M K Works can produce 60,000 units per annum at its optimum (100%)
capacity. The estimated costs of production areas under:
Direct material 3 per unit
Direct labour 2 per unit
Indirect expenses:
Fixed : 1,50,000 per annum
Variable: 5 per unit
Semi-variable: 50,000 p.a. upto 50% capacity and an extra expenses of
10,000 for every 25% increase in capacity on part thereof

The factory produced only against orders and not for own stock. If the production
programme of the factory is as indicated below, and the management desires to
ensure a profit of 1,00,000 for the year, work out the average selling price at
which each unit should be quoted.
First 3 months of the year 50% of capacity
Remaining 9 months 80% of capacity
Ignore selling, distribution and administration overheads.

9. Jolly Shoe Co. manufactures two types of shoes A and B. Production costs for the
year ended 31 March 2010 were:
Direct Materials: ₹15,00,000
Direct Wages: ₹ 8,40,000
Production Overheads: ₹ 3,60,000

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

ascertained that: (a) Direct Material in type A shoes consists twice as much as
that in type B shoes;
(b) The direct wages for type B shoes were 60% of those of type A shoes;
(c) Production overhead cost was the same per pair of A and B type;
(d) Administrative overhead for each type was 150% of direct wages;
(e)Selling costs was ₹1.50 per pair;
(f) Production during the year were: Type A 40,000 pairs of which 36,000 were
sold; Type B 1,20,000 pairs of which 1,00,000 were sold;
(d) Selling price was ₹44 for type and ₹28 for type B pair.
Prepare a statement showing cost and profit.