Chapter 1 COST SHEET

Q1. The Accounts of B Manufacturing Ltd. for the year ended 31.12.2008 show the following:

Particulars	Rupees
Stock of material on 1.1.2008	67,200
Materials Purchased	2,59,000
Drawing Office Salaries	9,100
General Office Salaries	17,640
Bad Debts Written Off	9,100
Traveller’s Salaries and Commission	10,780
Depreciation written off on office furniture	420
Rent, rates, taxes and insurance (factory)	11,900
Productive wages	1,76,400
General Expenses	4,760
Gas and Water	1.680
Travelling Expenses	2,940
Sales	6,45,540
Manager’s Salary (two-third factory, one-third office)	15,000
Depreciation written off on Plant, Machinery & Tools	9,100
Cash discount allowed	4,060
Repairs of Plant, Machinery & Tools	6,230
Carriage Outwards	6,020
Direct Expenses	10,010
Rent, Rates, Taxes and Insurance (Office)	2,800
Gas and Water (Office)	560
Stock of material on 31.12.2008	87,920

You are required to prepare a cost sheet showing Prime Cost, Factory Cost, Total Cost and Net Profit for the year ended 31.12.2008.

Q2. The following details have been obtained from cost records of Gattu Paints Ltd.

Particulars	Rupees
Stock of material on 1st September, 2008	75,000
Stock of material on 30th  September, 2008	91,000
Direct Wages	52,500
Indirect Wages	2,750
Sales	4,31,000
Work-in-progress on 1st September, 2008	28,000
Work-in-progress on 30th September, 2008	35,000
Purchase of Raw Materials	2,15,000
Factory rent, rates and power	15,500
Depreciation of Plant & Machinery	66,500
Expenses on purchases	54,500
Carriage outward	3,500
Advertising	3,500
Office rent and taxes	2,500
Travellers wages and commission	6,500
Stock of finished goods on 1st September, 2008	54,000
Stock of finished goods on 30th  September, 2008	31,000

Prepare a cost sheet giving maximum possible break-up of cost & profit.

Q3. The following particulars have been extracted from the books of M Manufacturing Co. Ltd. Kolkatta for the year ended 31^st March, 2009

Particulars	Rupees
Stock of material on 31st March, 2008	47,000
Stock of material on 31st March, 2009	50,000
Materials Purchased	2,08,000
Drawing Office Salaries	9,600
Counting house Salaries	14,000
Carriage inwards	8,200
Carriage outwards	5,100
Cash discount allowed	3,400
Bad Debts Written Off	4,700
Repairs of plant, machinery & tools	10,600
Rent, rates, taxes and insurance (Factory)	3,000
Rent, Rates, Taxes and Insurance (Office)	1,000
Travelling Expenses	3,100
Traveller’s Salaries and Commission	8,400
Productive wages	1,40,000
Depreciation written off on Plant, Machinery & Tools	7,100
Depreciation written off on furniture	600
Directors fees	6,000
Gas and Water charges (Factory)	1,500
Gas and Water charges (Office)	300
General Expenses	5,000
Managers Salary	12,000

Out of 48 hours a week, the time devoted by the manager to the factory and office was on an average 40 hours and 8 hours respectively, throughout the accounting year.

Prepare a statement giving the following information:

a. Prime Cost                              b. Factory overheads as the percentage on production wages

c. Factory Cost                 d. General Overheads and percentage on factory cost

e. Total Cost

Q4. Prepare a cost sheet showing the cost per tonne of paper manufactured by Mansi Paper Mills in January, 2009 under the different elements of cost.

Direct Materials:

  i.     Paper Pulps 1,000 tons @ Rs 80 per ton

 ii.     Other miscellaneous materials  200 tons @ Rs 50 per ton

Direct Labour:

220 skilled men for 25 days @ Rs 6 per day

110 unskilled men for 25 days @ Rs 4 per day

Direct Expenses:

Special Equipment Hire Charges Rs 10,000

Special Dyes Rs 5,000

Works Overheads:

Variable @ 100 percent on Wages

Fixed @ 50 percent on Direct Wages

Administrative Overheads @ 10 percent on works cost

Selling & Distribution Overheads @ 20 percent on works cost

Finished paper manufactured / produced 1,000 tons

Sale of Waste Rs 2,000

Sales Rs 400 per ton

Q5. The following figures are extracted from the Trial Balance of Algetter Co. on 30.9.2008

Particulars	Rupees
Inventories:
Finished Goods	80,000
Raw Materials	1,40,000
Work-in-progress	2,00,000
Office Appliances	17,400
Plant & Machinery	4,60,500
Buildings	2,00,000
Sales	7,68,000
Sales Return and Rebates	14,000
Materials Purchased	3,20,000
Freight incurred on materials	16,000
Purchase returns	4,800
Direct Labour	1,60,000
Indirect Labour	18,000
Factory Supervision	10,000
Repairs and Upkeep – Factory	14,000
Heat, Light and Power	65,000
Rates & Taxes	6,300
Miscellaneous Factory Expenses	18,700
Sales Commission	33,600
Sales Travelling	11,000
Sales Promotion	22,500
Distribution Department Salaries and Expenses	18,000
Office salaries and expenses	8,600
Interest on borrowed funds	2,000

Further details are available as follows:

  i.     Closing Inventories:

Finished Goods: Rs 1,15,000; Raw Materials: Rs 1,80,000; Work-in-progress: Rs 1,92,000

 ii.     Accrued Expenses on:

Direct Labour: Rs 8,200; Indirect Labour: Rs 1,200; Interest on borrowed funds: Rs 2,000

iii.     Depreciation to be provided on:

Office Appliances: 5 %; Plant & Machinery: 10 %; Buildings:  4%

iv.     Distribution of the following Costs:

Heat, Light and Power to Factory, Office and Selling in the ratio of 8:1:1

Rates and Taxes two-thirds to Factory and one third to Office

Depreciation on Buildings to Factory, Office and Selling in the ratio of 8:1:1

With the help of the above information, you are required to prepare a condensed Profit and Loss Statement of Algetter Co. for the year ended 30^th September, 2008 along with supporting schedules of:

     i. Cost of Sales          ii. Selling & Distribution Expenses           iii Administration expenses

Q6. The Government of India has instituted the dual pricing system in the industry in which your Company operates. You are the Head of the Costing Division of Surya Textiles Co. Ltd. Your Company produces a standard type of cloth, 50% of which is procured by the Government at a price of Rs 4 per meter.

You are requested by the Managing director of your Company to suggest suitable price for the cloth to be sold in the open market. Production during 2008-2009 had been 20,00,000 meters of cloth. Relevant information is given below:

Particulars	Rupees
Cotton consumed	10,00,000
Direct Labour in Factory	10,00,000
Carriage Inwards	50,000
Indirect Labour in Factory	4,00,000
Salary of Works Director and other staff in the factory	2,50,000
Water, Power, Local Taxes (Factory)	5,00,000
Dyeing, Bleaching, etc.	10,00,000
Depreciation (Factory)	2,00,000
Excise and other Taxes	30,00,000
Miscellaneous Expenses (Factory)	1,00,000
Office Salaries	10,00,000
Salary of Managing Director	1,00,000
Depreciation of Machines (Office)	1,00,000
Miscellaneous Office Expenditure	1,00,000
Purchase of computer for office	20,00,000
Miscellaneous purchase of furniture and machines for office	5,00,000
Dividends paid	12,00,000
Directors fees	2,00,000
Advertising and publicity	10,00,000
Commission paid on sales	10,00,000
Commission paid to Foreign Buyers	1,00,000
Packing and forwarding (Sales)	2,00,000
Expenditure on Sales Depots.	4,00,000

Following further information is available:

a.     The Company expects a fair return of 20% of its paid-up capital, which is 1,00,00,000

b.     Marketing expenses outstanding are Rs 1,00,000

Suggest the open market price after preparing a cost Analysis in a columnar form.

Q7. From the following information relating to the manufacturer of a standard product during the month of September 2008, prepare a statement showing cost and profit per unit:

Raw Materials used	Rs 40,000
Direct Wages	Rs 24,000
Machine Hours Worked	9,500
Machine Hour Rate	Rs 4 per hour
Office Overheads	20% on works cost
Selling Overheads	Re 1 per unit
Units Produced	20,000
Units Sold	18,000 at Rs 10 per unit

Q8. The following particulars for 2008 are taken form the books of BERRY LTD., which manufactures and sells a particular brand of Mixtures.

Particulars	Litres	Rupees
Stock on January 1st 2008
Raw Materials	2,000	200
Finished Mixture	500	175
Factory Stores		725
Purchases
Raw Materials	1,60,000	18,000
Factory Stores		2,425
Sales
Finished Mixture	1,53,050	91,800
Scrap (Factory)		817
Factory Wages		17,805
Power		3,040
Machine Depreciation (Factory)		1,800
Salaries
Factory		7,222
Selling		4,150
Office		3,772
Expenses
Direct		1,850
Selling		1,800
Office		1,820
Interest on Capital
Factory		700
General		300
Advertising		1,400
Cash discounts on sales		1,450
Bank interest paid		125
Stock on December 31st 2008
Raw Materials	1,200	?
Finished Mixture	450	?
Factory Stores		555

The wastage in raw material is normal.

Finished mixture in stock at the end of the year is to be valued at Factory Cost. The purchase price of raw material remained unchanged throughout 2008. Raw material is used and finished mixture is sold on the “First-in-First Out” basis. From the above information you are required to prepare a Cost Statement of BEERY LTD. for 2008. Give working for the quantity of scrap (factory) sold and value of Raw Materials & Finished Mixture in stock on 31.12.2008.

Q9. The books and records of the Tunnel Manufacturing Company present the following data for the month of August 2008.

Direct Labour cost   Rs 16,000 (160% of Factory Overheads)

Cost of goods sold  Rs 56,000

Inventory accounts showed these opening and closing balances

	August 1	August 31
Particulars	Rupees	Rupees
Raw Materials	8,000	8,600
Work-in-progress	8,000	12,000
Finished Goods	14,000	18,000
Selling Expenses		3,400
General & Administration Expenses		2,600
Purchase of Finished Goods		4,000

You are required to prepare a statement showing cost of goods manufactured and sold and profit earned. Sales were Rs 65,000.

Q10. Dolly Transistors Ltd. manufactures two kinds of transistors, viz Holly and Jolly. From the following particulars prepare statement showing cost & profit per transistor for each of the two brands.

Particulars	Holly	Jolly
Materials	Rs 1,40,000	Rs 96,000
Wages	Rs 1,80,000	Rs 1,20,000
Number of transistors manufactured and sold during the year end 31st March, 2009	4,000	2,400
Sales price per transistor	Rs 175	Rs 200

Factory overheads are 100% on wages and the office overheads are 20% of works cost. Selling and Distribution overheads are Rs 10 per transistor.

Q11. In 2007 when selling price was Rs 10 per article, total sales were Rs 1,00,000. In 2008 selling price was increased by 10% and total sales realised Rs 1,26,500.

In 2007, Materials cost 40% of sales value. In 2008 prices of raw materials rose by 10%. In 2007, wages were Rs 30,000. In 2008, the cost was Rs 33,000. In 2007, other expenses were 10% of sales value. These expenses rose in 2008 by the sum of Rs 1,500.

Prepare Cost Statement for the year 2007 and 2008 and find out the net profit for 2007 and 2008.

Q12. From the following information, prepare a cost statement, showing cost per article and total cost. 10,000 units were manufactured.

Particulars	Rupees
Stock of raw material (opening)	90,000
Stock of raw material (closing)	30,000
Purchases	60,000
Wages (productive)	51,000
Factory rent, rates and insurance	5,000
Depreciation on Machinery	500
Repairs to machinery	2,000
Factory Heating and Lighting	800
Works Administration Expenses	4,000
Office Administration Expenses	3,000
Salaries to Director and Managers	3,000
Office rent and taxes	1,200
Postage and Telephone	300
Printing and Stationery	100
Legal Expenses	500

Q13. From the following particulars you are required to prepare statement showing the cost of Materials Consumed, Prime Cost, Works Cost, Total Cost, the percentage of Works on Cost to Productive Wages and the percentage of General on Cost to Works Cost.

Particulars	Rupees
Stock of Finished Goods on 1.1.2008	72,800
Stock of Raw Materials on 1.1.2008	33,280
Purchases of Raw Materials	7,59,200
Productive Wages	5,16,880
Sale of Finished Goods	15,39,200
Stock of Finished Goods on 31.12.2008	78,000
Stock of Raw Materials on 31.12.2008	35,360
Works overhead charges	1,29,220
Office and General Expenses	70,161

The Company is about to send a tender for a large plant. The costing department estimates that the material required would cost Rs 53,000 and the wages to workmen for making the plant would cost Rs 31,200. The tender is to be made at a net profit of 20 percent on selling price. Show what the amount of the tender would be, if based on the above percentages.

Q14. In a factory two types of articles are manufactured viz No.1 and No.2. From the following particulars, prepare a statement of cost showing total cost of each variety and ascertain the total profit. There is no opening or closing stock.

Particulars	No.1 (Rs)	No.2 (Rs)
Materials	30,000	50,000
Labour	60,000	70,000

Works on cost is charged at 40% of Works Cost and Office on Cost at 20% on Total Cost. No.1 article sold during are 180 at Rs 1,200 each & No.2 article sold are 200 at Rs 1,500 each.

Q15. A factory produces uniform type of articles and has a capacity of 3,000 units per week. The following information shows the different elements of cost for 3 consecutive weeks when the output has changed from week to week.

Units Produced	Direct  Materials	Direct Labour	Factory Overheads (partly variable & partly fixed)
	Rupees	Rupees	Rupees
800	3,200	1,200	5,600
1,000	4,000	1,500	6,400
1,600	6,400	2,400	8,800

The factory has received an order for 2,400 units upon the selling price of which it wants a profit of 25%. Find out what price per unit it should quote.

Q16. A factory can manufacture 10,000 units every month. The following data is furnished to you for the quarter ended 31^st December, 2008.

Materials			Rs 5 per unit
Labour Cost			Rs 4 per unit
Direct Expenses			Rs 2 per unit
Months	October	November	December
Production in units	6,000	8,000	7,000
Factory overheads in Rupees	8,000	9,000	8,500

A commission agent introduced a prospective customer who wants to place an order for 10,000 units every month. You are asked to quote your price after considering the following.

a.     Administration overhead is 10% of works cost.

b.     Sales & distribution overheads is 12.50% of cost of production.

c.     The commission agent is to be paid Re 1 per unit as his agency remuneration.

d.     The factory wants a profit of 20% on sales price.

Q17. The following is a summary of the trading results of a company selling electrical appliances for the year ended 31^st December, 2008 during which 80,000 units were sold.

Particulars	Rs (Lacs)	Rs (Lacs)
Sales		96
Costs:
Materials	36
Direct Labour	15
Indirect Labour	6
Other Costs	18	75
Profit		21

Considering the following, prepare a summary of the expected results for the following year:

i.       The selling price is to be reduced by Rs 7.50 per unit.

ii.      Sales volume is expected to increase by 40%.

iii.    Suppliers have agreed to give a discount of 5% on all purchase of materials.

iv.    Direct workmen are to be paid an incentive bonus of 2.50% in order to simulate production. Indirect labour is not expected to increase during the following year.

v.     Other cost vary directly with production except to the extent of Rs 3 lacs which is considered ‘fixed’ and an additional expense of Rs 1 lac will arise due to rent in respect of an extension to the factory.

vi.    You are to assume that there is no stock or work-in-progress as at 31^st December.

Q18. A factory can produce 60,000 units p.a. at its optimum (100%) capacity. The estimated costs of production are as under:

Direct Material Rs 3 per unit and Direct Labour Rs 2 per unit

Indirect Expenses

Fixed Rs 1,50,000 per annum; Variable Rs 5 per unit and semi-variable Rs 50,000 per annum upto 50% capacity and an extra expense of Rs 10,000 per annum for every 25% increase incapacity or part thereof.

The factory produces 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 Rs 1,00,000 for the year, workout the average selling price at which each unit should be quoted:

                First 3 months of the year                 50% capacity

Remaining 9 months                          80% capacity

Ignore selling, distribution and administration overheads

Q19. A company makes two distinct types of vehicles A and B. The total expense during the period is by the books for assemble of 600 of A and 800 of B are as under:

Particulars	Rupees
Material	1,98,000
Wages	12,000
Stores Overheads	19,800
Running expense of machine	4,400
Depreciation	2,200
Labour amenities	1,500
Work General Expenses	30,000
Administration and Selling Expenses	26,800
Other Information	A : B
Material Cost ratio per unit	1 : 2
Wages Cost ratio per unit	2 : 3
Machine utilisation ratio per unit	1 : 2

Calculate the cost of each vehicle giving reasons for the basis of apportionment adopted by you.

Q20. American Sprayers Ltd. manufactured and sold 1,000 sprayers during the year ended 31^st March, 2009. The summarised accounts are set out below:

Manufacturing, Trading and Profit and Loss Account

 for the year ended 31^st March, 2009

Particulars	Rupees	Particulars	Rupees
To Cost of Material	80,000	By Sales	4,00,000
To Direct Wages	1,20,000
To Manufacturing Cost	50,000
To Gross Profit	1,50,000
Total	4,00,000	Total	4,00,000
To Management & Staff Salaries	60,000	By Gross profit b/f	1,50,000
To Rent, Rates & Insurance	10,000
To Selling Expenses	30,000
To General Expenses	20,000
To Net Profit	30,000
Total	1,50,000	Total	1,50,000

For the year ending 31^st March, 2010, it is estimated that:

a.               Output of the sprayers will be 1,200 sprayers.

b.               Price of material will rise by 20% on the previous year’s level.

c.               Wages per unit will rise by 5%.

d.               Manufacturing cost will rise in proportion to the combined cost of material and wages.

e.               Other expenses will remain unaffected by the rise in output.

f.                Selling expenses per unit will remain unchanged.

Prepare a cost statement showing the price at which the Sprayer should be marked so as to show a profit of 10% on the selling price.

Q21. The following information is available from the records of a company making two types of electric ovens i.e. Deluxe type and Economy type

Particulars	Rupees
Materials Consumed	20,00,000
Direct Wages	12,00,000
Factory Overheads	10,00,000
Total	42,00,000

Other Information:

i.       Material cost per unit in the Deluxe type was twice as much as in the Economy type.

ii.      Direct wages per unit in the Economy type were 50% of the Direct wages per unit in the Deluxe type.

iii.    Factory overheads are the same per unit both in the Deluxe type and the Economy type.

iv.    Administrative overheads are to be taken at 120% of Direct Wages both in Deluxe type and Economy type.

v.     Selling overheads are to be taken at Rs 20 per unit sold in Deluxe type and Economy type.

vi.    Production during the year was 7,500 Deluxe and 5,000 Economy and all the units produced were sold.

vii.   Profit charged is 25% of selling price in Deluxe type and 20% of selling price in Economy type.

Prepare a cost statement with maximum possible break-up of cost per unit and total cost both for Deluxe and Economy type.

Q22. M/s Bata Shoe Co. manufactures two types of Shoes A and B. Production cost for the year ended 31^st March, 2009 were:

Particulars	Rupees
Direct Materials	15,00,000
Direct Wages	8,40,000
Production Overheads	3,60,000
Total	27,00,000

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

i.       Direct Material in Type A shoe consists twice as much as that in Type B shoes.

ii.      Direct wages in Type B shoes were 60% of those for Type A shoes.

iii.    Production overheads were the same per pair of A and B Type.

iv.    Administrative overheads for each Type was 150% of Direct Wages.

v.     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

vi.    Selling cost was Rs 1.50 per pair.

vii.   Selling price was Rs 44 for A Type and Rs 28 per pair for B Type.

Q23. The cost structure of an article, the selling price of which is Rs 45,000 is as follows:

             Direct Materials                                  50%

             Direct Labour                                                20%

             Overheads                                                    30%

An increase of 15% in the cost of materials and of 25% in the cost of labour is anticipated. These increased costs in relation to the present selling price would cause 25% decrease in the amount of present profit per article.

You are required:

i.                 to prepare a statement of profit per article at present, and

ii.                the revised selling price to produce the same percentage of profit to sales as before.

Q24. Anurag Electricals Ltd. manufactured and sold 1,000 Electric Irons during the year ended 31^st December, 2008. Following were the expenses for the manufacture of 1,000 Electric Irons.

Particulars	Rupees
Materials	80,000
Direct Wages	1,20,000
Manufacturing Costs	50,000
Selling Expenses	40,000
Other Overheads Expenses	90,000

For the year ending 31^st December, 2009, it was estimated that:

i.            Output and sales will be 1,500 Electric Irons.

ii.           Cost of material will rise by 25% per unit.

iii.         Wages per unit will decrease by 10%.

iv.         Manufacturing cost will rise in proportion to the combined cost of materials and wages.

v.          Selling expenses per unit will remain unchanged.

vi.         Other overheads will increase by Rs 60,000.

Prepare a cost statement showing the price at which the Electric Irons should be marked so as to have a profit of 20% on selling price. Working should form part of the answer.

Q25. Mr. X manufactures Stools, Chairs and Tables. Materials and wages costs are separated as follows:

	Stools	Chairs	Tables
Particulars	Rupees	Rupees	Rupees
Materials (per unit)	36	60	440
Wages (per unit)	48	40	120

The total factory cost in the month of January 2009 was Rs 60,000. You are required to determine the factory cost of each type of furniture after assuming that one table is equivalent to 4 stools and two chairs are equivalent to one table for the purpose of allocation of factory on Cost. The production in the month of January was:

Stools 600;              Chairs          300;              Tables          60

Q26. M/s Rim-Jim Co. Ltd. gives you the following information about the cost structure of the product manufactured and sold by the company and requests you to prepare a cost sheet from the same. The cost per unit is also to be worked out.

i.       During the year 2008-09 the company has manufactured and sold 10,000 units of the product. The selling price being Rs 100 per unit.

ii.      The company has no financial expenses or losses.

iii.    The net profit ratio is 20% of sales.

iv.    The cost of production is equal to 75% of sales.

v.     The total of prime cost and works cost is equal to the cost of sales, the works cost being 62.50% and the balance being prime cost.

vi.    Prime cost is composed of 50% materials, 40% labour charges, 10% other direct expenses.

Q27. The following information is available from the books of a company manufacturing Luxury Ceiling Fans. Production and sales during the year ending 31^st March, 2009 was 1,000 units.

Particulars	Rupees
Direct Materials	2,00,000
Direct Wages	1,50,000
Factory Expenses	1,37,500
Administration Expenses	60,000
Selling Expenses	45,000
Sales	7,30,000

The following estimates have been made for the year 2009-10:

i.            Production and sales will be 1,500 units.

ii.           Material price per unit will increase by 25% but due to economy in consumption the cost per unit will reduce by 12%.

iii.         The wages rates per unit will increase by 20%.

iv.         Factory expenses of Rs 50,000 are fixed. The remaining factory expenses will be in the same proportion to materials consumed and wages a in the previous year.

v.          The total administration expenses will increase by 66⅔%.

vi.         Selling expenses will be Rs 90,000.

vii.        The profit desired is 20% on sales

Prepare a cost statement showing maximum possible break-up of cost per unit and total cost for 2008-2009 and 2098-2010, profit per unit and total profit for the years 2008-2009 and 2009-2010.

Q28. In respect of a factory, the following have been obtained for the year 2008.

Particulars	Rupees
Cost of Materials	6,00,000
Wages of Labour	5,00,000
Factory Overheads	3,00,000
Administration Charges (Total)	3,36,000
Selling Charges	2,24,000
Distribution Charges	1,40,000
Profit	4,20,000

A work order has been executed in 2009 and the following expenses have been incurred

Particulars	Rupees
Material	8,000
Wages of Labour	5,000

Assuming that in 2009 the rate of factory overhead has gone up by 20%, distribution charges have gone down by 10% and selling & administrative charges have each gone up by 12.50%, at what price should the product be sold, so as to earn the same rate of profit on the selling price as in 2008.

Factory Overhead is based on direct Labour and Administration, Selling and Distribution Overhead on Factory Cost.

Q29. The cost of manufacturing 5,000 units of a commodity comprises:

Particulars	Rupees
Materials	20,000
Wages	25,000
Chargeable Expenses	400
Fixed Factory Overheads	16,000
Variable Factory Overheads	4,000

For manufacturing every 1,000 extra units of the commodity the cost of production increases as follows:

Particulars	Rupees
Materials	Proportionately
Wages	10% less than proportionately
Chargeable Expenses	No extra cost whatsoever
Fixed Factory Overheads	Rs 2,000 extra
Variable Factory Overheads	25% less than proportionately

Calculate the estimated cost of producing 8,000 units of the commodity and by how much it would differ if a flat rate of factory overheads based on wages were charged.