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 31st 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 30th 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 31st 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 31st 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 31st
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 31st
March, 2009. The summarised accounts are set out below:
Manufacturing, Trading and Profit and Loss Account
for the year ended
31st 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 31st
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 31st 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 31st
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 31st
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 31st
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.
