Cost Sheet , Tender and quotation
- 1. 1 COST ACCOUTING PROBLEMS UNIT I COST SHEET 1. You are required to compile a statement showing cost and profit from the information given, showing clearly: a) Material consumed b) Prime cost c) Works cost d) Cost of production e) Cost of sales f) Profit and g) Sales Materials purchased Wages Direct expenses Rs 2,00,000 Rs 1,00,000 Rs 20,000 Opening stock of materials Closing stock of materials Rs 40,000 Rs 60,000 Factory overhead is absorbed at 20% on wages. Administration overhead is 255 on the works cost. Selling and distribution overheads are 20% on the cost of production. Profit is 20% on sales. 2. Calculate prime cost, factory cost, cost of production, cost of sales and profit from the following particulars: Rs Rs Direct materials Direct wages Wages of foreman Electric power Lighting : Factory Office Storekeepers wages Oil and water Rent: Factory Office Repairs and renewals: Factory plant Office premises Transfer to reserve Discount on shares written off Dividend 1,00,000 30,000 2,500 500 1,500 500 1,000 500 5,000 2,500 3,500 500 1,000 500 2,000 Depreciation: Factory plant Office premises Consumable stores Managers salary Directors fees Office stationery Telephone charges Postage and telegrams Salesmen’s salaries Travelling expenses Advertising Warehouse charges Sales Carriage outward Income tax 500 1,250 2,500 5,000 1,250 500 125 250 1,250 500 1,250 500 1,89,500 375 10,000 3. During the year 2008, X ltd, produced 50,000 units of a product. The following were the expenses: Stock of raw materials on 1.1.2008 Stock of raw materials on 31.12.2008 Purchases Direct Wages Rs 10,000 Rs 20,000 Rs 1,60,000 Rs 75,000 Direct expenses Factory expenses Office expenses Selling expenses Rs 25,000 Rs 37,500 Rs 62,500 Rs 25,000 You are required to prepare a cost sheet showing cost per unit and total cost at each stage. 4. A factory produces 100 units of a commodity. The cost of production is: Materials – Rs.10,000; Wages – Rs. 5,000; Direct expenses – Rs,1,000; Factory overheads are 125% on wages; office overheads are 20% on works cost. Expected profit is 25% on sales. Calculate the price to be fixed per unit. 5. The following details have been obtained from the cost records of Raja Sekar Ltd. Stock of raw materials on 1.12.2010 Stock of raw materials on 31.12.2010 Direct Wages Indirect wages Sales Work-in-progress 1.12.2010 Work-in-progress 31.12.2010 Purchases of raw materials Factory rent, rates and power Rs 75,000 Rs 91,500 Rs 52,500 Rs 2,750 Rs 2,11,000 Rs 28,000 Rs 35,000 Rs 66,000 Rs 15,000 Depreciation of plant and machinery Expenses on purchases Carriage outwards Advertising Office rent and taxes Travellers wages and commission Stock of finished goods (1.12.2010) Stock of finished goods (31.12.2010) Rs 3,500 Rs 1,500 Rs 2,500 Rs 3,500 Rs 2,500 Rs 6,500 Rs 54,000 Rs 31,000 Prepare a cost sheet giving the maximum possible break up of costs and profit.
- 2. 2 6. M/s Indus Industries Ltd. Are the manufacturers of moonlight torches. The following data relate to manufacture of torches during the month of March 2009. Raw materials consumed Direct Wages Machine hours worked Machine hour rate Rs 20,000 Rs 12,000 9500 hours Rs 2 Office overheads Selling overheads Units produced Units sold 20% of works cost 50 paise per unit 20,000 units 18,000 @Rs. 5 per unit Prepare cost sheet showing the cost and the profit per unit and the total profit earned. 7. Following extract of costing information relates to a commodity for the year ended 31-12-2010. Stock on 1.4.2009: Raw materials Finished goods(1,000 tons) Stock on 1.3.2010: Raw materials Finished goods(2,000 tons) Raw materials purchased Direct wages Rs 5,000 Rs 4,000 Rs 5,560 Rs 8,000 Rs 30,000 Rs 25,000 Rent, rates and taxes of works Carriage inwards Work-in-progress on 1.4.2009 Work-in-progress on 31.3.2010 Sales of finished goods Cost of factory supervision Rs 10,000 Rs 360 Rs 1,200 Rs 4,000 Rs 75,000 Rs 2,000 Advertisement and selling expenses amount to Re. 0.25 per ton sold. 16,000 tonnes were produced during the year. Prepare statement showing a) the value of raw materials used; b) the cost of the output for the year; c) the cost of the turnover for the year; d) the net profit for the year and e) the net profit per ton of the commodity. 8. Prepare a cost sheet showing cost of production and profit from the following data. Opening Closing Stock of raw materials Work-in-progress Stock of finished goods 75,000 24,600 52,080 78,750 27,300 47,250 Purchases for the year Sales Direct wages Works expenses Rs 65,700 Rs 2,16,930 Rs 51,450 Rs 25,020 Selling & distribution expenses Scrap sold Office expenses Rs 12,630 Rs 990 Rs 20,610 9. The following data are available from the books of a factory: Opening Stock: Raw materials Work-in-progress Closing stock: Raw materials Work-in-progress 16,000 6,000 8,000 10,000 Purchases of raw materials Direct wages Factory overheads 40,000 32,000 10,000 The following additional information is given to you: Composition of opening work-in-progress: Raw materials – 3,200 Direct wages – 2,000 Factory overheads – 800 Total – 6,000 Composition of closing work-in-progress: Raw materials – 4,000 Direct wages – 5,400 Factory overheads – 600 Total – 10,000 You are required to ascertain factory cost. 10. In a factory two types of ceiling fans viz., Usha and Crompton are produced. Ascertain the cost and profit per unit sold from the particulars given below. Usha Crompton Materials Wages 16,400 8,900 18,900 9,800 Works overhead are 60% of wages and office overheads are 20% on works cost. The selling expenses per fan sold is Rs. 2. The selling expenses of Usha and Crompton are Rs. 550 and Rs. 800 respectively. 80 fans of Usha and 100 fans of Crompton are sold. There is no opening or closing stock.
- 3. 3 11. From the following details extracted from the trial balance of new era ltd. For the financial year ending 31.3.2010, you are require to prepare: a) A statement of cost showing various elements of cost in detail b) A separate statement of profit Credit Balances Rs Debit Balances Rs Sales Returns of materials Sale of scrap of raw material 8,00,000 10,000 8,000 Opening stock: Raw material WIP Finished goods Plant & Machinery Buildings Returns inwards Raw material purchased Carriage on material Direct Wages Indirect wages Factory expenses Sundry office expenses Power Indirect materials infactory Sundry factory expenses Selling expenses Distribution expenses Interest on bank loan Additional Information a) Closing stock Raw material WIP Finished goods b) Depreciation on plant & Machinery at 10% P.A Depreciation on buildings (50% factory and 50% office) at 5% P.A 30,000 40,000 60,000 1,00,000 8,00,000 20,000 2,00,000 10,000 1,20,000 40,000 30,000 83,000 50,000 10,000 20,000 60,000 20,000 10,000 40,000 25,000 50,000 12. The following information has been obtained from the records of Left Center Corporation for the period from January 1 to June 30, 2010. On January 1, 2010 On June 30, 2010 Cost of raw materials Cost of work-in-progress Cost of stock of finished goods Transactions during six months are: Purchases of raw materials Wages paid Factory overheads Administration overheads Selling and distribution overheads Sales 30,000 12,000 60,000 4,50,000 2,30,000 92,000 30,000 20,000 9,00,000 25,000 15,000 55,000 Prepare i) Cost sheet showing a) Materials consumed b) Prime cost c) Factory cost incurred and factory cost; and ii) Income statement in Tradional form for the six months showing gross profit and net profit.
- 4. 4 TENDER AND QUOTATIONS 13. The following figures relate to the costing of a Tarpaulin manufactured in respect of a certain type of a sheet for a period of three months: Stock of materials (1-1-2001) Stock of materials (31-3-2001) Productive wages Materials purchased 11,000 7,000 1,66,000 1,23,000 Sales Indirect expenses Completed stock (1-1-2001) Completed stock (31-3-2001) 2,87,100 26,000 NIL 58,000 The number of sheets manufactured during three months was 4,400 and the price is to be quoted for 1,296 sheets in order to realise the same percentage of profits as for the period under review, assuming no alteration in rates of wages and cost of materials. Prepare a statement of cost for the manufacture of 4,400 sheets and quotation for 1,296 sheets. 14. The particulars of a factory for the year 2006 are given below: Raw materials Direct wages Works overhead Office overhead 3,00,000 1,68,000 1,50,000 1,68,000 Selling overhead Distribution overhead Net profit 1,12,000 70,000 1,10,000 In 2007, the expenses incurred on the execution of a work order: Raw materials - 12,000; wages – 7,000; Assuming that in 2007 works overhead went up 20% distribution overhead went down by 10% and selling and office overheads went up by 12 1/2 %, at what rate of price should the product be quoted so as to earn the rate of profit on the selling price same as in 2006? 15. On August 15, 1991 a manufacture Soman desired to quote for a contract for the supply of 500 radio sets. From the following details prepare a statement showing the price to be quoted to give the same percentage of net profit on turnover as was realised during 6 months ending on 30th June 1991: Stock of materials as on 1st Jan 1991 Stock of materials as on 30th June 1991 Purchase of materials during 6 months Factory wages during 6 months 20,000 25,000 1,50,000 1,20,000 Indirect charges during 6 months Opening stock of completed sets Closing stock of completed sets Sales during 6 months 25,000 NIL 100 3,24,000 The number of radio sets manufactured during these six months was 1,450 sets including those sold and those stocked at the end of the period. The radios to be quoted are of uniform quality and size as were manufactured during the six months to 30th June, 1991. As from August 1, the cost of factory labour has gone up by 10%. 16. Cooling Ltd. Manufactured and sold 1,000 refrigerators in the year ending 31-12-1997. The summarised trading and profit & loss account is as follows: Rs Rs To cost of materials To direct wages To other manufacturing costs To gross profit c/d 80,000 1,20,000 50,000 1,50,000 By sales 4,00,000 4,00,000 4,00,000 To management salaries To rent, rates To selling expenses To general expenses To net profit 60,000 10,000 30,000 20,000 30,000 By gross profit B/d 1,50,000 1,50,000 For the year ending 31-12-98, it is estimated that: a) Output and sales will be 1,200 refrigerators. b) Price of materials will go up by 20% on the level of the previous year. c) Wages will increase by 5%. d) Manufacturing cost will rise in proportion to the combined cost of materials and wages. e) Selling costs per unit remain unchanged. f) Other expenses will also remain constant.
- 5. 5 You are required to submit a statement to the board of directors showing the price at which the refrigerators should be sold so as to show a profit of 10% on selling price. 17. The accounts of Pleasant company Ltd., shows the following details for the year 1990: Materials – 3,50,000; Labour – 2,70,000; Factory Overhead – 81,000; Administration overheads – 56,080; It is estimated that Rs. 1,000 for materials and Rs. 700 for labour will be required for one unit of the finished product for quotation purpose. Absorb factory overheads on the basis of labour and administration overheads on the basis of works cost. A profit of 12.5% on selling price is required on quotation. a) Prepare a cost sheet and b) Prepare a statement of the selling price per unit of the finished product. 18. The cost of manufacturing 2,500 units of a commodity is as follows: Materials – 40,000; wages – 50,000; direct expenses – 800; variable overheads – 8,000; fixed overheads – 32,000; For manufacturing every 500 extra units of the commodity, the cost of production increases as follows: Materials – Proportionately Wages – 10% less than proportionately Direct expenses – No extra cost Fixed overheads – 400 extra Variable overheads – 25% less than proportionately Calculate the estimated cost of production of 4,000 units of the commodity. ---------------
- 6. 6 Specimen of cost sheet Cost sheet of ---- for the month of January 2011 Particulars Total Cost Cost per unit Rs. Rs. Rs. Opening stock of raw materials Add: Purchase of raw materials Add: Carriage inwards Add: Other direct materials used Add: Taxes and duties on the material purchased Less: Closing stock of raw materials Less: Saale of unsuitable raw materials Less: Sale of scrap of raw materials Cost of raw materials consumed Direct labour Direct expenses or chargeable expenses Prime cost Add: Works Overhead Indirect materials Indirect wages Factory rent and rates Factory lighting and heating Power and fuel Repairs and maintenance Drawing office expenses Depreciation of plant and machinery Factory stationery Insurance of factory Factory/works managers salary Water consumption in factory Total works overhead Add: opening work-in-progress Less: Closing work-in-progress Works cost/Factory cost/Manufacturing cost Add: Office or Administration overheads Office rent and taxes Office lighting Office stationery Office furniture depreciation and repairs Office salaries Legal expenses Bank commission Telephone and postages Office cleaning Total administration overhead Cost of Production Add: Opening stock of finished goods Less: Closing stock of finished goods Cost of production of goods sold Add: Selling and Distribution overheads Salesmen’s salaries xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx Xxx xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx
- 7. 7 Salesmen’s commission Showroom rent Showroom expenses Advertisement Sales office rent Travelling expenses Warehouse rent and rates Warehouse staff salaries Repairs and depreciation of delivery vans Carriage outward Total selling & distribution overhead Cost of sales Profit/Loss Sales Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx xxx Xxx Xxx Xxx xxx Xxx Tender and Quotations A) Direct material and direct labour cost are generally estimated on the basis of cost per unit of preceding period, subject to fluctuations in the market price of materials and labour rates. B) Overhead is estimated on the basis of past experience as a percentage as given below: 1. Percentage of factory overheads to direct wages = (Factory overheads / Direct wages) * 100 2. Percentage of office overheads to works cost = (Office overheads / Works cost) * 100 3. Percentage of selling and distribution overheads to works cost = (Selling and distribution overheads / Works cost) * 100 Or The percentage may be calculated on cost of production = (Selling and distribution overheads / Cost of production) * 100 C) Estimation of profit for a tender or quotation Profit = Cost of sales X (Percentage of profit / 100) If profit is to be ascertained as a percentage of selling price of the tender, the profit is to be calculated as given below: Profit = (Cost of sales x Rate of profit on sales) / (100 – Rate percentage on sales) ---------------