Vinod Sir 98720 46144, 6280627065

Mobile: 98720-46144
THE BEST TUTORIALS
218, Opp. S.B.I. Treasury Branch, Rani Jhansi Road, Ludhiana
132-E, Saheed Bhagat Singh Nagar, Pakhowal Road, Ludhiana.
COST ACCOUNTING Dec 2022

Unit 1
COST SHEET

Particular Detail Amount

Ram Material Consumed
Opening Stock of Raw Material xx
Add: Purchases xx
Less: Closing Stock of Raw Material (xx)
Direct Labour/Productive wages/Factory Wages Xx
Freight inward/Carriage inward/Freight on raw material purchases Xx
Material used in primary packing xx

Prime Cost Xxxxxx

ADD: FACTORY OVERHEAD/ WORK OVERHEAD

xx
Factory rent/Water. Local Taxes
xx
Factory lighting/ Factory Insurance
xx
Indirect Material
xx
Indirect Labour/ Dyeing, Bleaching etc., Excise duty
xx
Haulage/Power Expenses
xx
Depreciation of Factory Building
xx
Depreciation of Plant and Machinery/Plant Repair/Insurance of plant
xx
Foreman’s salary, Supervisor salary
xx
Work Director fees/Works Manager Salary
xx xxx
Property Tax on Factory Buildings
Factory Cost Incurred xxxx

LESS: Factory Scrap (xx)

xxx
Add; Opening Work in Progress (xxx)
Less: Closing Work in Progress xx
Factory Cost
ADD: OFFICE AND ADMINISTRATION OVERHEAD
xx
Office Rent
xx
Office Lighting
xx
Office Insurance/General Expenses
xx
Director Fees/Salary of Managing Director/Salary of Joint M.D.
xx
Depreciation of Furniture
xx
Bank Charges/Legal Expenses
xx
Printing and Stationery
xx
Postage and Telegram xxx
COST OF PRODUCTION xxx
xxx
ADD; OPENING STOCK OF FINISHED GOODS xxxx

VINOD SIR 6280627065 1

THE BEST TUTORIALS 98720 46144
Cost Sheet
 Vinod Sir 98720 46144, 6280627065

COST OF GOODS AVAILABLE FOR SALE (xx)

LESS CLOSING STOCK OF FINISHED GOODS xxx
Cost of Goods Sold
ADD; SELLING AND DISTRIBUTION OVERHEAD
Selling Expenses
Advertising/Sales Depot xx
Carriage outward xx
Bad Debts xx
Packing Charges xx
Depreciation of Delivery Van xx
Upkeep of Delivery Van xx xxx
xx xxx
Cost of Sales xxx
Add: Profit
Sales xxx

Note—
1. Purchase of fixed asset, sale of fixed asset, profit on sale of fixed asset , loss on sale of fixed Asset
will not be considered in Cost Sheet.
2. The following expenses will not be considered in the Cost Sheet.
 Debenture Interest, Interest on bank Loan
 Any type of provision e.g. provision for taxation, proposed dividend, provision for bad debts
 Dividend paid
 Discount on sales or discount allowed
 Income Tax, Advance Income Tax, Transfer to Sinking Fund, Goodwill written off
 Payment of Sales Tax
3.
When Income Statement is to be prepared , then cost sheet will be prepared till Factory Cost.

INCOME STATEMENT
Sales xx
Less: Cost of Goods Sold
Opening stock of finished Goods xx
Add: Factory Cost xx
Less: Closing Stock of Finished Goods (xx) xxx
Gross Profit xxx
Less: Indirect Expenses (Office and Administration, selling & distribution overhead) xx
Office Rent/General Expenses xx
Director Fees xx
Depreciation on office appliance xx
Depreciation on office building xx
Printing And Stationery xx
Selling Expenses xx
Distribution Expenses xx
xx (xx)
Net Profit xx

VINOD SIR 6280627065 2

THE BEST TUTORIALS 98720 46144
Cost Sheet
 Vinod Sir 98720 46144, 6280627065

Question 1 (A05, S07, S 08, A 09, S 12 ) Mr. Gopal furnishes the following data relating to the manufacture of
a standard product during the month of April, 2007:
Raw material consumed Rs 15,000
Direct labour Charges Rs 9,000
Machine hours worked 900
Machine hour rate Rs 5
Administration Overheads 20% on works cost
Selling overheads Rs .50 per unit
Units produced 17100
Units Sold 16000 at Rs 4 per unit
You are required to prepare a Cost Sheet from the above, showing; (a) the cost of production per unit (b) profit
per unit sold and profit for the period.

Answer—
Particulars Amount
Direct Material 15,000
Direct Labour 9000
Prime Cost 24,000
ADD: Factory Overhead
Machine overhead expenses (900 X 5) 4500
Factory Cost Incurred/ Factory Cost 28,500
ADD: Office And Administration Overhead
20%of work cost (28,500 X 20% ) 5700
Cost of Production 34,200
Less: Closing Stock (34,200 / 17100 = 2 X 1100) (2200)
Cost of Goods Sold 32,000
Add: Selling And Distribution Overhead
Selling overhead ( 16000 X 0.50) 8000
Cost of Sales 40,000
Add: Profit 24,000
Sales (16000 X 4) 64,000

Cost of production per unit ( Cost of production) = 34,200 =2

Actual Output 17,100
COMPUTATION OF PROFIT PER UNIT
Selling price per unit Rs 4
Less: Cost of Sales
Cost of production = Rs 2
Add: Selling cost = Rs 0.50 2.50
Profit per unit 1.50

Question 2 Prepare the Cost Sheet to show the total cost of production and cost per unit of goods
manufactured by a company for the month of July, 2006. Also find the cost of sales and profit.
Stock of Raw Materials 1.7.2006 3,000 Factory Rent and Rates 3,000
Raw Material purchased 28,000 Office Rent 500
Stock of Raw Material 31.7.2006 4500 General Expenses 400
Manufacturing Wages 7000 Discount on sales 300
Depreciation on Plant 1500 Advertisement Expenses 600

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THE BEST TUTORIALS 98720 46144
Cost Sheet
 Vinod Sir 98720 46144, 6280627065

Loss on sale of o part of plant 300 Income Tax Paid 2000

Sales 50,000
The number of units produced during July, 2006 was Rs 3,000.
The stock of finished goods was 200 and 400 units on 1.7.2006 and 31.7.2006 respectively. The total cost of
the units on hand on 1.7.2006 was Rs 2800. All these had been sold during the month.

Answer— COST SHEET

Particular Detail Amount
Raw Material Consumed
Opening stock of Raw Material 3000
Add: Purchases 28000
Less: Closing stock of Raw Material (4500) 26,500
Manufacturing Wages/Factory Wages 7000
Prime Cost 33,500
Add: Factory Overhead
Depreciation of Plant 1500
Factory Rent and Rates 3000 4500
Factory cost incurred/ Factory Cost 38000
Add: Office and Administration Overhead
Office Rent 500
General Expenses 400 900
Cost of Production 38,900
Add: Opening Stock of Finished Goods 2800
Less: Closing Stock of Finished Goods (5187)
(38900 X 400
3000
Cost of Goods Sold 36,513
Add: Selling And Distribution Overhead
Advertisement Expenses 600
Cost of Sales 37,513
Add: Profit 12,887
Sales 50,000

Notes—
1. Loss on sale of a part of plant is not to be considered for calculating cost sheet.
2. Income Tax, Discount on sales will not be considered.

Question 3 (S 09) The books of records of Anand Manufacturing company present the following data for the
month of August 2008.
Direct Labour Cost Rs 16000 (160% of Factory overhead)
Cost of goods sold Rs 56000
August 1 August 31
Raw Material 8000 8600
Work in Progress 8000 12000
Finished Goods 14000 18000
Other data:
Selling Expenses 3400
General and administration 2600
Sales for the month 75000

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THE BEST TUTORIALS 98720 46144
Cost Sheet
 Vinod Sir 98720 46144, 6280627065

You are required to prepare a statement showing cost of goods manufactured and sold and profit earned.
Answer—

COMPUTATION OF VALUE OF MATERIALS PURCHASED

Particular Details Amount
Cost of goods sold 56,000
Add: Closing stock of Finished Goods 18000
Less: Opening Stock of Finished Goods (14000)
Cost of Production 60000
Less: Office and Administration Overhead (2600)
Work Cost 57400
Add: Closing Stock of Work in Progress 12000
Less: Opening Stock of Work in progress (8000)
Work cost incurred 61400
Less: Factory Overhead
(Direct Labour = 160% of Factory overhead
If DL is Rs 160 then Factory overhead= 100
------------1-----------------------------------= 100/160
-------------16000---------------------------= 100/160 X 16000 (10000)
Prime Cost 51,400
Less: Direct Labour 16000
Raw Material Consumed 35400
Add: Closing Stock of Raw Material 8600
Less: Opening stock of Raw Material (8,000)
Raw Material Consumed 36000

COST SHEET
Particular Detail Amount
Raw Material Consumed
Opening stock of Raw Material 8,000
Add: Purchases 36000
Less: Closing stock of Raw Material (8,600) 35400
Manufacturing Wages/Factory Wages 16000
Prime Cost 51,400
Add: Factory Overhead 10,000

Factory cost incurred/ Factory Cost Incurred 61,400

Add: Opening Stock of Work in Progress 8000
Less: Closing Stock of Work in Progress (12000)
Factory Cost 57400
Add: Office and Administration Overhead
General And Administration expenses 2600
Cost of Production 60000
Add: Opening Stock of Finished Goods 14000
Less: Closing Stock of Finished Goods (18,000)
Cost of Goods Sold 56000
Add: Selling And Distribution Overhead
Selling Expenses 3,400

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THE BEST TUTORIALS 98720 46144
Cost Sheet
 Vinod Sir 98720 46144, 6280627065

Cost of Sales 59400

Add: Profit 15600
Sales 75,000

Question 4 The books of Adrash Manufacturing Company presents the following data for the month of April
2007. Direct labour cost Rs 17,500 being 175% of the works overhead; cost of goods sold excluding
administration expenses Rs 56,000
Inventory accounts showed the following opening and closing balances:
April 1 April 30
Raw Materials 8,000 10,600
Work-in-progress 10,500 14,500
Finished Goods 17,600 19,000
Other data are:
Selling Expenses 3,500
General and administration expenses 2,500
Sales for the month 75,000
You are required to; (i) compute the value of materials purchased. (ii) Prepare a statement of cost showing the
various elements of cost and also the profit

Answer— COMPUTATION OF VALUE OF MATERIALS PURCHASED

Particular Details Amount
Cost of goods sold (including administration overhead) 58500
(56000+2500)
Add: Closing stock of Finished Goods 19,000
Less: Opening Stock of Finished Goods (17,600)
Cost of Production 59,900
Less: Office and Administration Overhead (2500)
Work Cost 57,400
Add: Closing Stock of Work in Progress 14,500
Less: Opening Stock of Work in progress (10,500)
Work cost incurred 61,400
Less: Factory Overhead
(Direct Labour = 175% of Factory overhead
If DL is Rs 175 then Factory overhead= 100
------------1-----------------------------------= 100/175
-------------17500---------------------------= 100/175 X 17500 (10,000)
Prime Cost 51,400
Less: Direct Labour 17,500
Raw Material Consumed 33,900
Add: Closing Stock of Raw Material 10,600
Less: Opening stock of Raw Material (8,000)
Raw Material Consumed 36,500

COST SHEET
Particular Detail Amount
Raw Material Consumed
Opening stock of Raw Material 8,000
Add: Purchases 36,500

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THE BEST TUTORIALS 98720 46144
Cost Sheet
 Vinod Sir 98720 46144, 6280627065

Less: Closing stock of Raw Material (10,600) 33,900

Manufacturing Wages/Factory Wages 17,500
Prime Cost 51,400
Add: Factory Overhead 10,000

Factory cost incurred/ Factory Cost Incurred 61,400

Add: Opening Stock of Work in Progress 10,500
Less: Closing Stock of Work in Progress (14,500)
Factory Cost 57,400
Add: Office and Administration Overhead
General And Administration expenses 2500
Cost of Production 59,900
Add: Opening Stock of Finished Goods 17,600
Less: Closing Stock of Finished Goods (19,000)
Cost of Goods Sold 58,500
Add: Selling And Distribution Overhead
Selling Expenses 3,500
Cost of Sales 62,000
Add: Profit 13,000
Sales 75,000

Question 5 (13 S) M 5 Vijay industries manufactures a product X. On 1 st January 2002, there were
5000 units of finished product in stock. Other stocks on 1 st January 2002 were as follows:
Work in Progress 57400
Raw Materials 116200
The information available from cost records for the year ended 31 st December 2002 was a follows:-
Direct materials 906900
Direct Labour 326400
Freight or raw material purchased 55700
Indirect Labour 121600
Other factory overheads 317300
Stock of raw materials on 31.12.2002 96400
Work in progress on 31.12.2002 78200
Sales (1,50,000 units) 30,00,000
Indirect materials 2,13,900
st
There are 15000 units of finished stock in hand on 31 December 2002. You are required to prepare:
A statement of cost and profit assuming that opening stock of finished goods is to be valued at the
same cost per unit as the finished stock at the end of the period.
Answer—
Detail Amount
Raw material consumed
Opening Stock 116200
Add: Purchases 906900
Less: Closing Stock (96400) 926700
Direct Labour 326400

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THE BEST TUTORIALS 98720 46144
Cost Sheet
 Vinod Sir 98720 46144, 6280627065

Freight on raw material purchased 55700

Prime Cost 1308800
Add: Factory Overheads
Indirect Labour 121600
Indirect Materials 213900
Other Factory overhead 317300 652800
Factory Cost incurred 1961600
Add: Opening work in progress 57400
Less: Closing WIP (78200)
Factory Cost 1940800
Add: Opening stock of Finished Goods 60650
(1940800/160000=12.13)
Less: Closing Stock of Finished Goods (15000X 12.13) 181950
Cost of Goods Sold 1819500
Add: Profit 1180500
Sales 30,00,000

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THE BEST TUTORIALS 98720 46144
Cost Sheet