Natureof Proble m Question Practical Problems on “Cost Sheet” Remark Q.1. The following are the costing records for the year 2012 of a manufacturer: Production 10,000 units; Cost of Raw Materials Rs. 2,00,000; Labour Cost Rs. 1,20,000; Factory Overheads Rs.80,000; Office Overheads Rs. 40,000; Selling Expenses Rs. 10,000, Rate of Profit 25% on the Selling Price. Illustration [7] From ICAI-CMA Study Material The manufacturer decided to produce 15,000 units in 2013. It is estimated that the cost of raw materials will increase by 20%, the labour cost will increase by 10%, 50% of the overhead charges are fixed and the other 50% are variable. The selling expenses per unit will be reduced by 20%. The rate of profit will remain the same. Prepare a Cost Statement for the year 2013 showing the total profit and selling price per unit. Q.2. X Ltd. Provides you the following figures for the year 2011-12: Particulars ---------------------------------------------------------------------Direct Material Direct Wages Production Overheads (25% variable) Administration Overheads (75% Fixed) Selling and Distribution Overheads (2/3rd Fixed) Sales @ Rs. 125 per unit -------------------------------------------------------------------For the year 2012-13, it is estimated that: ` 3,20,000 8,00,000 4,80,000 1,60,000 2,40,000 25,00,000 1. Output and sales quantity will increase by 20% by incurring additional Advertisement Expenses of Rs. 45,200. 2. Material prices will go up 10%. 3. Wage Rate will go up by 5% along with, increase in overall direct labour efficiency by 12%. 4. Variable Overheads will increase by 5%. 5. Fixed Production Overheads will increase by 33 1/3 % Required: (a) Calculate the Cost of Sales for the year 2011-2012 and 2012-2013. (b) Find out the new selling price for the year 2012-2013. (i) If the same amount of profit is to be earned as in 2011-2012. (ii) If the same percentage of profit to sales is to be earned as in 20112012. (iii) If the existing percentage of profit to sales is to be increased by Illustration [6] From ICAI-CMA Study Material 80. The other details are as follows: Process Direct Labour Overheads Foundry 200 hours at Rs100 per hour Rs150 per labour hour Machining 100 hours at Rs50 per hour Rs 200 per labour hour Assembly 100 hours at Rs150 per hour Rs100 per labour hour CMA EXAM-DEC-13COST ACCOUNTING . A 99: Direct Material Rs. A 77: Direct Material Rs 420. (iv) If Profit per unit Rs. Q. The normal and actual yield at the Machining Process is 95%.4.Following data is available from the cost records of a company for the month of March 2012: (1) Opening stock of job as on 1st March 2012 Job no. There are three processes . An engineering company produces a standard metallic product. (6) Job numbers A 99 & A 77 were completed during the month. Machining and Assembly. (5) Factory Overhead incurred in March 2012 were Rs 2100. 130 tonnes of raw material at Rs. Q.Foundry. (b) Determine the selling price for the jobs. The yield at the Foundry is 90% (both standard and actual).500 per tonne were issued to Foundry. You may consider the losses as occurring at the end of the respective processes. There is no loss in the Assembly Process. (c) Calculate the value of work in process. They were billed to the customers at a price which included 15% of the price of the job for Selling & Distribution expenses and another 10% of the price for Profit.3. Direct Wages Rs150 and Factory Overheads Rs 200 Job no. Direct Wages Rs 450 and Factory Overheads Rs 400 (2) Direct material issued during the month of February 2012 was: Job no A 99 Rs 120 Job no A 77 Rs 280 Job no A 66 Rs 225 Job no A 55 Rs 300 (3) Direct labour details for March 2012 were: Job No Hours Amount (Rs ) A 99 400 600 A 77 200 450 A 66 300 675 A 55 100 225 (4) Factory Overheads are applied to jobs on production according to direct labour hour rate which is Rs 2 per hour.25%. Illustration [1] From ICAI-CMA Study Material Prepare: (a) Job cost sheet for job number A 77 and A 99. 10 is to be earned. A Ltd Co. b) It has lucky draws every month giving the 1st prize of Rs.1.30 per unit.550 per unit without incurring any of the expenses referred to in (a) to (d) above.000 units of a product every month.10.500 per unit of provided it incurs the following further expenditure: a)It gives gift items costing.5. Advise the company on its course of action.000 on refreshment served every month to its costomers.000 per month. Q. It can market 100% of its output at Rs.00. has capacity to produce 1.Prepare a Cost Sheet showing the element wise cost of output and cost per tonne of output. Its works cost at varying levels of production is as under: Level Work Cost Level Work Cost [Per Unit] [Per Unit] 10% 400 60% 350 20% 390 70% 340 30% 380 80% 330 40% 370 90% 320 50% 360 100% 310 Its fixed administration expenses amount to Rs.50.000.2. Show the supporting cost sheet.000 each to customers’ buying the products c)It spends Rs.000 and three consolation prizes of rs. (d) it sponsors a television program every week at cost of Rs.000 and fixed marketing expenses amount to Rs.00.000.00.20. 2nd prize of Rs.50.000 per month respectively. It can market 30% of its output at Rs. Rs.30 per unit of sale.1. 3rd prize of Rs. The variable distribution cost amounts to Rs. .5.50.25. 9.5.7.31.97.10.37. 2010 to October 31.Q.31.50.55.22.000 inventory. They reveal the following for the period September 1. The insurance company wants to know the historical cost of the inventories as a basis for negotiating a settlement. 2010 Direct materials purchased Rs .2010 40% of conversion cost Indirect manufacturing costs Rs . not historical cost.2010 Finished goods Rs .A Fire occurred in the factory premises on October 31.250 Direct manufacturing labour Rs.1.1.000 Work in process Rs .2.000 Sales revenues Rs.2010 Direct materials Rs .20. 2010.50.2010 (iii) Direct materials inventory.3. Required : (i) Finished goods inventory.775 Cost of goods available for sale The loss is fully covered by insurance company.40.2.2010 . The accounting records have been destroyed.10. certain accounting records were kept in another building.31.2010 (ii) Work-in-process inventory.750 inventory.6.9.although the settlement is actually to be based on replacement cost.9.750 Prime costs 30% Gross margin percentage based on revenues Rs.10.000 inventory.1.