In the books of a Company

Cost Sheet for the period ended..

Units Produced..
Name of the product
Particulars

Opening stock raw materials

Add

Purchases of Raw Materials

Add:

Expenses on Purchases of Raw

Materials (octroi & duty)

Less: Closing stock of raw materials

Less: Sale of scrap or defectives of raw
materials
=

Cost of materials consumed

Add:

Productive Labour

Add:

Outstanding labour

Add:

Direct Expenses( architects fees)

Prime cost

Add:

Factory overheads

Add:

Opening stock of Work-in-progress

Less: Closing stock of Work-in-progress

Less: Sale of scrap or defectives of Work-inprogress
=

Factory cost

unit sold.
Total cost
Rs.

Unit
Cost
Rs.

Add:

Office overheads

Cost of Production

Add:

Opening Stock of Finished Goods

Less: Closing Stock of Finished Stock

=

Cost of Goods Sold

Add:

Selling & Distribution Overheads

Total cost

Add

Profit

Less

Loss

Sales

Statement showing distribution of overheads

Particulars

Factory

Office

Selling &
distribution

Non cost items

ie. Items to be excluded from cost.
1. Financial Incomes:
Capital profits, dividend received, brokerage &
commission received, share transfer fees, interest on
investments, rent received , bad debts recovery, interest
on loan given.
2. Financial charges
capital losses, cash discount , trade discount, penalties &
fines, share transfer fees paid, interest on debentures,
preliminary expenses, underwriting commission,
discount on issue of shares and debentures, loss on
investment, capital expenses, interest on capital, salary
or commission paid to partner, income tax, wealth tax,
interest on debentures, reconstruction expenses,
development expenses.
3. Appropriations:
Bad debts reserve, dividends paid, charitable donations,
transfer to reserve, sinking fund, debenture redumption
fund, machinery replacement fund, investment
fluctuation fund.
4. Abnormals:
Abnormal wastage, abnormal idle time, loss by fire, loss
by theft, loss of stock, insurance premium.

Q. 1) The cost accounts of A Ltd. Mumbai, for the year ended

31st March 2009 showed the following information.
Types of stock

As on 1-4-2008

As on 31-3-2009

Raw materials

75,000

86,000

Work-in-progress

1,20,000

75,000

Finished stock

44,000

21,000

Underwriting commission
Purchase of raw material
Selling overheads
Drawing Office salaries

12,000
1,58,000
23,000
5,600

Productive Labour

36,700

Audit fees

13,900

Establishment on cost

36,000

Steam, gas and water

Sales
Rent

4,300
6,78,800
24,000

(factory 80%, office 20%)

Architects fees

12,700

Wages outstanding

54,000

Octroi and duty

Distribution on cost
Solution:
In the books of a Company

3,000
12,800

Cost Sheet for the period ended..

Units Produced..
Name of the product
Particulars

Opening stock raw materials

Add

Purchases of Raw Materials

Add:

Expenses on Purchases of Raw

Materials (octroi & duty)

Less: Closing stock of raw materials

Less: Sale of scrap or defectives of raw
materials

unit sold.
Total cost Unit
Rs. Cost
Rs.
75,000
1,58,000
3,000
86,000
0

Cost of materials consumed

Add:

Productive Labour

36,700

Add:

Outstanding wages

54,000

Add:

Direct Expenses( architects fees)

12,700

Prime cost

Add:

Factory overheads

Add:

Opening stock of Work-in-progress

Less: Closing stock of Work-in-progress

1,50,000

2,53,400
29,100
1,20,000
75,000

Less: Sale of scrap or defectives of Work-inprogress

=

Factory cost

3,27,500

Add:

Office overheads

Cost of Production

Add:

Opening Stock of Finished Goods

54,700
3,82,200
44,000

Less: Closing Stock of Finished Stock

21,000

Cost of Goods Sold

4,05,200

Add:

Selling & Distribution Overheads

Total cost

4,41,000

Add

Profit

2,37,800

Less

Loss

Sales

35,800

6,78,800

Statement showing distribution of overheads

Particulars

Factory
Office
Selling &
Overheads Overheads distribution
Overheads

Selling overheads
Drawing office salaries

23,000
5,600

Audit fees

13,900

Establishment on cost

36,000

Steam ,gas and water

Rent

4,300
19,200

4,800

Distribution on cost
Total

12,800
29,100

54,700

35,800

Problems
Q.2) The expenditure incurred in the manufacturing and
selling of product A for the three months ended 31st march
2008 is given as below:
Rs.
Direct material cost

30,000

Engineers fees

1,000

Power & fuel

7,000

Wages payable

2,000

Office salary
Trade discount

5,000
500

Direct expenses

4,000

Haulage

3,000

General on cost

1,000

Catalogue expenses

1,500

Process & operating wages

13,000

Time-keeping expenses

2,000

Electricity charges

2,000

Donations

1,000

Tendering expenses

1,000

Commission on sales

2,500

Tons manufactured & sold

900

Prepare cost sheet of XYZ Ltd., Pune, showing the cost of each
element, the total cost per ton and the profits if selling price is
Rs. 120 per ton.

Q. 3) From the following particulars relating to M/S Shah

Brothers, prepare a simple cost sheet showing,
a. prime cost
b. works cost
c. cost of production
d. cost of sales
e. profit or loss for the period for six months ended
31.3.2009
Rs.
Cost of materials consumed
Oil and waste

2,30,000
3,000

Operating labour

32,000

Wages of foreman

44,500

Direct expenses
Stock keeper wages
Sales cash and credit

3,900
40,000
100

Commission to partner

9,000

Electric power

1,000

Salary to partner

2,000

Consumable stores
Direct wages payable

500
1,00,000

Lighting
i)Factory plant

200

ii) office establishment

650

Carriage outward

1,000

Rent
i)factory plant

1,000

ii) machinery

2,000

iii) office premises

3,000

iv) warehouse

4,000

Interest on bank overdraft

5,500

Advertising

3,450

Depreciation
i) office building

2,000

ii) machinery

4,280

Traveling expenses

6,000

Office managers salary

12,000

Salesmans commission

22,000

Directors fees

40,000

Printing & stationery

5,200

Telephone charges

6,500

Postage

3,320

Bad debts

2,900

0.
Q. 4) from the following particulars of Maharasttra Traders,
prepare a cost sheet for the year 2008-2009
Sale of scrap of raw material

500

Works overheads

45,000

Stock of raw materials as on 1-4-2008

40,000

Selling and distribution expenses

71,500

Wages due but not paid

4,500

Costom duty on purchases

5,500

Share transfer fees paid

1,500

Purchases of raw materials

Office on cost
Share transfer fees received

1,50,000
32,500
2,500

Stock of raw materials as on 31-3-2009

15,000

Direct wages

95,500

The company has to send a tender for the manufacture of a

machine in the year 2009-10. As per the judgment of costing
department materials of Rs. 80,000 will be required and wages
will be Rs. 50,000. The factory expenses bears the same
percentage on direct wages, office expenses bears the same
percentage on works cost and selling & distribution expenses
bear the same percentage on the cost of production as that of
the year 2008-09. The tender is to be made at a profit of 25 %
on market price.
Q. 5) Prepare a cost sheet with the help of the following
information. Give statement of cost and profit valuing closing
stock on the basis of LIFO, FIFO AND Weighted average cost
separately.

Opening stock:
Raw materials:
Work in
progress:
Finished goods:
(1000 units)
Purchase of raw
material
Direct labour
Direct power
Indirect power
Indirect material
Other factory
expenses

Show room expenses

10,000
Selling commission
@ 5 % on sales
30,000
Other selling
80,000
expenses
Office & Admn.
Overheads
1,00,000 Sales ( 12,000 units)
3,00,000 Closing Stock:
20,000
Raw materials:
6,000
Work in
24,000
progress:
30,000
Finished goods:
(4000 units )

40,000

15,000
60,000

15,000
18,000

Selling price Rs. 100 per unit.

Q. 6) The books & records of AB manufacturing company,
present the following data for the month of January 2009:
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:
Raw materials
Work-in-progress
Finished goods

January 1

January 31

Rs. 8,000

Rs. 8,600

8,000

12,000

14,000

18,000

Other data: selling Expenses Rs. 3,400; General Expenses

Rs.2,600; Sales for the month Rs. 75,000. You are required to
prepare a statement showing cost of goods manufactured and
sold and profit earned.

Q. 7) The following data pertains to Mr. Y for the month of

March 2009:
Direct material used
Opening finished
goods stock
Closing finished stock
Direct manufacturing
labour

Rs.
847 Manufacturing
? overhead
Cost of goods
94 manufactured
Cost of goods sold
389 Cost of goods
available for sale

Rs.
?
1,878
?
1,949

Find out the missing items and the statement of cost for
March 2009.
Q. 8) Raw materials X costing Rs. 100 per KG and Y costing
Rs. 60 per KG are mixed in equal proportions for making
product A. The loss of materials in processing works out to
25 % of the output. The production expenses are allocated at
50 % of direct material cost. The end product is priced with a
margin of 33 % over the total cost. Material Y is not easily
available and substitute material Z has been found for y
costing Rs. 50 per KG. It is required to keep the proportion of
this substitute material in the mixture as low as possible and
the same time maintain the selling price of the end product at
existing levels and ensure the same quantum of profit as at
present.

Q.9) The following details are available from the books of Ram
products Ltd. for the year ending 31st March 2007:

Direct wages

6,00,000 Printing &

stationery

12,000

Purchase of
materials

7,20,000 Counting house

salary

12,000

Other materials

36,000 Carriage outwards

8,640

Wages of foremen
and stores keeper

48,000 Other indirect

wages

6,000

Cost of research
and experiments

30,000 Office managers

salary

72,000

Power fuel and

haulage

54,000 Drawing office

salary

36,000

Closing stock of Raw materials

Work in progress
Finished goods
( 12,000 units)
Sales

Opening stock of 1,33,440 Raw materials

96,000 Work in progress
1,95,000 Finished goods
(6,000 units)
18,00,000 Income tax
Donations

1,20,000
28,800
97,500
22,000
5,000

Selling and distribution expenses are to be charged at Re. 1

per unit sold. During this year total units produced were
96,000. Prepare a cost sheet showing different elements of cost
and the profit.
Q. 10) The following are the details of 14 H.P. motor cars
produced by Zen & Co Ltd. for the year ending 31st March
2007:
Opening stock of Raw materials
Rs.
50,000
Works overheads
Rs. 1, 96,000
Purchases
Rs. 12, 00,000
Establishment charges
Rs 1, 49,170

Carriage

Rs.

60,000

Wages
Rs. 7, 00,000
Closing stock of Raw materials
Rs.
75,000
1. Find out the works cost & the total cost of motor cars,
percentage the works overheads bears to wages and
percentage that establishment charges bears to works
cost.
2. Work out what price a co should quote for a motor car,
which is estimated will require on expenditure of Rs.5,500
in raw material and Rs. 4,000 in wages, so that it would
yield a profit of 25% on quotation price.