GENERAL POINTS

(1) Element to be ignored while preparing Cost

Sheet

(a) Expenses not related to the product

product.
Ex : Donation ,Gift etc.
(b) Abnormal Expenses and Losses. Losses
Ex : Loss by fire, theft etc.
(c ) Fictitious / Intangible Assets written
off.
Ex : Goodwill W/off
W/off, Preliminary
exp.W/off etc.
(d) Expenses after Profit
Profit.
Ex : Income tax etc.
(e) Appropriation of Profits
Profits.
Ex : Dividends, Transfer to G.R. etc
(f) Financial Expenses / Losses.
Losses
Ex : Interest payment, Cash discount,
Bad debts etc
etc.
(g) Incomes other than Sales and Sale of
Scrap.
Scrap
E.g.: Interest received, rent received,
Dividend recd.etc.
recd etc
(2) To find out Qty.Mfg / Qty. Sold

Particulars Units

Opening Stock of finished goods xxx

Add : Q
Qty.Mfg.
y g ((Finished Goods)) xxx
Less : Closing stock of finished goods xxx

Qty.Sold (Finished goods) xxx

(3) Valuation of Opening & Closing stock
of finished goods
(a) Closing Stock of Finished Goods :-
:
To be valued at current year’s cost of
production
d ti per unit. it
(b) Opening
Ope g Stock
S oc ofo Finished
s ed goods ::-
To be valued at previous year’s cost of
production per unit.
If previous year cost of production is not given
→Assume it to be the same as current years
cost of production.
(4) Valuation of finished goods by weighted
average method
Particulars Units Total Cost
Cost P.U.
Rs. Rs.
Cost of Production 1000 10000 10.00
Add : Opening
p g Stock of finished ggoods 200 2300 --

Less : Cl.stk.of
Cl stk of finished Goods 100 1025 --
10000+2300
1000+200
Cost of Goods sold 1100 11275 10.25
Types of Problems :-

(1) Simple format based Problems.

(2) Problems based on Reverse Working.
(3) Problems based on estimated cost sheet.
(variable, fixed & Semi variable costs)
(4) Problems where break up of semi variable
cost not given.
(5) Problems based on Total Cost Ratios.
((1)) Simple
p format
based Problems.
(2) Problems based on Reverse
W ki
Working
→ Some
S bbasic
i information
i f i missing.
i i
E g : Purchase of raw material
E.g
→ Some other extra information given.
E.gg : Cost of ggoods sold
Start with the extra information given in
the Question.
(3) Problems based on estimated cost sheets.
→Prepare A
→P Actual
t lC Costt Sheet
Sh t off th
the previous
i
year.
→Give
Gi th the effects
ff t off variable,
i bl fixed
fi d & semii
variable cost in the estimated cost sheet as
given
i below.
b l
((a)) Variable cost :
Change In Cost Per Unit Column
→Give effect of change in price in the per
unit column .
If no change in the price
Maintain the same amt. in the per unit column.
(b) Fixed Cost :

Change In Total Cost Column

→Give effect of change in price in the Total

Cost column .

g in the price.
If no change p

Maintain the same amt. in the Total cost

column.
(C) S iV
Semi Variable
i bl Cost
C t :-

→Find the break-up of semi variable cost

between fixed & variable cost.
→Change in the variable portion →Effect
should be given in per unit column.
column
→Change in the fixed portion →Effect
should be given in total cost column.
Bifurcation of Costs into Variable, Fixed &
Semivariable
→Direct material
→Direct wages Always variable cost
→Direct Expenses

→Factory Overheads Can be variable or

→Office Overheads fixed or even semi
→Selling Overheads variable
If specified → Follow the specifications.
ifi d → C
If not specified Consider
id them
h as Fixed
Fi d Cost
C
 IMPORTANT POINTS

(1) IIn case off a semii variable

i bl cost
→ Give break up of fixed & variable
portion in previous years actual cost
sheet.

(2) Closing stocks of Actual Cost Sheet

→ Not to be included as opening stock in
Estimated Cost Sheet
Sheet.
(4) Problems where break up of semi variable
cost not given.
g
→Find out the variable cost per unit .

Variable Cost Difference in cost

Per Unit =
Difference in qty.
→ Find out Total variable cost.
Variable cost per unit X No.of units
→ Find out Fixed cost.
F C = Semi Variable cost – Total Variable cost
F.C
(5) Problems based on Total Cost Ratios :-
→Total cost (Consolidated cost) is given &
Cost sheet to be prepared for two or more
than two products.
Formula to Divide the Total Cost between
the various products.
A B
Cost Per Unit Ratio X : X
X Qty.Mfg. / Sold Ratio X : X
Total Cost Ratio X : X

Only
O l for
f selling
lli expenses qty.sold
ld Ratio
R i should
h ld
be used.
Important Question
Q.5, 6, 8, 10,
0, 13,
3, 14,,
16 18,
16, 18 20,
20 23,
23 28