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Grade 11 Unit 7

The document discusses production costs including direct costs, indirect costs, prime costs and overhead costs. It provides examples of costs from various manufacturing businesses and questions to test understanding of calculating costs.

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Nipuni Perera
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162 views

Grade 11 Unit 7

The document discusses production costs including direct costs, indirect costs, prime costs and overhead costs. It provides examples of costs from various manufacturing businesses and questions to test understanding of calculating costs.

Uploaded by

Nipuni Perera
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Nalanda College – Colombo 10


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Unit Evaluation
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Grade 11 Business& Accounting studies Unit 07


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Statement of Production Cost


Part I

01) The cost of physical resources that can be directly identified with the unit of production
is known as;
1. Direct material cost 2. Indirect material cost
3. Direct other cost 4. Over head production cost
02) Which of the following is correct in relation to prime cost?
1. Prime cost = Indirect material cost+ Indirect labour cost+ Indirect other cost
2. Prime cost = Direct material cost+ Direct labour cost+ Overhead cost
3. Prime cost = Direct material cost+ Direct labour cost+ Direct other cost
4. Prime cost = Direct material cost+ Indirect material cost+ other cost
03) Salary paid to Machine operator in a garment factory was Rs.35 000. This amount should
be recorded under,
1. Direct material cost 2. Indirect material cost
3. Direct other cost 4. Over head production cost

 Following information relates to the “Hela garment factory”

Direct material cost Rs.310 000 Indirect material cost Rs.175 000

Direct labour cost Rs.142 000 Indirect labour cost Rs.85 000

Direct other cost Rs.93 000 Indirect other cost Rs.20 000

By using them answer Question No.04 to 06

04) Direct production cost of this business is;


1. Rs.280 000 2. Rs.310 000 3. Rs.175 000 4. Rs.545 000
05) Total production overhead cost is;

1. Rs.280 000 2. Rs.175 000 3. Rs.545 000 4. Rs.310 000


06) Total production cost is;
1. Rs.545 000 2. Rs.265 000 3. Rs.825 000 4. Rs.280 000

1
 State whether the following statements are true or false (07 to 09)

07) A firm which produce and sell products is known as manufacturing firm

08) The main function of a manufacturing firm is producing and selling goods and services

09) The total of indirect costs is also known as production overheads

 Use the following information of Chethiya’s business for the year ending
3112.2019 , to answer question No.10 to 14

Material purchases Rs.150 000


Factory employee salaries Rs.18 000
Material transport cost Rs.2 400
Direct labour Rs.35 000
Electricity Rs.11 600
Factory rent and other expenses Rs.23 000
No. of units produced 2000
-

10) Prime cost of this business is ;


1. Rs.240 000 2. Rs.187 400 3. Rs.52 600 4. Rs.130 400
11) Total production cost is;
1. Rs.240 000 2. Rs.187 400 3. Rs.52 600 4. Rs.130 400
12) Production cost of a unit is;

1.Rs.93.70 2. Rs.120.00 3. Rs.26.30 4. Rs.65.20

13) If the product is priced after adding 10% profit margin on cost. What is the price per unit?

1.Rs.132.00 2. Rs.103.07 3. Rs.28.93 4. Rs.71.72

14) What is total sales income of this business for the month of June 2020?

1. Rs.240 000 2. Rs.187 400 3. Rs.52 600 4. Rs.130 400

15) Which of the following spread sheet is not used to prepare production cost statement?

1.Libreo office calc 2. MS Excel 3. Google sheets 4. MYOB

2
Part II

01) What is meant production cost?

02) Name 6 elements of production cost.

03) Briefly explain 4 elements of production cost with examples

04) Following information relates to the Sarath’s business which produces cement flower
vases for the month of June 2020

Cement ,and sand Rs.130 000


Salaries to production workers Rs.22 000
Carriage inward- raw materials Rs.5 400
Factory electricity Rs.1 000
Factory rent Rs.2 500
Salaries to factory workers Rs.15 000
Paints Rs.4 100

Additional information:

 During the month of June 500 flower vases were produced


 Selling price was marked by adding 10% profit margin

Required :
(a) Categorise above items as direct cost and indirect cost
(b) Calculate prime cost and production overhead cost separately
(c) Calculate the total production cost
(d) Calculate cost of a flower vase
(e) Calculate the selling price of a flower vase
(f) Calculate the profit of this business for the month of June 2020

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