Problem 1.

The cost of sale of production ‘A’ is made up as follows:-

Material used in manufacturing Rs 5,500

Material used in packing material Rs 1,000
Material used in selling the product Rs 150
Material used in the factory Rs 175
Material used in the office Rs 125
Labour required in production Rs 1,000
Labour required for supervision in factory Rs 200
Expenses direct factory Rs 500
Expenses indirect factory Rs 100
Expenses office Rs 125
Depreciation of office building Rs 75
Depreciation on factory plant Rs 175
Selling expenses Rs 350
Freight on material Rs 500
Advertising Rs 125

Assuming that all products manufactured and sold, what should be the selling price be fixed
to obtain a profit of 20% on selling price.

Problem 2. Mr. Zia furnishes the following data related to the manufacture of a standard
product during the month of August 2008

Raw material consumed - Rs 15,000

Direct labour - Rs 5,000
Machine hours worked - Rs 900
Machine hour rate - Rs 5
Administration overheads = 20% of works cost
Selling overheads - Rs 0.50 per unit
Unit produced & sold - 16,000 @ Rs 4 per unit

You are required to prepare a cost sheet from the above showing:-
a) The cost per unit
b) Cost per unit sold and profit for the period

Problem 3. From the following particulars, prepare a Cost Sheet showing (1) Cost of
Materials Consumed (2) Prime Cost (3) Factory Cost (4) Cost of Production and (5) Profit

Particulars Amount (Rs.)

Opening stock of raw materials 20,000
Opening stock of work in progress 10,000
Opening stock of finished goods 50,000
Raw materials purchased 5,00,000
Direct wages 3,80,000
Sales for the year 12,00,000
Closing stock of raw materials 75,000
 Closing stock of work in progress 15,000
Factory overhead 80,000
Direct expenses 50,000
Office and Administrative overhead 60,000
Selling and Distribution expenses 30,000

Problem 4. Calculate
a) Value of raw-materials consumed
b) Total cost of production
c) Cost of goods sold and
d) The amount of profit from the following particulars:
Particulars Amount (Rs) Particulars Amount(Rs)

Opening stock Power 2,000

Raw – materials 5,000 Factory heating and lighting 2,000
Factory insurance 1,000
Closing stock Experimental Expenses 500
Raw – materials 4,000 Sales of wastage of materials 200
Office management salaries 4,000
Raw – materials purchased 50,000 Office printing and stationery 200
Wages paid to labourers 20,000 Salaries of salesmen 2,000
commission of travelling
agent
Chargeable expenses 2,000
Factory rent, rates & taxes 5,000 Sales 1,00,000
(Ans. (a) Rs 50,800, (b) Rs 87,500, (c) Rs 89,500, (d) Rs 10,500)
 PROFORMA
Cost sheet /Statement of Cost for the Period Ended......................

Units Produced.......... Units Sold..............

Particulars Total Cost

Rs
I. Material Consumed:
Opening stock xx
Add: Purchase-materials Direct xx
Carriage inwards Material xx
Less: Closing stock xx
II. Direct Wages xx
III. Direct Expenses xx
A. Prime Cost xx
IV. Works Overhead:
Power xx
Factory Supervision xx
Stores xx
Depreciation xx
Factory expenses xx
B. Factory Costs or Works Costs xx
V. Office Overheads:
Printing Stationary xx
Office Salary xx
Conveyance xx
Electricity Bill xx
Legal Fees xx
Postage, etc. xx
C. Cost of Production xx
VI. Selling and Distribution Overheads:
Advertisement xx
Salesman’s salary xx
Commission xx
Travelling xx
Warehouse expenses xx
D. Cost of Sales/Total Cost xx
Profit xx
F. Sales/Selling Price xx