ImperialgroupofinstitutionsCopyrights@2021-22

PROBLEMS
1) Mr. Gopal furnishes the following data relating to the manufacture of a standard product during the
month of April 2021;
Raw materials consumed Rs. 15000
Direct labour charges Rs. 9000
Machine hours worked 900
Machine hour rate Rs. 5
Administration overhead 20% on works cost
Selling overhead Rs. 0.50 per unit
Unit produced 17100
Units sold 16000 at 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
2) From the following information for the month of January prepare a Kashi to show the following
component;
a) Prime cost
b) Factory cost
c) Cost of production
d) Total cost..
Direct material Rs. 57000
Direct wages Rs. 28500
Factory rent and rate Rs. 2500
Office rent and rate Rs. 500
Plant repairs and maintenance Rs. 1000
Plant depreciation Rs. 1250
Factory heating and lighting Rs. 400
Factory manager salary Rs. 2000
Office salary Rs. 1600
I 1
KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

Director remuneration Rs. 1500

Telephone and postage Rs. 200
Printing and stationery Rs. 100
Legal charges Rs. 150
Advertisement Rs. 1500
Salesman salary Rs. 2500
Show room rent Rs. 500
Sales Rs. 116000

3)From the following particulars, prepare a cost statement:

Stock 1-1-2021:
Raw materials Rs. 30500
Finished goods Rs. 20400
Stock 31-1-2021:
Raw materials Rs. 48500
Finished goods Rs. 10000
Purchase of raw materials 25000
Work-in-progress, 1-1-2021 Rs. 8000
Work-in-progress 31- 1- 2021 Rs. 9000
Sales Rs. 95000
Direct wages Rs. 20400
Factory expenses Rs. 10,500
Office expenses Rs. 5,400
Selling expenses Rs. 3800
Distribution expenses Rs. 2500
Also calculate the percentage of works expenses to direct wages and the percentage of office expenses
to work cost.

I 2
KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

4)In respect of a factory the following particulars have been extracted for the year 2021:
Cost of materials Rs. 600000
Wages Rs. 500000
Factory overheads Rs. 300000
Administration charges Rs. 336000
Selling charges Rs. 224000
Distribution charges Rs. 140000
Profit Rs. 420000
A work order has to be executed in 2022 and the estimated expenses are:
Material Rs. 8000
Wages Rs. 5000
Assuming that in 2022, the rate of factory overheads has gone up by 20%, distribution charges have
gone down by 10% and selling and distribution charges have gone each up by 15% at what price
should be the product be sold so as to earn the same rate of profit on the selling price as in 2021?
Factory overheads are based on wages and administration, selling and distribution over its on factory
cost.

5)The following details are available from a company's books;

Stock of raw material on 1-1- 2021 Rs. 10800
stock of finished goods on 1-1-2021 Rs. 28000
Purchases during the year Rs. 294000
Productive wages Rs. 198800
Sales of finished goods Rs. 592000
Stock of finished goods 31st- 12- 2021 Rs. 30,000
Stock of raw material on 31st -12- 2021 Rs. 13600
Works overhead Rs. 43736
Office expenses Rs. 35524
The company is about to send a tender for large plant. The costing department estimates that the
material required for its production would cost Rs. 20000 and wages for making the plant would cost
Rs. 12000. Tender is to be made keeping a net profit of 20% on the selling price. State what would be
the amount of the tender, is based on the percentages.
I 3
KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

6)The accounts of flux manufacturing company for the year ended 31st March 2021 show the
following information
Production wages Rs. 250000
Direct material used Rs. 318200
Chargeable expenses Rs. 30000
Sales Rs. 780000
Drawing office salary Rs. 10000
Counting office salary Rs. 18800
Cash discount allowed 3000
Carriage outward Rs. 5400
Bad debts written off Rs. 8500
Rent rate and taxes:
I) Office Rs. 4000
II) Works Rs. 15400
Travelling expenses Rs. 3600
Traveler’s salaries and commission Rs. 8500
Depreciation on plant and machinery Rs. 6500
Depreciation on office furniture Rs. 1,000
Directors fees Rs. 12000
gas and water (3/4 factory, 1/4 office) Rs. 2800
Managers salary (3/4 factory, 1/4 office) Rs. 24000
General expenses Rs. 4000
Hire of crane Rs. 5000
Donation to charitable trust Rs. 2000
Prepare a statement showing :
I)Prime cost
II)Factory cost
III)Total cost
IV)Net profit
I 4
KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

7)The following particulars have been extracted from the books of Calcutta manufacturing company
limited for the year ended 31st March 2021
Stock of materials as on 1 April 2020 Rs. 47000
Stock of materials as on 31st March 2021 Rs. 50,000
Material purchase Rs. 208000
Drawings office salaries Rs. 9600
Counting house salaries Rs. 14000
Carriage inwards Rs. 8200
Carriage outwards Rs. 5100
Cash discount allowed Rs. 3400
Bad debts written off Rs. 4700
Repairs of plant machinery and tools Rs. 10600
Rent rates taxes and insurance (factory) Rs. 3000
Rents rates taxes and insurance (office) Rs. 1000
Travelling expenses Rs. 3100
Travelling salaries and commission Rs. 8400
Production wages Rs. 140000
Depreciation on plant and tools Rs. 7100
Depreciation written off on furniture Rs. 600
Directors fees Rs. 6000
Gas and water charges (factory) Rs. 1500
Gas and water charges (office) Rs. 300
General charges Rs. 5000
Manager salary Rs. 12000
Out of 48 working hours in a week the time devoted by the manager to the factory and office was on an
average 40 hours and 8 hours respectively throughout the accounting year.
You are required to prepare a cost sheet.

I 5
KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

8)From the books of M/S ZYX, enterprises the following details have been extracted from the year
ending March 31st 2021;
Stock are materials - Opening Rs. 188000
Closing Rs. 200000
Materials purchased during the year Rs. 832000
Direct wages paid Rs. 238400
Indirect wages Rs. 16000
Salaries to administrative staff Rs. 40000
Freight -Inward Rs. 32000
Outward Rs. 20000
Sales Rs. 1579800
Cash discount allowed Rs. 14000
Bad debts written off Rs. 18800
Repairs of plant and machinery Rs. 42400
Rent rates and taxes -Factory Rs. 12000
Office. Rs. 6400
Travelling expenses Rs. 12400
Salesman salaries and commission Rs. 33600
Depreciation written off -Plant and Machinery Rs. 28900
Furniture 2400
Directors fees Rs. 24000
Electricity charges (factory) Rs. 48000
Fuel (for boiler) Rs. 64000
Sale of scrap Rs. 500
General Charges Rs. 24800
Manager salary Rs. 48000
The manager's time is shared between the factory and the office in the ratio of 20:80.
From the above details you are required to prepare cost sheet to show;
a) Prime cost, b) Factory cost, c) Cost of production, d) Total cost, e) Profit.
I 6
KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

9) E Ltd. Furnish the following information for 10,000 units of a product manufactured during the year
2021;
Material Rs. 90000
Direct Wages Rs. 60000
Power and consumable stores Rs. 12000
Indirect Wages Rs. 15000
Factory lighting Rs. 5500
Cost of rectification of defective work Rs. 3000
Clerical salaries and management expenses Rs. 33500
Selling Expenses Rs. 5500
Sale proceeds of scrap Rs. 2000
Repairs maintenance and depreciation of plant Rs. 11500
The net selling price was Rs. 31.60 per unit sold and all units were sold.
A film 1-1-2022, the selling price was reduced to Rs. 31 per unit. It was estimated that production
could be increased in 2022 by 50% due to spare capacity.
Rates for materials and direct wages will increase by 10%.
You are required to prepare;
a) Cost sheet for the year 2021 showing various elements of cost per unit, and
b) Estimated cost and profit for 2022.
Assume that 15000 units will be produced and sold during the year and factory over its will be
recovered as a percentage of direct wages and office and selling expenses as a percentage of work cost.

10)Bharat engineering company manufactured and sold 1000 sewing machines in 2021. Following are
the particulars obtained from the records of the company;
Cost of material Rs. 80000
Wages paid Rs. 120000
Manufacturing expenses Rs. 50000
Salaries Rs. 60000
Rent rates and insurance Rs. 10000
Selling expenses Rs. 30000
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KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

General expenses Rs. 20000

Sales Rs. 400000
The company plans to manufacture 1200 sewing machines in 2022. You are required to submit a
statement showing the price at which machines would be sold so at to show a profit 10% on the selling
price.The following additional information is supplied to you;
a) The price of materials will rise by 20% on the previous year’s level.
b) Wage rates will rise by 5%.
c) Manufacturing expenses will rise in proportion to the combined cost of materials and wages.
d) Selling expenses per unit will remain unchanged.
e) Other expenses will remain unaffected by the rise in output.

11)Flat shoe company manufacture two types of shoes a and b cost for the year ended 31st March 2021
were;
Direct materials Rs. 1500000
Direct wages Rs. 840000
Production overhead Rs. 360000
Total 2700000
There was no work in progress at the beginning or at the end of the year. It is ascertained that;
a) Direct material in type A shoes consists twice as much as that in type B shoes.
b) The direct wages for type B shoes was 60% of those of type A shoes.
c) Production overhead was the same per pair of A and B type.
d) Administrative overhead for each type was 150% of direct wages,
e) Selling cost was Rs. 1.50 per pair.
f) Production during the year were: Type A 40000 fairs of which 36000 were sold; Type B 120000
pairs of which 100000 were sold.
g) Selling price was Rs. 44 for type A and Rs. 28 for type B per pair.
Prepare a statement showing cost and profit.

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KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

12) From the following particulars, prepare cost sheet showing the comparative cost per tonne for the
periods:
Three months ended 2021
Particulars
31st March 30th June
Productive wages 72000 98000
Administrative expenses 12000 12000
Raw materials 36000 49000
Taxes and Insurance factory 750 750
Light and water 1000 1000
direct expenses 9000 12500
Depreciation 2000 2000
factory rent 1500 1500
Unproductive labour 30000 41000
Factory repair 3000 4500
TOTAL 167250 222250
The tonnage produced in the two quarters was 12000 & 16000 respectively.

13) Steel products company produces a machine that sells for Rs.300. An increase of 15% in cost of
materials and of 10% in cost of labour is anticipated.
If the only figures available are the given below, what must be the selling price to give the same
percentage of gross profit as before?
a) Material cost have been 45% of cost of sales, b) Labour cost have been 40% of cost of sales.
c) Overhead cost have been 15% of cost of sales, d) The anticipated increased cost in relation to the
present sale price would cause 35% decrease in the present gross profit.

I 9
KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

14) The books of Acme limited. present the following data for the month of Jan 2021.
Direct labour cost Rs 16000 (160% of factory overhead)
Cost of goods sold Rs 56000
Inventory account showed the following opening and closing balances:
Particular’s January 1 January 31
Raw material 8000 8600
Work-in-progress 8000 12000
Finished goods 14000 18000
Selling expenses 3400
General and administration expenses 2600
Sales for the month 75000
You are required to prepare a cost sheet showing cost of goods manufactured and sold and profit
earned.

15) The following direct cost work included on job NO. 239 of XYL company limited.
Materials Rs.6010
Wages: Department- A- 60 hours at Rs.30 per hour.
B- 40 hours at Rs.20 per hour.
C- 20 hours at Rs.50 per hour.
Overhead for these three departments were estimated as follows:
Variable overhead department: A- Rs.15000 for 1500 labor-hours
B- Rs.4000 for 200 labour hours
C- Rs.12000 for 300 labor-hours
Fixed overhead: Estimated at Rs.40000 for 2000 normal working hours.
You are required to calculate the cost of job NO. 239 and quote the price to give profit of 25% on
selling price.

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KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

16) A factory uses job costing. The following data were obtained from its books of books for the year
ended 31st December 2021.
Direct material 90000
Direct wages 75000
Factory overhead 45000
Selling and distribution overhead 52500
Administration overhead 42000
Profit 60900
a) Prepare a cost sheet indicating the prime cost, work cost. Production cost, Cost of sales and the sales
value.
b) In 2022, the factory received and order for a number of jobs. It is estimated that direct materials
required will be Rs.120000 and direct labour will cost Rs.75000. What should be the price for this jobs
if factory indents to earn the same rate of profit on sale assuming that the selling and distribution over
its have gone up by 15%? The factory recovers factory overheads as a percentage of direct wages and
administration, selling and distribution overheads as a percentage of work cost based on cost rates
prevailing in the previous year.

I 11
KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

I 12
KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
 ImperialgroupofinstitutionsCopyrights@2021-22

I 13
KIRAN R
ASSISTANT PROFESSOR
IMPERIAL INSTITUTE OF ADVANCED MANAGEMENT
ImperialgroupofinstitutionsCopyrights@2021-22