Ideal Commerce Care Ideal Zone 01965-105877

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Chapter-2 (An Introduction to cost Terms and Purposes)
Cost Sheet
Particulars Tk Tk
Opening raw materials ***
(+) Raw material purchase ***
***
(+) Carriage inwards ***
***
(-) Purchase discount/Return ***
***
(-) Closing raw materials ***
***
(-) Abnormal loss ***
Raw Materials used/consumed ***
(+) Direct expenses/ wages/ labour /changeable expenses ***
Prime cost ***
(+) Factory overhead ***
(-) Sales of scrap/spoiled ***
Factory cost/Production cost/Work cost/ Manufacturing ***
(+) Opening work in progress ***
(-) Closing work in progress ***
Cost of Goods manufactured ***
(+) Opening finished goods ***
(-) Closing finished goods ***
Cost of goods sold ***
(+) Operating expenses / Commercial expenses.
Office & administrative expense ***
Selling & Distribution expense ***
Total cost/ Cast of sales. ***
(+) Profit ***
Sales ***

Income Statement
Particulars Tk Tk
Sales ***
(-) Cost of Goods sold ***
Gross profit ***
(-) Operating expense/ Commercial expense
Office & administrative expense ***
Selling & distribution expense *** ***
Net profit ***

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Tender cost sheet / Job Cost sheet / Estimated cost sheet
Particulars Tk Tk
Raw materials ***
(+) Direct wages ***
Prime Cost ***
(+) Factory overhead ***
Factory Cost/ production cost/ work cost ***
(+) Operating expenses / Commercial expense. ***
Office & administrative expense *** ***
Selling & distribution expense ***
Total Cost ***
(+) Profit ***
Tender cost sales

Factory overhead
W-1. Factory overhead to wager = ×100
wager
Office & administrative
W-2. Office & administrative to work cost = ×100
work cost
Selling & distribution
W-3. Selling & distribution to work cost = ×100
work cost
Marketing expense
W-4. Marketing expense to work cost = ×100
work cost
W-5. Profit on cost = Cost × %
%
W-6. Profit on sales = Cost ×
100−%
[g‡b ivL‡Z n‡e Overhead always Dci em‡e|]

Chapter-3 (Cost Behavior Analysis)

Highest cost−Lowest Cost
1. According to high low method variable cost per unit=
Highest unit−Lowest unit
y = Total cost
2. According to least squares method total cost, y = a+bx a= Fixed cost
b= variable cost per unit
x= units

3. According to equation, y = a +bx

Total production
4. Average production (x)= Total Month

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Total Mixed Cost
5. Average Mixed Cost (y) =
Total Month
∑ dxdy
6. Variable cost per unit (b) = ∑ dx2

7. Fixed cost: Fixed cost are fixed in total but per unit is variable
8. Variable cost: Variable cost are variable in total but per unit is fixed.
9. Mixed Cost: Mixed cost are variable in total as well as per unit.

Table for calculation of Fixed and Variable Cost

(Under least square method)
Production Mixed cost
Month dx = x − 244 dy= dx = y − 2567 dx.dy dx 2
(in units) (x) (in Tk.) (y)

Chapter-4 (Materials)
A = Annual usage in unit
2AO O= Ordering cost per order
1. EOQ = √
C C= Carrying cost per unit
EOQ = Economic order quantity

AR= Annual Requirement

AR OC= Ordering cost per order
2. Total ordering cost = × OC per order
EOQ
EOQ = Economic Order Quantity

EOQ CC= Carrying cost per unit

3. Total Carrying Cost= × CC
2
EOQ = Economic order quantity
4. Total inventory cost = TOC + TCC
AR
5. No. of order = times
EOQ
AR
6. Number of working days = × days
Average daily usage
Annual working day
7. Interval between two order = × days
No.of orders

8. Value per order = EOQ × Purchase price per unit

9. Re- order level = Maximum stock + (Average consumption rate × Average lead time)
10. Re- order point = (Average daily usage × lead time)+Safety stock

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11. Minimum level = Re- order level −(Normal usage × Average delivery time)
12. Maximum level = Re- order level + Re-ordering quantity−(Minimum Consumption × Minimum re − ordering period)
Maximum stock level+Minimum stock level
13. Average stock level =
2

14. Safety stock = Normal/ Average usages × Maximum Re-order period for emergency purchase.
15. Total cost of safety stock = (Safety stock × PU purchasing cost)+ (Safety stock × Per unit carrying cost)
16. Absolute Maximum inventory = Normal Maximum inventory + (Normal use per day − Minimum use per day) × lead time.
17. Normal Maximum inventory = Safety Stock + EOQ
18. Total cost of inventory including safety stock = (EOQ
2
AR
× c + EOQ × OC)+ units of safety stock× Carrying cost

Table Showing the Economic Order Quantity

Cost
Annual Order Order Average Carrying Ordering Cost of Total
per
Usage Size Number Inventory cost cost purchase cost
unit

Table Showing the Economic Order Quantity

Cost Average Carrying
Annual Order Order Average Ordering Cost of Total
per inventory Cost
Usage Size Number Inventory Cost purchase Cost
unit cost

Material:---------- Rupsha Manufacturing Co. Maximum level: ................

Bin No:-------- Store Ledger Account Minimum Level:-------------
Location:------------ Under FIFO Method Re-order level: -------------

Received Issued Balance

Date
Unit Rate Amount Unit Rate Amount Unit Rate Amount

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Chapter-5(Labour)
1. Time rate system:
(a) Time rate of ordinary level: Gross wages = Hours worked / Time taken × Rate per hour
(b) Time rate of high wages plan: Wages = Total hours worked × Hourly rate
(c) Graduated time rate method: Wages = Number of units produced × Rate per unit.

2. Piece rate system:

Wages = Number of units produced × Rate per unit
3. Taylor’s differential piece rate system:
Actual Production
on production basis: Efficiency Ratio = × 100
Standards Production
Standard time
on time basis: Efficiency Ratio = × 100
Actual time

4. Halsey system:
Wages = (Time taken × Rate per hour)+ (50% of time save + Rate per hours)
Time saved= Standard time – Time taken

5. Halsey weir system:

Wages = (Time taken ×Rate per hour) + (30% of time save × Rate per hours)

6. Rown system:
Wages= Basic wages + Bonus
Basic wages = Time taken × rate per hours
Time save
Bonus = × Time taken × rate per hours
Standard time

7. Standard time plan:

Actual Output
(a) Efficiency Ratio = × 100
Standard output

(b) New wage rate G‡ÿ‡Î Basic Rate ‡K Efficiency Ratio Øviv ¸Y K‡i New rate wbY©q Kiv nq|
Efficiency 100% ch©šÍ Normal rate. 100% Gi †P‡q †ewk n‡jB Rate cwie©Zb n‡e|
Wage = Hours worked/ Time take × New rate
8. Emersion efficiency Plan:
Standard Time
(a) mgq wfwËK `ÿZv = × 100
Actual Time

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Actual Production
(b) Drcv`bwfwËK `ÿZv = × 100
Standard Production

9. Barth plan: total wages = Hourly rate of wages

Hourly rate
10. Bedaux point plan: Wages = Hours worked × Hourly rate + 75% of above standard × 60

Calculation of the Weekly Wages

Actual
Actual Standard Efficiency Basic Revised
Days Hours Wages
Output Output Ratio rate rate
Worked

Employees Earnings Statement and Labour Cost Per Hour

Labour
Actual standard Actual Bonus Bonus Basic Total cost
Days
Units Time Time hours wages wages wages per
unit

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Chapter-6 (Overhead)
Name.........
Statement Showing the Computation of Machine Hour Rate
Running by............ Machine................No..................

Description of Machine
Account Titles Taka Taka
1. Variable Expenses/ Machine Charge:
(a) Fuel & Operating Exp. ****
(b) Power consumption ****
(c) Lubricating ****
(d) Cotton wart & consumable store ****
(e) Chemicals ****
(f) Steam & water ****
(g) Repairs & Maintenance ****
(h) Indirect Labor ****
(i) Other variable overhead ****
Total variable expenses ****
2. Fixed Expenses/ Standing Charges:
(a) Rent, Rates & Insurance ****
(b) Lighting & Heating ****
(c) In7terest on capital (Cost of machine) ****
(d) License ****
(e) Supervision ****
(f) Foreman salary / wages ****
(g) General expenses / Charges ****
(h) Canteen charges ****
(i) Depreciation ****
(j) Machine man / Helper wages ****
(k) Other fixed overhead ****
Total fixed expenses: ****
3. Toal Factory Overhead (1+2) ****
4. Effective Machine Hour/ Anticipated Machine Hour ****
5. Factory Overhead Rate (3÷ 4) ****

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Chapter-7 (Allocation of support Department Cost. Common costs and Revenues)
Method:
1. Primary distribution 2. Secondary Distribution
(a) Direct Method
(b) Step Method
(c) Repeated Method
(d) Equation Method

No. Items of Expenses Apportion Base

(a)Rent, Rates and Taxes
(b) Insurance of Building
1. Area occupied / Floor space
(c) Depreciation of Building
(d) Maintenance of Building
(a) Lighting / Lighting power
2. No. of light Point
(b) Electricity
1. Horse power of machine
3 Power and Fuel
2. Horse power ×Machine hours
4 Medical Expenses No. of employee
(a) Repairs to machinery
(b) Depreciation of plant and
5. machinery Cost of machine / Value of plant
(c) Repairs to plant and machinery
(d) Insurance of plant and machinery
(a) Direct wage
6. Indirect wage/ Indirect labor
(b) Working hours
(a) Supervision charge
7. (b) First Aid No. of worker
(c) Canteen Expenses
8. Workman’s Compensation insurance Indirect wages
9. Frige benefit Direct wage
10. Motive power Electricity (kwh)
11. Storage overheads Direct materials
12. Amenities to staff No. of staff
13. General overheads Direct wages
14. Property insurance Value of fixed assets
15. Sundries / Other factory overheads Working hour ratio
16. Insurance premium Total assets ratio

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Tips-1: Indirect Material, Indirect Wages and Indirect any expenses hv‡e mKj Department G|
wKš‘ Direct Material, Direct Wages and Direct any expenses hv‡e ïaygvÎ Service Department G.

Tips-2: Estimated overhead/ Budgeted overhead hw` Actual overhead Gi Zzjbvq Kg nq Zv‡K
Under allocation e‡j|

Tips:-3 Estimated overhead/ Budgeted overhead hw` Actual overhead Gi Zzjbvq ‡ewk nq Zv‡K
Over allocation e‡j|

The Surma Ltd.

Overhead Distribution Summary
Under repeated Distribution Summary
Production Department Service Department
Particulars
A B C X Y

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Chapter-8 (Job Costing)

Specimen of cost Sheet

Name of the Institution
Cost sheet / Cost statement
For the year ended..........
Accounts Titles Tk. Tk.
Opening stock of raw materials ****
Add: Purchase of raw materials ****
****
Add: Carriage inwards ****
****
Less: Purchase return / Purchase discount ****
****
Less: Closing stock of raw materials ****
****
Less: Abnormal loss ****
Materials used / Raw materials consumed ****
Add: All direct expenses & wages / Chargeable expenses ****
Prime cost ****
Add: Factory overhead/ Production overhead ****
Less: Sales od scrap/ spoiled ****
Factory cost / work cost ****
Add: Opening work in progress ****
Less: Closing work in progress ****
Cost of goods manufactured ****
Add: Opening finished goods ****
Less: Closing finished goods ****
Cost of goods sold ****
Add: Commercial expenses / Operating expenses
(a) Office & Administrative expenses ****
(b) Selling & Distribution expenses ****
Total cost ****
****
Add/ Less: Profit/ Loss ****
Sales ****

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List of formula:
1. Cost Received = Value of work certified – retention money
2. Work in progress = Cost of work done + Profit transferred – Cash Received

Tips
1. Value of worked certified contract price Gi 50% ev Zvi †ewk n‡j:-
2 Cash Received
Profit Transferred = × Notional profit ×
3 Value of work certified

2. Value of worked certified contract price Gi 50% Kg wKš‘ 25% Gi †ewk n‡j:-
1 Cash Received
Profit Transferred = × Notional profit ×
3 Value of work certified

3. Value of worked certified contract price Gi 25% Gi Kg n‡j Profit Transferred n‡e bv|

Chapter-9 (Process Costing)

Mathematics Tarm’s’
1. General Process
2. Inter process profit
3. Equivalent production
4. Cost of production report
Profit ×Cosing Stock
⇒Preparation of Inter process formula: Closing stock profit =
Total
[we:`ª: First process G Opening stock Gi †Kvb Profit _vK‡e bv Ges Closing Stock Gi †Kvb Profit ‡ei
Ki‡Z n‡‡e bv|]
⇒Preparation of Equivalent Production:
1. Opening Stock Gi g~j¨ GKmv‡_ Total _vK‡j †mUv FIFO Method.
2. Opening Stock Gi g~j¨ Avjv`v Avjv`v _vK‡j †mUv Average Method.
3. Average Method G Opening stock Avm‡e bv|
4. Abnormal Gain me©`v me level G 100%
5. Normal loss me level G (Equipment production) Gi 0%
6. Completely process FIFO Ges Average Dfq Method B 100%
7. Opening Stock FIFO Method G input Ges output `yB RvqMvq Avm‡e wKš‘ Average Method G
ïaygvÎ input G Avm‡e wKš‘ Output G Avm‡e bv|

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Chapter-10 (Service Costing)
1. Formula & Format
Per month/ Cost per ton /
Accounts Titles
Per annum km
Fixed cost:
Insurance **** ****
Taxes **** ****
Road License ****
Interest ****
Depreciation ****
Grage rent ****
Drivers’ salary ****
Conductors’ salary ****
Supervision expenses ****
Repairs and maintenance ****
Managers salary ****
Total Fixed cost ****
Fixed cost per unit ****
Variable Cost:
Depreciation ****
Cost of petrol ****
Tire cost ****
Commission ****
Lubrication oil, Fuel grease etc. ****
Engine oil ****
Painting etc. ****
Total variable cost ****
Total cost ****

Notes: AePq (Dpreciation)= hvbevn‡bi AePq‡K †KD ¯’vqx Avevi ‡KD cwieZ©bkxj e¨q wn‡m‡e MY¨ K‡ib| †hme
†ÿ‡Î hvbevn‡bi ‡gvU Pjb gvB‡ji Dci wfwË K‡i AePq wbY©q Kiv nq, †m‡ÿ‡Î AePq‡K cwieZ©bkxj e¨q wn‡m‡e
MY¨ Kiv DwPZ|
2. Total kilometers = No. of buses × No. of days × No. of trips × Distance
3. Total passengers’ kilometers = NO. of buses × No. of days × No. of trips × Distance sitting × Capacity
4. Calculation of tons kilometers= No. of trucks × No. of days × No. of trips × Distance × Tons actually carried
5. Total taking per month = Total cost + Drivers commission + Profit.

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