Problem 1 : Cost sheet and profit or loss

The following information are obtained from the books of accounts of ABC Ltd
for the year ended 2013.

Debit (Rs.) Credit (Rs.)

Inventories:
Raw materials 140000
Work in progress 200000
Finished Goods 80000

Office appliances 17500

Plant and Machinery 460500
Buildings 200000
Sales 768000
Sales returns and rebates 14000
Materials purchased 320000
Freight on materials 16000
Purchase returns 4800
Direct labour 160000
Direct expense 50000
Indirect labour 18000
Factory supervision 10000
Factory repairs and upkeep 14000
Heat light and power 65000
Rates and taxes 6300
Misc. Expenses factory 18700
Sales commission 33600
Sales travelling 11000
Sales promotion 22500
Distribution dept. salaries & expenses 18000
Office salaries and expenses 8600
Interest on borrowed fund 2000
Dividend income 20000
Bad debts 5000
Additional Information:

1. Closing inventories: Raw materials Rs. 180000; WIP Rs. 192000 and FG Rs.
115000
2. Accrued Expenses: Direct Labour Rs. 8000; Indirect Labour Rs. 1200 and
Interest on borrowed funds Rs. 2000
3. Depreciation to be provided on: Office appliances at 5%; Plant and
machinery at 10%; and buildings at 4%
4. Distribution of common expenses would be as follows:
a. Heat, light and power: in the ratio of 8:1:1 to factory, office and
selling and distribution
b. Rates and taxes: 2/3 to factory and 1/3 to office
c. Depreciation on buildings: in the ratio of 8:1:1 to factory, office and
selling and distribution

Prepare a cost sheet of ABC Ltd for the year ended 31.03.2013 showing
a. Prime costs
b. Factory Overheads
c. Cost of production
d. Cost of sales
Also, show Profit and Loss as per cost accounts for the above period.

Problem 2: Cost statement, estimated cost and Price

The accounts of Steelsways Engineering Co. Ltd show the following for 2013:

Rs.
Materials used 180000
Manual and machine labour wages directly chargeable 160000
Works overhead expenditure 40000
Establishment and general expenses 19000

a. Show the works cost and total cost, the percentage that the works
overhead cost bears to the manual and machine labour wages and the
percentage that the establishment and general expenses bear to the
works cost
b. What price should the company quote to manufacture a machine which,
it is estimated, will require an expenditure of Rs 8000 on materials; and
Rs. 6000 on wages , so that it will yield a profit of 25% on the total cost or
20% on selling price
Problem 3: Cost sheet with adjustments for inventories

A manufacturing company submits the following information on 31.03.2013.

Rs. Rs.
Sales for the year 275000
Inventories as on 1.4.2012
Materials 3000
WIP 4000
FG 8000
Raw materials purchased 110000
Direct labour 65000
Chargeable expenses 10000
Inventories as on 31.3.2013
Materials 4000
WIP 6000
FG 7000
Other Expenses:
Factory overheads @ 50% of direct labour
Administration overheads @ 10% of works cost
Selling overheads @ 5% of sales

Prepare a cost sheet

Problem 4: Cost of sales and profit determination

The following data relate to the manufacture of a standard product during a

four week period ending June 30, 2013:
Rs
Raw materials consumed 4000
Wages 6000
Machine hours worked 1000
Machine hour rate 0.50
Office overhead @ 20% on works cost
Selling overhead per unit 0.06
Units produced 20000
Units sold (at Re 1 per unit ) 18000

Prepare a cost sheet showing the cost per unit and profit for the period.