Cost sheet involves all the direct and indirect expenses related to a particular cost center or cost units.
It does not involve unrelated expense.
The following expenses are excluded in cost sheet:
Capital expenditures
Loss of sale of fixed assets or investment
Provision for taxation or tax paid
Dividend paid
Discount on shares or debenture
Amortization of intangible assets
Underwriting commission
Transfer to reserve or sinking fund
Interest on capital, debenture or loan
Provision for bad debts
Donation to charitable institutions
Loss by fire, theft or accident
Cost sheet excluded all the financial incomes gained from other external or irrelevant sources.
The following are the incomes excluded in cost sheet:
Capital gains
Profit on sales of fixed assets or investment
Transfer fee
Interest received, dividend received
Rent received, commission received
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2A
The following information of DK Manufacturing Company is provided to you ($/₹/Rs):
Cost of goods sold |
11,00,000 |
|
Packaging (secondary) |
2,500 |
Advertisement |
30,000 |
|
Free samples |
5,000 |
Carriage outward |
25,000 |
|
Discount allowed |
4,500 |
Rent of warehouse |
15,000 |
|
Repairs of a delivery van |
5,000 |
Commission to agent |
7,500 |
|
Salary of salesmen |
35,000 |
TA/DA of salesmen |
3,500 |
|
Depreciation of delivery van |
4,000 |
Dividend paid |
7,000 |
|
Interest received |
3,000 |
Required: Total cost and sales (if profit 20% on cost)
[Answer: Total cost = Rs 12,37,000; Profit = Rs 2,47,400; Sales = Rs 14,84,400]
SOLUTION
Statement of Cost
Particulars |
Amount |
Amount |
Cost of goods sold |
|
11,00,000 |
Add: Selling and distribution overheads: |
|
|
Advertisement |
30,000 |
|
Carriage outward |
25,000 |
|
Rent of warehouse |
15,000 |
|
Commission to agent |
7,500 |
|
TA/DA of salesmen |
3,500 |
|
Packaging (secondary) |
2,500 |
|
Free samples |
5,000 |
|
Discount allowed |
4,500 |
|
Repairs of delivery van |
5,000 |
|
Salary of salesmen |
35,000 |
|
Depreciation of deliver van |
4,000 |
1,37,000 |
Total cost |
|
12,37,000 |
Add: Profit on cost (12,37,000 @ 20%) |
|
2,47,400 |
Sales |
|
14,84,400 |
*No entry for dividend paid and interest received
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2B
The following information of DK Manufacturing Company is provided to you ($/₹/Rs):
Cost of goods sold |
11,47,000 |
|
Packaging (secondary) |
5,000 |
Advertisement |
20,000 |
|
Free samples |
3,000 |
Carriage on sales |
15,000 |
|
Discount and bad debts |
7,000 |
Rent of godown |
35,000 |
|
Repairs of the delivery van |
13,000 |
Export duty |
10,000 |
|
Salary of salesmen |
36,000 |
Depreciation of delivery van |
4,000 |
|
Dividend paid |
4,000 |
Provision for bad debts |
7,000 |
|
|
|
Required: Total cost and sales (if profit 20% on sales)
[Answer: Total cost = Rs 12,95,000; Profit = Rs 323,750; Sales = Rs 16,18,750]
SOLUTION
Statement of Cost Sheet
For ……. units
Particulars |
Amount |
Amount |
Cost of goods sold |
|
11,47,000 |
Add: Selling and distribution overheads: |
|
|
Advertisement |
20,000 |
|
Carriage on sales |
15,000 |
|
Rent of godown |
35,000 |
|
Export duty |
10,000 |
|
Depreciation of deliver van |
4,000 |
|
Packaging (secondary) |
5,000 |
|
Free samples |
3,000 |
|
Discount and bad debts |
7,000 |
|
Repairs of delivery van |
13,000 |
|
Salary of salesmen |
36,000 |
1,48,000 |
Total cost |
|
12,95,000 |
Add: Profit on sales (12,95,000 x 20/80* |
|
3,23,750 |
Sales |
|
16,18,750 |
*No entry for PBD and interest received
= 100 – Profit % = 100 – 20 = 80*
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2C
ABC Manufacturing Company provides following extracted data for the production of 20,000 units:
Particulars |
Amount |
Particulars |
Amount |
Ram material purchased |
145,000 |
Haulage |
7,000 |
Direct chargeable expenses |
35,000 |
Bad debts |
3,000 |
Productive wages |
125,000 |
Advertisement |
4,500 |
Indirect wage |
7,500 |
Carriage outward |
4,800 |
Factory cleaning |
7,500 |
Salary of salesmen |
12,000 |
Indirect materials |
5,000 |
Bank charge |
1,000 |
Motive power |
10,500 |
Estimating expenses |
4,000 |
Printing and stationery |
5,400 |
Up-keep of delivery van |
2,500 |
Rent and rates |
12,000 |
Manager’s salary |
15,000 |
Coal, gas, and water |
7,500 |
Tax paid during the period |
8,750 |
Legal expenses |
5,000 |
Telephone and fax |
3,200 |
Audit fee |
4,000 |
Depreciation of office building |
7,500 |
Depreciation of plan and machinery |
15,000 |
Depreciation of furniture |
2,500 |
Profit on cost |
20% |
Internet and email |
2,000 |
Additional information:
60% of manager’s salary is related to factory and balance of office
Required: Cost sheet to show:
(a) Prime cost; (b) Factory cost; (c) Cost of production; (d) Total cost; (e) Profit; (f) Cost per unit;
[Answer: (a) PC = Rs 305,000; (b) FC = Rs 374,000;
(c) COP = Rs 426,600; (d) TC = Rs 453,400;
(e) Profit = Rs 90,680; (f) CPU = Rs 22.67]
Solution:
Cost Sheet
(For 20,000 units)
Particulars |
Amount |
Amount |
|
Ram material purchased |
|
145,000 |
|
Productive wages |
|
125,000 |
|
Direct chargeable expenses |
|
35,000 |
|
|
a. Prime cost |
|
3,05,000 |
Add: |
Factory overheads: |
|
|
|
Indirect wage |
7,500 |
|
|
Factory cleaning |
7,500 |
|
|
Indirect materials |
5,000 |
|
|
Motive power |
10,500 |
|
|
Coal, gas, and water |
7,500 |
|
|
Depreciation on plan and machinery |
15,000 |
|
|
Haulage |
7,000 |
|
|
Manager’s salary (60% of 15,000) |
9,000 |
69,000 |
|
b. Factory cost |
|
3,74,000 |
Add: |
Office overheads: |
|
|
|
Printing and stationery |
5,400 |
|
|
Rent and rates |
12,000 |
|
|
Legal expenses |
5,000 |
|
|
Audit fee |
4,000 |
|
|
Bank charge |
1,000 |
|
|
Estimating expenses |
4,000 |
|
|
Manager’s salary (40% of 15,000) |
6,000 |
|
|
Internet and email |
2,000 |
|
|
Telephone and fax |
3,200 |
|
|
Depreciation on office building |
7,500 |
|
|
Depreciation on furniture |
2,500 |
52,600 |
|
c. Cost of production |
|
4,26,600 |
Add: |
Selling and distribution overheads: |
|
|
|
Bad debts |
3,000 |
|
|
Advertisement |
4,500 |
|
|
Carriage outward |
4,800 |
|
|
Salary of salesmen |
12,000 |
|
|
Repairs of delivery van |
2,500 |
26,800 |
|
d. Cost of sales or total cost |
|
4,53,400 |
Add: |
Profit on cost (e) [453,400 x 20/100] |
|
90,680 |
|
Sales |
|
5,44,080 |
(f) Cost per unit = Total cost ÷ Total production units = Rs 453,000 ÷ 20,000 units = Rs 22.67
#####
PROBLEMS AND ANSWERS OF COST SHEET |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2A
The following information of a manufacturing company for the period of one year is provided to you:
Particulars |
Amount |
Particulars |
Amount |
Opening of stock of raw materials |
1,00,000 |
Salary- salesmen |
7,500 |
Purchase of raw materials |
11,00,000 |
Commission to salesmen |
12,500 |
Carriage on purchase |
15,000 |
Traveling expenses of salesmen |
5,500 |
Closing of stock of raw materials |
80,000 |
Advertisement |
10,000 |
Direct wage |
3,50,000 |
Repairs of delivery van |
1,500 |
Indirect wage |
25,000 |
Carriage outward |
5,250 |
Chargeable expenses |
55,000 |
Loan repaid to bank |
1,50,000 |
Rent and rates- office |
21,000 |
Dividend received |
5,350 |
Rent and rates- factory |
16,000 |
Printing and stationery |
4,500 |
Depreciation of plan and machinery |
12,000 |
Manager’s salary |
21,000 |
Depreciation of furniture |
3,500 |
Coal and gas |
12,000 |
Salary- office |
15,000 |
Profit on sales |
20% |
Manager’s salary is to be apportioned Rs 9,000 to factory, Rs 8,000 to office and Rs 4,000 to selling department.
Required: Cost sheet to showing: prime cost, factory cost, cost of production, Total cost and profit.
[Answer: (a) PC = Rs 15,40,000; (b) FC = Rs 16,14,000; (c) COP = Rs 16,66,000;
(d) COS or Rs TC = Rs 17,12,250; (e) Profit = Rs 4,28,063]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2B
The following information of PK Manufacturing Company is provided to you ($/₹/Rs):
Opening stock of raw materials |
50,000 |
|
Supervisor’s salary |
10,000 |
Purchase of raw materials |
4,00,000 |
|
Coal, coke, gas and power |
35,000 |
Carriage on purchase |
20,000 |
|
Office rent and taxes |
21,000 |
Import duty |
50,000 |
|
Depreciation on equipment |
3,500 |
Closing stock of raw materials |
80,000 |
|
Office salary |
45,000 |
Direct materials |
50,000 |
|
Printing and stationery |
4,500 |
Direct wages |
90,000 |
|
Phone and internet |
9,000 |
Chargeable (direct) expenses |
70,000 |
|
Carriage outward |
10,000 |
Indirect wages |
25,000 |
|
Advertisement |
25,000 |
Factory rent |
16,000 |
|
Commission to salesmen |
35,000 |
Depreciation on plant |
12,000 |
|
Travelling expenses for selling |
20,000 |
Profit on sales of machinery |
2,300 |
|
|
|
Profit is charged 20% on cost.
Required: Cost sheet showing (a) Value of material consumed; (b) Prime cost; (c) Factory cost;
(d) Cost of production; (e) Total cost; (f) Profit
[Answer: (a) Rs 440,000, (b) Rs 650,000; (c) Rs 748,000;
(d) Rs 831,000; (e) Rs 921,000; (f) Rs 184,200]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2C
The following information of EP Manufacturing Company is provided to you ($/₹/Rs):
Opening stock of raw materials |
60,000 |
|
Internet expenses |
1,000 |
Purchase of raw materials |
5,00,000 |
|
Depreciation on furniture |
2,000 |
Carriage on purchase |
50,000 |
|
Audit fee |
5,000 |
Custom duty |
12,000 |
|
Staff salary |
19,500 |
Closing stock of raw materials |
72,000 |
|
Printing and stationery |
7,500 |
Direct wages |
200,000 |
|
Establishment expenses |
3,000 |
Chargeable (direct) expenses |
70,000 |
|
Carriage outward |
15,000 |
Indirect materials |
10,000 |
|
Rent of warehouse |
10,500 |
Indirect wages |
12,000 |
|
Commission to agent |
7,500 |
Factory rent |
15,000 |
|
TA/DA of salesmen |
3,500 |
Power and fuel |
12,000 |
|
Packaging |
2,500 |
Factory insurance |
25,000 |
|
Advertisement |
10,000 |
Repair to plant |
7,000 |
|
Discount allowed |
4,500 |
Depreciation on plant |
27,000 |
|
Repair to delivery van |
1,500 |
Coal, gas and water |
10,000 |
|
Salary to salesmen |
16,000 |
Work’s manager salary |
15,000 |
|
Depreciation on delivery van |
4,000 |
Telephone expenses (office) |
1,500 |
|
Loss on sales of furniture |
5,000 |
Legal fee |
3,500 |
|
|
|
Profit is charged 20% on sales.
Required: (a) Value of material consumed; (b) Prime cost; (c) Factory cost; (d) Cost of production;
(e) Total cost; (f) Profit
(Ans. (a) Rs 550,000, (b) Rs 820,000; (c) Rs 953,000;
(d) Rs 996,000; (e) Rs 10,71,000; (f) Rs 267,750]
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