CIA 1 – COMPONENT 1

COST SHEET AND QUOTATION

COST & MANAGEMENT

ACCOUNTING

Submitted by:
Kanika Bothra – 1820441
PROBLEM:
The following data is available from the books of an XYZ watch factory for the year 2019:

PARTICULARS ₹
Raw Material Consumed:  
Dial (100*100) 10,000
Case (100*300) 30,000
Crystal (100*600) 60,000
Lug (100*150) 15,000
Crown (100*100) 10,000
Buckle (100*200) 20,000
Hands (100*250) 25,000
Bezel (100*100) 10,000
Strap (100*2000) 2,00,000
Box for Primary Packaging 60,000
Foam 10,000
Direct Wages 2,70,000
Direct Expenses 25,000
Carriage Outwards 300
Depreciation:  
Factory Plant 500
Office Premises 1,300
Electric Power 600
Lighting:  
Factory 1,500
Office 500
Manufacturing wages 10,000
Rent:  
Factory 15,000
Office 22,500
Repairs & Renewals:  
Factory Plant 3,500
Office Premises 1,700
Director's Fees 29,500
Office Stationery 500
Telephone Charges 400
Advertising 22,000
Income Tax 35,000
Transfer to Reserve 5,500
Traveling Expenses 3,500
10,29,96
Sales 0

The following additional information for the year 2020 is given to you:
Materials - ₹1,00,000 ; Wages - ₹50,000 ; Direct Expenses - ₹10,000
Factory overheads have risen by 125% due to rise in manufacturing wages and in factory
rent. Office overheads have declined by 20% due to fall in the prices of office supplies. Sales
& distribution overheads have also declined by 15% due to fall in the prices of packaging,
mailing, promotional expenses of the product.
Factory overheads are calculated on wages. Office overheads, selling & distribution
overheads are both calculated on the works cost. The product is to be sold at such a price that
it earns the same rate of profit on selling price as in 2019.

You are required to:

a. Prepare a Statement of Cost Sheet
b. Prepare a Statement of Estimated Cost & Profit

SOLUTION:

a. COST SHEET OF XYZ LTD. FOR THE YEAR 2019

PARTICULARS ₹
Raw Material Consumed 4,50,000
Direct Wages 2,70,000
Direct Expenses 25,000
   
PRIME COST 7,45,000
Factory Overheads 31,100
   
WORKS / FACTORY COST 7,76,100
Office Overheads 56,400
   
COST OF PRODUCTION 8,32,500
Selling & Distribution Overheads 25,800
   
TOTAL COST 8,58,300
Profit 1,71,660
10,29,96
SALES 0
Working Notes:

Raw Material Consumed ₹

Dial (100*100) 10000
Case (100*300) 30000
Crystal (100*600) 60000
Lug (100*150) 15000
Crown (100*100) 10000
Buckle (100*200) 20000
Hands (100*250) 25000
Bezel (100*100) 10000
Strap (100*2000) 200000
Box for Primary Packaging 60000
Foam 10000
TOTAL 450000

Factory Overheads ₹
Depreciation on Factory Plant 500
Electric Power 600
Lighting for Factory 1500
Manufacturing Wages 10000
Rent for Factory 15000
Repairs & Renewals for Factory Plant 3500
TOTAL 31100

Office Overheads ₹
Depreciation on Office Premises 1300
Lighting for Office 500
Rent for Office 22500
Repairs & Renewals for Office Premises 1700
Director's Fees 29500
Office Stationery 500
Telephone Charges 400
TOTAL 56400

Selling & Distribution Overheads ₹

Carriage Outwards 300
Traveling Expenses 3500
Advertising 22000
TOTAL 25800
b.
Factory Overheads as a percentage of
Wages (31,100 / 2,70,000) * 100 11.51%
Office Overheads as a percentage of Works
Cost (56,400 / 7,76,100) * 100 7.26%
Selling & Distribution Overheads as a
percentage of Works Cost (25,800 / 7,76,100) * 100 3.32%
Profit as a percentage of Cost (1,71,660 / 8,58,300) * 100 20%

STATEMENT OF ESTIMATED COST & PROFIT OF XYZ LTD. FOR WORK

ORDER IN 2020

Particulars ₹
1,00,00
Raw Material Consumed 0
Direct Wages 50,000
Direct Expenses 10,000
   
1,60,00
PRIME COST 0
Factory Overheads (11.51% of wages, inc.
by 125%) 12,945
   
1,72,94
WORKS / FACTORY COST 5
Office Overheads (7.26% of works cost,
dec. by 20%) 10,044
   
1,82,98
COST OF PRODUCTION 9
Selling & Distribution Overheads (3.32%
of works cost, dec. by 15%) 4,880
   
1,87,86
TOTAL COST 9
Profit (20% of Total Cost) 37,574
2,25,44
SALES 3