......___ ~-:-:.... ..... .

-- -· - u --• ---• -'!lffl I · ' I --= --

The par ticu lars obt ain ed from th
Q. 1· · b e records of M/s. Jee van Ind ustr ies for
009
tbe year _,2 ,· .• ..ar_e_gi~en e1ow: . (2010)
,
_, , _., . Op .,..;,.,
e. . ~ g Stock ~ · . , '
UJ.
1
. ,,· , -- ,,, .•
~
9
RaW,lnaterials , ·
• ,. :½:" , .
~ , 'f

\
~

: ., :Firiishe(i goOds-(1,QOO l;lriits). '. ·. · · . , . : ' ·.

l;40,000
· ·. )jk h~ -.; ; . . , ' .
' ~ Fa~t~ey ~a g~ ; ·d · ,, · 2,~~ :: 1
. , ,::11i~6r¥ ~ve:rhea. s_ 3,80,000
· ,. ,
· . .Office ove rhe ads . - 70;000
4 ooo
· · -· o ,
: ,- ·-.<':~;:111· -·aterh~ads ·
_;:,cl,, u;tg ). ; 91,600·· ,
l
>• ' \l . -

:~-:li)~~es .(~,~90 .units)

'C • .• • ,
r

. 9,28,000
i t}i_fU osi
) , -;" ~ t::. ,,
~, \,
ng
•
· Sto
,
ck·-
~ ~
' ... •
·· ~~. . ,..,1'
n•a~~
.,~l-ma teri
,. als · ·· · · · · .· . :.~ · ~
/ . 1·9I 600 !
\-~ ~:t:~~;~Ued Q"OO ds (900 unit s)' ,~ · .._:, :
•
, . " 'I' ~~I. I!
r;..<. ~ ~
Q ,
...~ ·,,.. . - . . .. . ......
J ,•
l' •
•!, ,, \
., • •
.
•
. ,
♦ ~
,
, . ? •
... •
·, •
, •
• ' . 1 64 o"80
, , ,
J
~
"
..

,' -h ~pa re a cos t she et sho win g prim e cost, factory cost, cos
•

t of pro duc tion ,

total cost and sale s per uni t. ·
Dur ing 2010 the ~nd ustr y expects to receive an ord er for
5,00Q uni ts. ~t is _
estimated tha t ·
. (~ the prices of raw materials and factory wages will rise by
15% and 10%
respectively. ·
(i~ there wil l be no change in the total factory ove
rheads and office
overheads. .
(iit) Selling ove rhe ads per uni t will remain the same. • ·
·_
Prepare an esti mat ed cos t sheet. The factory inte nds _to earn the
sam e rate of
profit on cost.
 Q. 2. In a factory two types of articles are manufac tured No. 1 atftl No. 2.
From the followin g particula rs, prepare a statemen t of cost showing total cost
of producti on of .each variety and ascertain the fotal profit. There are no
~!'-~ ning and closing stoc-k and no selling and distribution overheads:

Works ove:CheadS ;r~

~b.;.g;;1;;·4007~ OfWOfkS cost and office overheads are
charged as 20% of cost of producti on. · ' · (2014)
 ' -.1v, vuv
Q. 3. The parti cula rs obta ined from the reco rds of Sum it
Ente rpris es for the
year 2013 are give n be.l ow: .
:
open ing stoc k of ra,v n1at erial s A,nt,. (f)
1,50, 000
, ., Putc hase s of ravv mate rials
3,00, 000
Clos ing stoc k of raw 1nat erial s 40,00 0
>-. ····:·Ab norm al wast age of raw mate rials
10,000
:/,.,>;; ·Fact 9ry wag es
2,00, 000
· . .-~. Fact ory over head s
2,00, 000
... .. \Office & Ad:c iinis tra tiori pver head s 80,0 00
~-;- ~!Jing:.~ pistr ibut ion over head s 1,20 ,000
.·. ,, . ...Sale. s.(4,000. units ) ....
.. '{ , ,:•-~·:,,.,.,., •:·:- \ "··' ,:,..,_ :,; ' :,. . 12,0 0,000
'

· · (a) Prep are a cost shee t and asce rtain prof it for the year 2013 .
(b) Dur ing 2014 the Ente rpris e inte nds to prod uce.and sell 5,00 0
unit s. It is
estim ated that: .-- -
( i) The pric e of raw m _a teria ls will rise by 15% and facto ry wag
e rate
will fall by 10% . .
(ii) The re will be no chan ge in the total Fact ory over head s and
Offi ce
and Adm inist ratio n over head s, and .
(iii) 50% of · the· Sell ing and Dist ribu tion over head s will
rema in
unch ange d and rest will vary with volu me of sale s.
Prep are an estim ated cost shee t for the year 2014 and dete rmin e
the selli ng
price p.u. if the com pany inte nds to earn the sam e rate of prof it
on cost as in
2013.
 •

Th e co st da ta
• - -
• - ~A -~.:,~

Q. 4. XY Li m ite d ma nu fa ctu re s tw
- - - -
-

o ty pe s of pr od uc ts S ai td R- (2 0 13 Ju ne )
fort~~ ~~~ !n~~ ~ .~ ~r~~,/ .} .~?~:if.~:'.~~,
.~~~~ ?~ s: ... . . .. . , ... ·.. ,- . / _ f 4, 00 ,0 00
: _:_; -~j.~~:,:!~: ~~~.; ,_~ ,
It is fu rth er as ce rta in ed th at:
(i) Di rec t ma ter ial in pr od uc t_S co di re ct m at er ia l in
sts tw ice as m uc h as
pr od uc t R.
(ii) Di rec t· wa ge s fo r th e pr od uc t R · ·· d t S
·,· ·) we re 60 % of th os e fo r pr o uc -t h.
( l 1 Pr od uc tio n ov er · ·
he ad s we re ap po rti on ed to bo· th t h e prod uc ts at e sa me
ra te on un it ba sis .
(iv ) Ad mi nis tra tio n ov er he ad s fo r ·
ea ch we re 20 0% . of di re ct la bo ur
.
 ·.·.. ·.·· .·· ··.·.··

.. ·.. : . ., f1;odv.ct1on.(Vrnts). :<•.>t,.~·./: .,.·:.·. . ::<··.:·:......:':...=<.·/: .-. .>..·..\:·.:::•:>. .<·,- ~~;OQQ.·~·.:..-.·.. . ..:· ·: - . !1,,20,000 . · , .
·· (units
"· . ,·.. ·. ··.. . ·Sales ..
) · ~ ~. ··..-·... '·· .::'.\·· '.·.:.,:.·: ··..· ··..·:....:<.>>.=· ~·:·/·:).~??·:·< 8'zi.: nnrf,..... : : ,..· : ::-.· .··-.-:. ·_.. 1. o
f
·o· ·

·. · · . <·:: ·.··. ·.. '.,:,..:.... ·::·:.. -._.-.D10.j_lJVU:"· · ..,. '. · .- · .· . : ·

1
' ooo · , .·. ··
. . ,·· .
..

(Vii) ·Selling prices w~re· .~-14 P~i iirlif'fbl''.R±~~~dFs artaJ,ao per upi_tfor .
.'· : product r ;•.,··,.· ..show ..·. ;,_·. <. ;cost.· · • .ofii.•.Lproduction, total cost, profit
,.,.· .·; : ;: ·per f.· ·-•·., ,:"'. :. ····.·; .· ·. ·.· ·.... · .. . ·....
Prepare a statem ent ing unit
and also total sales value and profits separately-for two types of products R
and S.
Sol. Calculation of Direct Material Cost and Direct Wages:
m'.'.lf-~1"1;'.:1 1 rost oer unit of R = fx
'O
 .I

,,I •

SHIVA DELHI UNIVERSITY·SERIES

·ss
Mana gi· ng
·f • g concern consults you
Director of a small .manu actun n . f
Q. 7. The .h h II the outp ut o one of the
as . to the minimum price at w~c . . e can se
departments of the company, whtch IS'l~temJed
The Company's records show the follo.w1ng particu ar
ass roduction in future.
~ort s fo~ this department for
. ,
the preceding year: ..., . , - :. . ..•••·.·\··.· .·....,,··:·.·-: .,., . . .....,. ·; . ._ },>::\(:.:·i'.''(:·:••r .· ··i
'('\t~;:Oi. \f :'. p_
et;ils :i . .· . . . . ,.·······. . . ".· •·· ./:,;,_·:t.::> . ,, .., ;. ::;:·>.- ·" :. ;; B?,~ -~
. ·Produc:tion-and Sale (100 ....... .....,oi,.. •. ,....·,., ..,.._,. . . • . .• :- . 26 ()()()··
Material~ .. ., · •., .,. . ., ,.. ... . .,, ...,·, .,.· .·.- . •· .. '..-.':/>·· ·•;14:oocr;.:
\. D.ir~ct 'tabour
·o· ha
· .· •····• ll~t •c rges : 4,ooo _;
Production Overheads · 16 ·· ··
· ,00Q.:;
:<l> Administrative Overheads · ; :5,69() ;
L
~··/.P rofit
~ Selling Overheads · 6~100 .:
f;.3.--:/~;:~-~-·:::~:' .... :~•-~-·..
·
:. .~- ~.-:. -.:; ...
. . . . • -· . . . · ·.·:··t· -_:,- · ·:.·:- · .8,000 '.
; ,,,,,_ :
·"·1 :.;,.,_,:., .. f:,;:/ . . '__·_._ .:·~'.;~ -.... / .. ~~-- .-.·~~-......··,.;·. :\ ·.. · ....··...:. ·:. .. ,•. ;~.......
·.~·--,j

It. is ascertained that 45% of the Production Overheads fluctuate directly

with Production and 60°/~ of the Selling Overheads fluctuate with sales. It is
anticipated that the department would produce 6,000 units per annu m and that
direct labour charges per unit will be reduced by 20%, while the fixed
production overheads will increase by fS,000. Administrative overheads and
fixed selling overheads are expected to show an increase of 25% but otherwise .
no changes are expected. (2015)
C...,.1 C.
 1
4l

Assuming that in 2016, .,

{t) ·The rate of factory overh~ds has gone ~p by 20%.
(ii) Distribution overheads have gone down by 10%.
(iii) Selling and administration overheads have each gone up by 15%.
(iv) Factory overheads are based on wages. _ . I\.
(v) Administration, selling and _ distribu~on <?Verl,teads_are based on factory
cost.
Calculate the cost of work order and the price at which the product
should be sold so as to earn the same rate of profit on the selling price as
in 2015.