CA – INTERMEDIATE: COST & MANAGEMENT ACCOUNTING BY CA. CS. ANSHUL A.

AGRAWAL

CHAPTER-6
COST SHEET

TABLE OF CONTENTS:
1. Introduction
2. Practical Problem

1. INTRODUCTION

One of the objectives of cost accounting system is ascertainment of cost for a cost object. The cost objects may
be a product, service or any cost centre. Ascertainment of cost includes elementwise collection of costs,
accumulation of the costs so collected for a certain volume or period and then arrange all these accumulated
costs into a sheet to calculate total cost for the cost object. In this chapter, a product or a service will be the cost
object for cost calculation and cost ascertainment. A Cost Sheet or Cost Statement is “a document which
provides a detailed cost information. In a typical cost sheet, cost information are presented on the basis of
functional classification. However, other classification may also be adopted as per the requirements of users of
the information.

2. PRACTICAL PROBLEMS

Q1. Basic Question REG. PAGE NO.

The following data related to the manufacture of a standard product during the month of April 2018:
PARTICULARS AMOUNT
Raw Material Rs. 1,80,000
Direct Wages Rs. 90,000
Machine Hours Worked (Hours) 10,000
Machine Hour Rate (Per Hour) Rs. 8
Administration Overheads Rs. 35,000
Selling Overheads (Per Unit) Rs. 5
Units Produced 4,000
Units Sold 3,600
Selling Price/Unit Rs. 125
You are required to prepare a cost sheet from the above showing –
(a) Cost Per Unit; and
(b) Profit for the month

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Q2. Basic Question REG. PAGE NO.
The following information has been obtained from the records of ABC Corporation for the period from 1st
June 2018 to 30th June 2018. Prepare Cost sheet from the same.
PARTICULARS On 1st June 2018 On 30th June 2018
Cost of Raw Materials 60,000 50,000
Cost of Work in Process 12,000 15,000
Cost of Stock of Finished Goods 90,000 1,10,000
Purchases of Raw Materials during the month 4,80,000
Wages Paid 2,40,000
Factory Overheads 1,00,000
Admin Overheads (related to production) 50,000
Selling & Distribution Overheads 25,000
Sales 10,00,000
Solution:
PRODUCT COST SHEET
PARTICULARS AMOUNT AMOUNT
Opening Stock of Raw Material
Add: Raw Material Purchases (Net of Returns)
Less: Closing Stock of Raw Material
Direct Material Consumed
Direct Labour
Direct Expenses
A] PRIME COST
Add: Factory / Production / Works / Mfd. Overheads
B] FACTORY / WORKS COST
Add: Opening Stock of Work-In-Process
Less: Closing Stock of Work-In-Process
C] FACTORY COST OF GOODS PRODUCED
Add: Administration Overheads
D] COST OF PRODUCTION
Add: Opening Stock of Finished Goods
Less: Closing Stock of Finished Goods
E] COST OF GOODS SOLD
Add: Selling & Distribution Overheads
F] COST OF SALES
Add/Less: Profit / (Loss)
G] SALES

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 CA – INTERMEDIATE: COST & MANAGEMENT ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
Q3. Basic Question REG. PAGE NO.
The books of Adarsh Manufacturing Co. present the following data for the month of April 2019:
Direct Labour Cost Rs. 17,500 being 175% of Works overheads. Cost of goods sold (excluding
administration expenses Rs. 56,000). Inventory accounts showed the following opening and closing
balances –
PARTICULARS On 1st April 2019 On 30th April 2019
Raw Materials 8,000 10,600
Work in Process 10,500 14,500
Finished Goods 17,600 19,000
Selling Expenses Rs. 3,500; General & Administration Expenses Rs. 2,500 and Sales are Rs. 75,000.
Compute value of material purchased and prepare Cost sheet from the given information.

Solution:
PRODUCT COST SHEET
PARTICULARS AMOUNT AMOUNT
Opening Stock of Raw Material
Add: Raw Material Purchases (Net of Returns)
Less: Closing Stock of Raw Material
Direct Material Consumed
Direct Labour
Direct Expenses
A] PRIME COST
Add: Factory / Production / Works / Mfd. Overheads
B] FACTORY / WORKS COST
Add: Opening Stock of Work-In-Process
Less: Closing Stock of Work-In-Process
C] FACTORY COST OF GOODS PRODUCED
Add: Administration Overheads
D] COST OF PRODUCTION
Add: Opening Stock of Finished Goods
Less: Closing Stock of Finished Goods
E] COST OF GOODS SOLD
Add: Selling & Distribution Overheads
F] COST OF SALES
Add/Less: Profit / (Loss)
G] SALES

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Q4. Cost Sheet REG. PAGE NO.
A Ltd. has capacity to produce 1,00,000 units per month. It’s Works Cost at various levels of production is
as under –
LEVEL (%) WORKS COST PER UNIT (RS.)
10% 400
20% 390
30% 380
40% 370
50% 360
60% 350
70% 340
80% 330
90% 320
100% 310
Its fixed administration expenses amount to Rs. 1,50,000 and fixed marketing expenses amount to Rs.
2,50,000 per month respectively. The variable distribution cost amounts to Rs. 30 per unit. It can sell
100% of its output at Rs. 500 per unit provided it incurs the following further expenditure:
(a) It gives gift items costing Rs. 30 per unit of sale;
(b) It has lucky draws every month giving the first prize of Rs. 50,000; 2nd prize of Rs. 25,000, 3rd
prize of Rs. 10,000 and three consolation prizes of Rs. 5,000 each to customers buying the product.
(c) It spends Rs. 1,00,000 on refreshments served every month to its customers;
(d) It sponsors a television programme every week at a cost of Rs. 20,00,000 per month.It can market
30% of its output at Rs. 550 per unit without incurring any of the expenses referred to in (a) to (d)
above.
Prepare a cost sheet for the month showing total cost and profit at 30% and 100% capacity level.

Q5. Single Figure Question REG. PAGE NO.

From the following information, prepare the Cost Sheet with as many details as possible and ascertain
the selling price per unit of the product.
1. Direct Materials - 12.5% of Selling Price;
2. Direct Labour - 17.5% of Selling Price;
3. Production Overhead - 1/3rd of Prime Cost:
4. Administration OH - 50% of Production Cost;
5. Profit (Rs. 750 per unit) - 15% of Sales

Q6. Changes in Costs REG. PAGE NO.

A Company manufactures radios, which are sold at Rs. 1,600 per unit. The total cost is composed of 30%
for direct materials, 40% for direct wages and 30% for overheads. An increase in material price by 30%
and in wage rates by 10% is expected in the forthcoming year, as a result of which the profit at current
selling price may decrease by 40% of the present profit per unit. You are required to prepare a statement
showing current and future profit at present selling price.
How much Selling Price should be increased to maintain the present rate of profit?

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 CA – INTERMEDIATE: COST & MANAGEMENT ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
Q7. Product Cost Sheet (Various levels of operation) REG. PAGE NO.
Maximum production capacity of JK Ltd. is 5,20,000 units per annum. Details of estimated cost of
production are as follows:
− Direct material Rs. 15 per unit.
− Direct wages Rs. 9 per unit (subject to a minimum of Rs. 2,50,000 per month).
− Fixed overheads Rs. 9,60,000 per annum.
− Variable overheads Rs. 8 per unit.
− Semi-variable overheads are Rs. 5,60,000 per annum up to 50 per cent capacity and additional Rs.
1,50,000 per annum for every 25 per cent increase in capacity or a part of it.
JK Ltd. worked at 60 per cent capacity for the first three months during the year 2018, but it is expected
to work at 90 per cent capacity for the remaining nine months.
The selling price per unit was Rs. 44 during the first three months.
You are required, what selling price per unit should be fixed for the remaining nine months to yield a
total profit of Rs. 15,62,500 for the whole year.
Solution:
ANNUAL PROFITABILITY STATEMENT
FIRST 3 MONTHS NEXT 9 MONTHS YEAR 2018
PARTICULARS

Direct Material

Direct Wages

Variable Overheads

Fixed Overheads

TOTAL COST
Add: Profit
TOTAL SALES
Selling Price / Unit

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“Winners don’t think about circumstances, they always think about Opportunities”.
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-ANSHUL A. AGRAWAL

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