" lem 5.10 7w..

Aa}dil-«A-~-
Delco Shoe Co. manufacture two types of s~
,-.-Q)
Costs for t he year ended 31-3-2017
were:
t
15,00,000
Direct materials
8,40,000
Direct wages
3,60,000
Production overhead
27 ,00,000
 ut Costing (Cost Sheet)
, ,r,d1'ttoo~rOt1tp ~-~-- - - - - - - - - - - - - -- - - -~5.~21
1/ was no work-in-progress at the beginning or at the end of th . .
rtiere . . e year. It 1s ascertained that
irect matenal m type A shoes consists twice as much as th t .
(a) D a m type B shoes,
(b) The direct wages for type B shoes were 60% of those of type A shoes,
(c) production ~verhead was the same per pair of A and B type.
(d) Administrative overhead for e~ch type was 150% of direct wages,
(e) Selling ~ost wa~ t 1.50 per parr. _
Production durmg
· f the
hi hyear were : Type A 40,000 pairs of which 36 ,ooo · were sold·, Typ e B
1,20,000 paus o w c 1,00,000 were sold. · _
(g) Selling price was t 4~ for type A and t 28 for type B per pair.
Prepare a statement showmg cost and profit. . (B.Com., Bombay)

solution
Statement of Cost and Profit
for the year ending 31s't March. 2017
Particulars ·Type A Type B
' -
Total Per pair Total Per pair
( ( ( (
.,,

--- 'i Direct materi~

Direct wages_/
6,00,000
3,00,000
15.00 l----9:oo,ooo
7.58-"' 5,40,000
7.50
4.
Prime Cost 9,00,000 22.50 14,40,000 12.00
Production - 90,000 2.25 2,70,000 2.25
I

Cost 9,90,000 24.75 17,10,000 14.25

Administrative expe 4,50,000 11.25 ., / 8,10,000 6. 2fr
Cost o f ~ 14,40,000 36.00 25,20,000 '- 21.00
1,44,000
-- 4,20,000 / -
Less : _closing
12,96,000 36.00 21,00,000 21 .00
Cost~ -
--
_......_
Selling exp~nse/ 54,000 1.50 1,50,000 - 1.50
13,50,000 37.50 22,50,000 .,22.-50
/ Cost of~•• .,..,.----
6.50 5,50,000 5.50
Profit 2,34,000
Sales 15,84,000
I I
,~
IV\/'\__
28,00,000

Y\J-trD
Working Notes :
1. Materials cost has been allocated as follows :
ne, Suppose Type B's material cost is = x
Then Type Ks materials \= 2x
<
1,20,000 X + 80,000 X = 15,00,000
2,00,ooox = < 15,00,000
X = t 7.50
Type B material cost = < 7.50 per pair.
A material cost = t 15.00 per pan
 \\ Cost Ace .
1
55.,::22:___ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ __ DUnt ·
:.: '

2. Wages
Let labour charges for A be = x
60
Then labour charges for B = 1()0 x or 0.6x

:. 40,ooox + (l,20,000 x 0,6 x) = <8,40,000

:. 1,12.ooox = <8,40,000
X = n.50
:. Ks labour charges = <7.50 per pair
B's labour charges = 7.50 x 60% = <4.50 per pair. fl

V -~blem 5.1 • ,..

Steel Products Company produces a machine that sells for f 300. An increase of 15% in cost 01
materials and of 10% in cost of labour is anticipated. / · -
. be the selling price to give the,,.
If the only figures available are those given below, what must ~"e

percentage of gross profit as before ?

(a) Material costs have been 45% of cost of sales, {b) Labour costs have been 40% of cost of sai,,,
(c) Overhead costs have been 15% of cost of sales, (d) T~anticipated increased costs ~r"§tion toth,

-- - ---- -- .
present sale price would cause 35% decrease in the present gross profit. -
(B. Com. Hons., Delhi)

Solution :
Statement of Cost
(Suppose cost of Sales= nGO)

Assumed present Increase-- , Antidpated

cost of sales '"' cost of sales

45 15% < 51.75

Materials 40 10% < 44.00
Labour costs 15
< 15.00
Overhead costs
< 100
Cost of sales
. 110.75
Selling pnce = 300 x
100 = <332.25
Increase in cost in relation to the assumed present -cost of sales =f 110.75 - 100'
: o_:l;-Increase m cost= 35% decrease in the amount of gross profit
· . <10.75
Gross profit = -- = 30 72
I 350/o •
30. 72
Gross pro fl t as a percentage of sales =
300
x 100 = 10 _24% J
Actual present cost of sales = <300 - <30. 72 = < 269.2B
 ,,qwt Costing (Cost Slict'f) 5.23

-
ti'"' 11 r__0 _

-----
. the anticipated increase :
T~ng ---
Percentage P'rese11t cost l ,".,CT"'CIS"'
.. "'" . ntie1
A . .pated cost
,
- :-=-------- - - -~- -
45% 12 L 18 18. 18 139 .36
..
- ; .. .. rial 40% 107 .72 10.78 l 18 .50
1,;~.-iut 15% 40 .38 40. 38
(,-,~?1 t,ead 1000/o 269 .28 298 .24
298 .24
;lntici pated cost of sales wi th the ln<:rease 34.0l . / '
~rne perce ntage of ~oss pr~ 110.24% of sales}
. .- --- 332 .25
-~
selling pnce - -- - - - - - - - - ---- - --
rrob\tm 5.12 G>

l
The books of Acme Ltd. present the following data for the month of J an ., 201 7 .

16,000 (1 60% of factory ovexhectd)

D11ect labour cost
56,000
Cusl of goods sold
Inventory accounts showed the following opening and closing balances :
January I January 31
8,000 8,600
Kaw materials 12,000
8,000
Wo,k-in-progress 18,000
14,000
hnished goods 3, 400
St>lltng expenses 2,600
General and administration expenses 7 5,000
Sales for the month
'fou are required to prepare a cost sheet showing cost of goods manufactured and sold and
'• :it earned. (B. Com. Hons. Delhi)

:u\ution :
Note. Purchase of raw materials is not given in the question. It is ascertained as shown below by
~~~d.fing a reverse cost sheet i.e., working backward h orn cost of goods sold upto the amount of
-- r~hases.
?
56,000
Cost of goods sold 18. 000
Closing stock of finished goods 74, 000
14,000
l :i : 60 ,000
• C
Opening stock of finishe d goods. Cost of Production
2, 600
I <:3 3 : G 57,400
eneral administrative expenses Factory Cost
12,000
/. ,I rl •
· stock of work -in-progress
• · Closmg 69,400
8,000
Less .· Op enmg
. stock of work-in-progre ss 61,400
(Contd .. . )
- ~ ~ - - - - - - - - - - - - - - - - - - - - -- - - - - - - - · ' ALl'Q"IIt·
124
10,000
-....:..:
lOOJ
Less: Factory overhead (16,000 x -160 51,400
prime cost

Materials Consumed 35,400

Less : Labour cost 8,600
---..::
44,ooo
Add : Closing stock of raw materials 8,0QQ

Less : Opening stock of raw materials Purchases 36,0oo

- - ------------------------ - - - - ---===---------
Cost Sheet
for the month ending 31st January, 2017
( ---------
8,000
Opening stock of raw materials 36,000
Add: Purchases 44,000
8,600
Less: Closing stock of raw materials 35,400
Materials consumed 16,000
---..:
Direct labour cost

-
Prime Cost 51,400
10,000
Factory overhead 61,400

Add: Opening work-in-progress - 8,000

69,400
12,000
Less: Closing work-in-progress
Factory Cost 57,400
General administrative expenses
Cost of Production 60,000
Add: Opening stock of finished goods -14,000
-
74,000
Less: Closing stock of finished goods 18,000 I

Cost of Sales 56,000

Selling expenses 3,400
Cost of Sales 59,400
Profit
Sales - 15,600
75,002