Nature

of
Proble
m

Question

Practical Problems on
Cost Sheet

Remark

Q.1.

The following are the costing records for the year

2012 of a manufacturer:
Production 10,000 units; Cost of Raw Materials Rs.
2,00,000; Labour Cost Rs. 1,20,000; Factory Overheads
Rs.80,000; Office Overheads Rs. 40,000; Selling Expenses
Rs. 10,000, Rate of Profit 25% on the Selling Price.

Illustration [7]
From ICAI-CMA
Study Material

The manufacturer decided to produce 15,000 units

in 2013. It is estimated that the cost of raw materials will
increase by 20%, the labour cost will increase by 10%, 50%
of the overhead charges are fixed and the other 50% are
variable. The selling expenses per unit will be reduced by
20%. The rate of profit will remain the same.
Prepare a Cost Statement for the year 2013 showing the
total profit and selling price per unit.

Q.2. X Ltd. Provides you the following figures for the year 2011-12:
Particulars
---------------------------------------------------------------------Direct Material
Direct Wages
Production Overheads (25% variable)
Administration Overheads (75% Fixed)
Selling and Distribution Overheads (2/3rd Fixed)
Sales @ Rs. 125 per unit
-------------------------------------------------------------------For the year 2012-13, it is estimated that:

`
3,20,000
8,00,000
4,80,000
1,60,000
2,40,000
25,00,000

1. Output and sales quantity will increase by 20% by incurring

additional Advertisement Expenses of Rs. 45,200.
2. Material prices will go up 10%.
3. Wage Rate will go up by 5% along with, increase in overall direct
labour efficiency by 12%.
4. Variable Overheads will increase by 5%.
5. Fixed Production Overheads will increase by 33 1/3 %
Required:
(a) Calculate the Cost of Sales for the year 2011-2012 and 2012-2013.
(b) Find out the new selling price for the year 2012-2013.
(i) If the same amount of profit is to be earned as in 2011-2012.
(ii) If the same percentage of profit to sales is to be earned as in 20112012.
(iii) If the existing percentage of profit to sales is to be increased by

Illustration [6]
From ICAI-CMA
Study Material

25%.
(iv) If Profit per unit Rs. 10 is to be earned.

Q.3.Following data is available from the cost records of a

company for the month of March 2012:
(1) Opening stock of job as on 1st March 2012
Job no. A 99: Direct Material Rs.80, Direct Wages Rs150 and
Factory Overheads Rs 200
Job no. A 77: Direct Material Rs 420, Direct Wages Rs 450 and
Factory Overheads Rs 400
(2) Direct material issued during the month of February 2012
was:
Job no A 99
Rs 120
Job no A 77
Rs 280
Job no A 66
Rs 225
Job no A 55
Rs 300
(3) Direct labour details for March 2012 were:
Job No
Hours
Amount (Rs )
A 99
400
600
A 77
200
450
A 66
300
675
A 55
100
225
(4) Factory Overheads are applied to jobs on production
according to direct labour hour rate which is Rs 2 per hour.
(5) Factory Overhead incurred in March 2012 were Rs 2100.
(6) Job numbers A 99 & A 77 were completed during the month.
They were billed to the customers at a price which included
15% of the price of the job for Selling & Distribution expenses
and another 10% of the price for Profit.

Illustration [1]
From ICAI-CMA
Study Material

Prepare:
(a) Job cost sheet for job number A 77 and A 99.
(b) Determine the selling price for the jobs.
(c) Calculate the value of work in process.
Q.4. An engineering company produces a standard metallic

product. There are three processes - Foundry, Machining and

Assembly. 130 tonnes of raw material at Rs.500 per tonne were
issued to Foundry. The yield at the Foundry is 90% (both standard
and actual). The normal and actual yield at the Machining
Process is 95%. There is no loss in the Assembly Process. You
may consider the losses as occurring at the end of the respective
processes. The other details are as follows:
Process

Direct Labour

Overheads

Foundry

200 hours at Rs100 per

hour

Rs150 per labour

hour

Machining

100 hours at Rs50 per

hour

Rs 200 per labour

hour

Assembly

100 hours at Rs150 per

hour

Rs100 per labour

hour

CMA EXAM-DEC-13COST ACCOUNTING

Prepare a Cost Sheet showing the element wise cost of

output and cost per tonne of output.
Q.5.A Ltd Co. has capacity to produce 1,00,000 units of a
product every month. Its works cost at varying levels of
production is as under:
Level
Work Cost
Level
Work Cost
[Per Unit]
[Per Unit]
10%
400
60%
350
20%
390
70%
340
30%
380
80%
330
40%
370
90%
320
50%
360
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 market 100% of its output at Rs.500 per unit of
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 1st 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 products
c)It spends Rs.1,00,000 on refreshment served every month
to its costomers;
(d) it sponsors a television program every week at 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.
Advise the company on its course of action. Show the
supporting cost sheet.

Q.6.A Fire occurred in the factory premises on October 31,

2010. The accounting records have been destroyed. certain
accounting records were kept in another building. They
reveal the following for the period September 1, 2010 to
October 31, 2010
Direct materials purchased
Rs .2,50,000
Work in process
Rs .40,000
inventory,1.9.2010
Direct materials
Rs .20,000
inventory,1.9.2010
Finished goods
Rs .37,750
inventory,1.9.2010
40% of conversion cost
Indirect manufacturing costs
Rs .7,50,000
Sales revenues
Rs.2,22,250
Direct manufacturing labour
Rs.3,97,750
Prime costs
30%
Gross margin percentage based
on revenues
Rs.5,55,775
Cost of goods available for sale
The loss is fully covered by insurance company. The
insurance company wants to know the historical cost of the
inventories as a basis for negotiating a settlement,although
the settlement is actually to be based on replacement cost,
not historical cost.
Required :
(i)
Finished goods inventory,31,10,2010
(ii)
Work-in-process inventory,31.10.2010
(iii) Direct materials inventory,31.10.2010