Example:

Expense details for a company manufacturing a product the

previous month are as under:
Production and Sale-Units: 20,000
The Selling Price of the Product-Rs/unit. 58
Interest from bank interest on Fixed Deposit 10,000
Classify the cost as per Nature or Elements and find out profit.
Cost elements Amount-Rs.
Principal Raw Material 600,000
Other supporting raw materials 30,000
Packing Material 15,000
Direct labour 40,000
Indirect manu. labour 10,000
Donation 5,000
Bad debts 4,000
Marketing personnel Salary 100,000
Salary of Production Cost centre 100,000
Salary of Mnt. Personnel 90,000
Sales and Distri. Supervisor's salary 15,000
Telephones expenses 15,000
General Manager's Travelling 12,000
Direct expenses 8,000
Depreciation on Plant and Machinery for 4,000
processing main material
Printing, Stationery 4,000
Depre. on Office building 3,000
Depre.on Office vehicle 1,000
Depre. on Depot furniture 1,000
Depre. on Plant and Machinery for providing
support service to the Production 2,000
Total 1,059,000

Classification of Cost-01

Particulars Qty

Sales Realisation
Cost
Material Cost
Labour Cost
Expenses
Total Cost of Sales
Profit

FINANCIAL PROFIT & LOSS

Sales Realisation -
Add: Income from interest on Fixed Deposit
Total Revenue -
Less:
Total Expenses
Profit -

Reconciliation of Costing Profit/Loss with Financial Profit/Loss

Profit as per Costing Profit/Loss Working -

Add-Income not considered
Less- Expenses not considered
Donation -
Bad debts -
Profit as per Financial Accounts -

Alternatively,
Profit as per Financial Accounts -
Add- Expenses not to be considered
Donation -
Bad debts -
Less- Income not to be considered -
Profit as per Cost Accounts -
d find out profit.
Material cost Labour cost Expenses Irrelevant cost

- - - -
645,000 50,000 355,000 9,000

By Nature or Element

Amount-Rs. Rs/unit % on Sales % on Cost

0 #DIV/0!

0 - #DIV/0! #DIV/0!
 0 - #DIV/0! #DIV/0!
0 - #DIV/0! #DIV/0!
0 - #DIV/0! #DIV/0!
0 - #DIV/0! #DIV/0!

ncial Profit/Loss
Suggested
Answer Difference
1,160,000 -1,160,000

645,000 -645,000
 50,000 -50,000
355,000 -355,000
1,050,000 -1,050,000
110,000 -110,000
Example:
Expense details for a company manufacturing a product the
previous month are as under:
Production and Sale-Units: 20,000
The Selling Price of the Product-Rs/unit. 58
Interest from bank interest on Fixed Deposit 10,000
Classify the cost as per Traceability and find out profit.
Cost elements Amount-Rs. Direct cost
Principal Raw Material 600,000
Other supporting raw materials 30,000
Packing Material 15,000
Direct labour 40,000
Indirect manu. labour 10,000
Donation 5,000
Bad debts 4,000
Marketing personnel Salary 100,000
Salary of Production Cost centre 100,000
Salary of Mnt. Personnel 90,000
Sales and Distri. Supervisor's salary 15,000
Telephones expenses 15,000
General Manager's Travelling 12,000
Direct expenses 8,000
Depreciation on Plant and Machinery for 4,000
processing main material
Printing, Stationery 4,000
Depre. on Office building 3,000
Depre.on Office vehicle 1,000
Depre. on Depot furniture 1,000
Depre. on Plant and Machinery for providing
support service to the Production 2,000
Total 1,059,000 -
697,000

Classification of Cost-02 By Traceability

Particulars Qty Amount-Rs.

Sales Realisation 0
Cost
Direct Cost 0
Indirect Cost 0
Total Cost of Sales 0
Profit 0
 Indirect cost Irrelevant cost

- -
353,000 9,000

Traceability

Rs/unit % on Sales % on Cost

#DIV/0!

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0!
 #DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
1,160,000 -1,160,000

697,000 -697,000
353,000 -353,000
1,050,000 -1,050,000
110,000 -110,000
Example:
Expense details for a company manufacturing a product the
previous month are as under:
Production and Sale-Units: 20,000
The Selling Price of the Product-Rs/unit. 58
Interest from bank interest on Fixed Deposit 10,000
Classify the cost as per Behaviour and find out profit.
Cost elements Amount-Rs. Variable cost
Principal Raw Material 600,000
Other supporting raw materials 30,000
Packing Material 15,000
Direct labour 40,000
Indirect manu. labour 10,000
Donation 5,000
Bad debts 4,000
Marketing personnel Salary 100,000
Salary of Production Cost centre 100,000
Salary of Mnt. Personnel 90,000
Sales and Distri. Supervisor's salary 15,000
Telephones expenses 15,000
General Manager's Travelling 12,000
Direct expenses 8,000
Depreciation on Plant and Machinery for
processing main material 4,000
Printing, Stationery 4,000
Depre. on Office building 3,000
Depre.on Office vehicle 1,000
Depre. on Depot furniture 1,000
Depre. on Plant and Machinery for
providing support service to the
Production 2,000
Total 1,059,000 -
693,000

Classification of Cost-03 By Variability

Particulars Qty Amount-Rs.

Sales Realisation 0
Cost
Variable Cost 0
Fixed Cost 0
Total Cost of Sales 0
Profit 0
 Fixed cost Irrelevant cost

- -
357,000 9,000

Variability

Rs/unit % on Sales % on Cost

#DIV/0!

#DIV/0! #DIV/0! #DIV/0!

 #DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
1,160,000 ###

693,000 ###
 357,000 ###
1,050,000 ###
110,000 ###
Example:
Expense details for a company manufacturing a product the
previous month are as under:
Production and Sale-Units: 20,000
The Selling Price of the Product-Rs/unit. 58
Interest from bank interest on Fixed Deposit 10,000
Classify the cost as per Functions and find out profit.

Cost elements Amount-Rs.

Principal Raw Material 600,000
Other supporting raw materials 30,000
Packing Material 15,000
Direct labour 40,000
Indirect manu. labour 10,000
Donation 5,000
Bad debts 4,000
Marketing personnel Salary 100,000
Salary of Production Cost centre 100,000
Salary of Mnt. Personnel 90,000
Sales and Distri. Supervisor's salary 15,000
Telephones expenses 15,000
General Manager's Travelling 12,000
Direct expenses 8,000
Depreciation on Plant and Machinery for 4,000
processing main material
Printing, Stationery 4,000
Depre. on Office building 3,000
Depre.on Office vehicle 1,000
Depre. on Depot furniture 1,000
Depre. on Plant and Machinery for providing
support service to the Production 2,000
Total 1,059,000

Classification of Cost-03

Particulars Qty

Sales Realisation
Cost
Prime Cost
Factory Overheads
Administration Overheads
Selling & Distribution Overheads
Total Cost of Sales
Profit
 Selling and
Factory Administration Distribution Irrelevant
Prime cost overheads overheads overheads cost

- - - - -
693,000 206,000 35,000 116,000 9,000

By Function

Amount-Rs. Rs/unit % on Sales % on Cost

0 #DIV/0!
0 #DIV/0! #DIV/0! #DIV/0!
0 #DIV/0! #DIV/0! #DIV/0!
0 #DIV/0! #DIV/0! #DIV/0!
0 #DIV/0! #DIV/0! #DIV/0!
0 #DIV/0! #DIV/0! #DIV/0!
0 #DIV/0! #DIV/0! #DIV/0!
0
 697,000 -697,000
202,000 -202,000
35,000 -35,000
116,000 -116,000
1,050,000 -1,050,000
110,000 -110,000
Example:
Expense details for a company manufacturing a product the
previous month are as under:
Production and Sale-Units: 20,000
The Selling Price of the Product-Rs/unit. 58
Interest from bank interest on Fixed Deposit 10,000
Classify the cost as per Statistical Division and find out profit.

Cost elements Amount-Rs. Prime cost

Principal Raw Material 600,000
Other supporting raw materials 30,000
Packing Material 15,000
Direct labour 40,000
Indirect manu. labour 10,000
Donation 5,000
Bad debts 4,000
Marketing personnel Salary 100,000
Salary of Production Cost centre 100,000
Salary of Mnt. Personnel 90,000
Sales and Distri. Supervisor's salary 15,000
Telephones expenses 15,000
General Manager's Travelling 12,000
Direct expenses 8,000
Depreciation on Plant and Machinery for 4,000
processing main material
Printing, Stationery 4,000
Depre. on Office building 3,000
Depre.on Office vehicle 1,000
Depre. on Depot furniture 1,000

Depre. on Plant and Machinery for

providing support service to the Production 2,000
Total 1,059,000 -
693,000

Classification of Cost-03 By Statistical Division

Particulars Qty Amount-Rs.

Sales Realisation 0
Cost
Prime Cost 0
Conversion Cost* 0
Selling & Distribution Overheads 0
Total Cost of Sales 0
Profit 0

* Some units consider Material Cost (RM +PM) and all else as Conversion cost.
This is so when a material is sent for jobwork outside the premises to some other
processor.
 Selling and
Converesion Distribution Irrelevant
cost cost cost

- - -
241,000 116,000 9,000

Statistical Division

Rs/unit % on Sales % on Cost

#DIV/0!
 #DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!

nversion cost.
es to some other
1,160,000 -1,160,000
 693,000 -693,000
242,000 -242,000
115,000 -115,000
1,050,000 -1,050,000
110,000 -110,000
Example:
Expense details for a company manufacturing a product the
previous month are as under:
Production and Sale-Units: 20,000
The Selling Price of the Product-Rs/unit. 58
Interest from bank interest on Fixed Deposit 10,000
Classify the cost as per Relevance and find out profit.
Cost elements Amount-Rs.
Principal Raw Material 600,000
Other supporting raw materials 30,000
Packing Material 15,000
Direct labour 40,000
Indirect manu. labour 10,000
Donation 5,000
Bad debts 4,000
Marketing personnel Salary 100,000
Salary of Production Cost centre 100,000
Salary of Mnt. Personnel 90,000
Sales and Distri. Supervisor's salary 15,000
Telephones expenses 15,000
General Manager's Travelling 12,000
Direct expenses 8,000
Depreciation on Plant and Machinery for 4,000
processing main material
Printing, Stationery 4,000
Depre. on Office building 3,000
Depre.on Office vehicle 1,000
Depre. on Depot furniture 1,000
Depre. on Plant and Machinery for providing
support service to the Production 2,000
Total 1,059,000

Classification of Cost-03

Particulars Qty

Sales Realisation
Irrelevant Revenue -Rs.
Cost
Relevant Cost
Irrelevant Cost -Rs.
Total Cost of Sales
Profit
 Relevant cost Irrelevant cost

- -
1,050,000 9,000

By Relevance

Amount-Rs. Rs/unit % on Sales % on Cost

0 #DIV/0!

0 #DIV/0! #DIV/0! #DIV/0!

 #DIV/0! #DIV/0! #DIV/0!
0 #DIV/0! #DIV/0! #DIV/0!
0 #DIV/0! #DIV/0! #DIV/0!
1,160,000 -1,160,000

1,050,000 -1,050,000
1,050,000 -1,050,000
110,000 -110,000