Chapter 5 - Cost Sheet

Cost Sheet
Question 1 - Rtp Nov 2021
Impact Ltd. provides you the following details of its expenditures for the year ended 31st March, 2021:
S.No. Particulars Amount (₹) Amount (₹)
(i) Raw materials purchased 5,00,00,000
(ii) GST paid under Composition scheme 10,00,000
(iii) Freight inwards 5,20,600
(iv) Trade discounts received 10,00,000
(v) Wages paid to factory workers 15,20,000
(vi) Contribution made towards employees’ PF &
ESIS 1,90,000
(vii) Production bonus paid to factory workers 1,50,000
(viii) Fee for technical assistance 1,12,000
(ix) Amount paid for power & fuel 2,62,000
(x) Job charges paid to job workers 4,50,000
(xi) Stores and spares consumed 1,10,000
(xii) Depreciation on:
Factory building 64,000
Office building 46,000
Plant & Machinery 86,000 1,96,000
(xiii) Salary paid to supervisors 1,20,000
(xiv) Repairs & Maintenance paid for:
Plant & Machinery 58,000
Sales office building 50,000
Vehicles used by directors 20,600 1,28,600
(xv) Insurance premium paid for:
Plant & Machinery 31,200
Factory building 28,100 59,300
(xvi) Expenses paid for quality control check activities
25,000
(xvii) Research & development cost paid for improvement
in production process 48,200
(xviii) Expenses paid for administration of factory work
1,38,000
(xix) Salary paid to functional mangers:
Production control 4,80,000
Finance & Accounts 9,60,000
Sales & Marketing 12,00,000 26,40,000
(xx) Salary paid to General Manager 13,20,000
(xxi) Packing cost paid for:
Primary packing necessary to maintain quality
1,06,000
For re-distribution of finished goods 1,12,000 2,18,000
(xxii) Interest and finance charges paid (for usage of non-
equity fund) 3,50,000
(xxiii) Fee paid to auditors 1,80,000
(xxiv) Fee paid to legal advisors 1,20,000
(xxv) Fee paid to independent directors 2,40,000

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(xxvi) Payment for maintenance of website for online sales 1,80,000

(xxvii) Performance bonus paid to sales staffs 2,40,000
(xxviii) Value of stock as on 1st April, 2020:
Raw materials 9,00,000
Work-in-process 4,00,000
Finished goods 7,00,000 20,00,000
(xxix) Value of stock as on 31st March, 2021:
Raw materials 5,60,000
Work-in-process 2,50,000
Finished goods 11,90,000 20,00,000
Amount realized by selling of waste generated during manufacturing process – ₹ 66,000/-
From the above data, you are required to PREPARE Statement of cost of Impact Ltd. for the year ended 31st
March, 2021, showing (i) Prime cost, (ii) Factory cost, (iii) Cost of Production, (iv) Cost of goods sold and (v)
Cost of sales.

Question 2 - Study Material

The following data relates to the manufacture of a standard product during the month of April, 2018:
Particulars Amount (₹.)
Raw materials 1,80,000
Direct wages 90,000
Machine Hours worked (Hours) 10,000
Machine hour rate (per hour) 8
Administration overheads 35,000
Selling overheads (per unit) 5
Units produced 4,000
Units sold 3,600
Selling price per unit 125
You are required to PREPARE a cost sheet in respect of the above showing:
(i) Cost per unit
(ii) Profit for the month

Question 3 - Study Material

The following information has been obtained from the records of ABC Corporation for the period from June 1
to June 30, 20X8:
On June On June 30,
1, 20X8 (₹. ) 20X8 (₹. )
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
Purchase of raw materials during June’ 20X8 4,80,000
Wages paid 2,40,000
Factory overheads 1,00,000
Administration overheads (related to production) 50,000
Selling & distribution overheads 25,000
Sales 10,00,000
PREPARE a statement giving the following information:
(a) Raw materials consumed;
(b) Prime cost;
(c) Factory cost;
(d) Cost of goods sold; and
(e) Net profit.

Question 4 - Study Material

The books of Ada₹h Manufacturing Company present the following data for the month of April, 20X9:

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 Chapter 5 - Cost Sheet

Direct labour cost ₹.17,500 being 175% of works overheads.

Cost of goods sold excluding administrative expenses ₹.56,000.
Inventory accounts showed the following opening and closing balances:
April 1(₹. ) April 30 (₹. )
Raw materials 8,000 10,600
Work in progress 10,500 14,500
Finished goods 17,600 19,000
Other data are:
(₹. )
Selling expenses 3,500
General and administration expenses 2,500
Sales for the month 75,000
You are required to:
(i) COMPUTE the value of materials purchased.
(ii) PREPARE a cost statement showing the various elements of cost and also the profit earned.

Question 5 - Study Material

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 Works cost per unit (₹. )
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 ₹.1,50,000 and fixed marketing expenses amount to ₹.2,50,000
per month respectively. The variable distribution cost amounts to ₹.30 per unit.
It can sell 100% of its output at ₹.500 per unit provided it incu₹ the following further expenditure:
(a) it gives gift items costing ₹.30 per unit of sale;
(b) it has lucky draws every month giving the First prize of ₹.50,000; 2nd prize of ₹.25,000, 3rd prize of ₹.10,000
and three consolation prizes of ₹.5,000 each to custome₹ buying the product.
(c) it spends ₹.1,00,000 on refreshments served every month to its custome₹;
(d) it sponso₹ a television programme every week at a cost of ₹.20,00,000 per month.
It can market 30% of its output at ₹.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.

Question 6 -
The cost of sale of Product Z is made up as follows:
Particulars ₹.
Materials used in manufacturing 5,500
Materials used in packing materials 1,000
Materials used in selling the product 150
Materials used in the factory 75
Materials used in the office 125
Primary Packing Costs 800
Quality Control Cost 600
Labour required in producing 1,000
Labour required for supervision of the Management – Factory 200
Freight inward of material used in manufacturing 1,000
Expenses – Indirect – Factory 100

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 Chapter 5 - Cost Sheet

Expenses – Office 125

Depreciation – Office Building and Equipment 75
Depreciation – Factory 175
Research and Development Costs 700
Recoveries on account of sale of scrap produced in the normal cou₹e of
manufacture 100
Selling Expenses 350
Advertising 125
Assuming that all the products manufactured are sold, what should be the selling price to obtain a profit of
25% on selling price?
Show the divisions of costs for Product Z.

Cost Sheet – Product Wise Cost Analysis and Apportionment

Question 7 -
Bright Shoe-Polish Company manufacturing black and brown polish in one standard size of tin retailing at ₹. 12
and ₹. 13.30 respectively. Following information is supplied to you:
Opening Stock:
Black polish 2,400 tins
Brown polish 8,000 tins
Closing Stock:
Black polish 5400 tins
Brown polish 3,000 tins
Sales:
Black polish 72,000 tins
Black polish 30,000 tins
Direct materials:
Polish ₹. 2,46,000
Tins ₹. 1,20,000
Direct wages ₹. 2,04,000
Production overhead ₹. 3,06,000
Administration and selling overhead ₹. 1,02,000
The opening stock of black and brown polish was valued at its production cost. The cost of raw materials for
brown polish is 10 per cent higher than for black, but there is no difference in the cost of tins. Direct wages for
brown polish are 8 per cent higher than those of black polish and production overheads are considered to vary
with direct wages. Administration and selling overhead is absorbed at a uniform rate per tin of polish sold.
Prepare a statement to show the cost and profit per tin of polish.

Question 8 - Nov 09
SK Engineering Company Limited manufactures two types of auto bearing type ‘XD’ and type ‘XE’. The
company’s records show the following Particulars for those bearing for the month of May, 2009:
Particulars Amount (₹.)
Direct Materials 38,10,000
Direct labour 20,10,000
Production overheads 6,03,000
Office Overheads 6,42,300
There was no work-in-progress at the beginning or at the end of the month. It was ascertained that:
● Direct material cost per bearing for type ‘XD’ was 160 percent of those for type ‘XE’.
● Direct labour cost per bearing for type ‘XE’ was 40 percent of those for type ‘XD’.
● Production overheads were absorbed on the basis of direct labour cost.
● Office overheads were absorbed on the basis of factory cost.
● Selling and distribution overheads were ₹. 2 per bearing sold for each type.
● Stock of finished bearing on 1st May, 2009 was 15,000 bearings @ ₹.15 of type ‘XD’ and 20,000 bearing
@ ₹. 8 of type ‘XE’.

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 Chapter 5 - Cost Sheet

● Production during the month of May, 2009 was 2,70,000 bearings of type ‘XD’ and 3,30,000 bearings of
type ‘XE ‘ and out of May’s output 25,000 bearings of type ‘XD’ and 40,000 bearings of type ‘XE’ would
be remains in stock on 31st May, 2009 which valued at cost of production. You are required to:
(1) Prepare a statement showing cost of production each type of bearings.
(2) Prepare, if the company desires at 20 percent profit on selling price.

Estimation of Selling Price Overhead Estimation – Quotation

Question 9 - Nov 15
Stand Ltd is engaged in manufacture of leather items as per customers specifications. Summary of their
accounts for the last year shown in the following information:
Particulars Amount (₹.)
Opening stock of Raw Materials 50,000
Purchases of Raw Materials 12,60,000
Closing Stock of Raw Materials 75,000
Production OH 1,96,000
Administration OH 1,45,000
workers' Wages 7,00,000
In the current year, the Company has obtained a job from Ram. Estimates of Material and Labour Cost for this
job are ₹. 5,500 and ₹. 4,000 respectively. The Company’s costing system recognizes Production OH as a % of
Direct labour and Administration OH as a % of Works Cost. Calculate the Price that the Company should quote
Ram, in order to earn a profit of 20% on Sales.

Estimation of Overhead as Percentage of Costs

Question 10 - Nov 08
In a manufacturing company factor overheads are charged as fixed percentage basis on direct labour and
office overheads are charged on the basis of percentage of factory cost. The following information is available
related to the ending 31st March, 2008:
Particulars Production A Production B
Direct Materials ₹. 19,000 ₹. 15,000
Direct Labour ₹. 15,000 ₹. 25,000
Sales ₹. 60,000 ₹. 80,000
Profits 25% on cost 25% on sales price
You are required to find out:
(a) The percentage of factory overheads on direct labour.
(b) The percentage of office overheads on factory cost.

Income Statement – Wrong Estimation of Overhead based Selling Price

Question 11 - Rtp
Dayalan has a small furniture factory and specialize in the manufacture of tables of standard sizes of which he
can make 15,000 a year. Last year, he made and sold 10,000 tables and his cost per table was ₹. 55, made up
as (a) Materials ₹. 30, (b) Labour ₹. 10 and (c) OH (Fixed) recovered at 50% of Material Cost ₹. 15.
Prices are fixed by adding a standard margin of 10% to the total cost arrived at as above. For the current year,
due to a fall in the cost of materials, total cost was determined at ₹. 40 per table as under – (a) Materials ₹. 20,
(b) Labour ₹. 10 and (c) Overhead (Fixed) recovered at 50% of Material Cost ₹. 10.
Dayalan maintained his standard margin at 10% of his total cost of sales. Sales were at the same level as in
the previous year. You are required to –
1. Determine Profit or Loss for the current year
2. Compute the price that should have been charged in the current year to yield the same profit as in previous
year.
3. Compute the price that should have been charged in the current year to yield the same profit PERCENTAGE
as in previous year.

Direct and Indirect Cost Apportionment for a Dealership Business

Question 12 - May 06
XYZ Auto Ltd is in the business of selling ca₹. It also sells insurance and finance as part of its overall business
strategy. The following information is available for the Company –

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Particulars Physical Units Sales Value

Sales of Ca₹ 10,000 Ca₹ ₹. 30,000 Lakhs
Sales of Insurance 6,000 Policies ₹. 1,500 Lakhs
Sales of Finance 8,000 Loans ₹. 19,200 Lakhs
The Revenue Earnings from each line of business before expenses are as follows:
Sale of Ca₹ – 3% of Sales Value, Sale of Insurance – 20% of Sales Value, Sale of Finance – 2% of Sales Value.
The expenses of the Company are as follows –
Salesman Salaries ₹. 200 Lakhs
Rent ₹. 100 Lakhs
Electricity ₹. 100 Lakhs
Advertising ₹. 200 Lakhs
Documentation Cost per Insurance Policy ₹. 100
Documentation Cost for each Loan ₹. 200
Direct Sales Expenses per Car ₹. 5,000
Indirect Costs have to be allocated in the ratio of physical units sold. You are required to:
● Make a Cost Sheet for each product allocating the Direct and Indirect Costs, and also showing the
product-wise profit and Total Profit.
● Calculate the percentage of profit to revenue earned from each line of business.

Basic Decision Making

Question 13 - June 16 CMA
The following information is available to Z Ltd. for the financial year ending 31st March 2016:
Particulars (₹. )
Direct material 3,45,000
Direct wages 3,90,000
Production overheads (75% variable) 2,40,000
Administration overheads (75% fixed) 1,20,000
Selling and distribution overheads (50% fixed) 1,60,000
Sales – 10,000 units 15,50,000
Opening stock – Nil
Closing stock – Finished goods – 5,000 units
No WIP (Opening / closing)
For the year 2016 - 17, it is estimated that:
1. Output will increase by one – third; sales quantity will increase by 50% by incurring additional
advertisement expenses of ₹.1,45,200. Assume that opening stock is First sold before using the
current year’s output.
2. Material prices will increase by 5%.
3. Wage rate will increase by 5% while overall direct labour efficiency will Decrease by 4%.
4. The variable overheads will be at the same unit rates as last year.
5. Fixed production overheads will increase by 25%.
6. Assume that production and sales units were achieved as per budget last year and will be achieved as
per estimate this year also.
7. The company will revise its selling price in 2016-17 to ₹.125 per unit. The same selling price will hold
for the units sold from the opening stock also.
You are required to prepare a statement showing cost of sales and sales profit giving effect to the above for
the financial year 2016-17.

Semi Variable Cost and Pricing Decision

Question 14 - Nov 97
A manufacturing Company has an installed capacity of 1,20,000 units p.a. The cost structure of the product is
given below –
Material Costs ₹. 8 per unit
Labour (subject to a minimum of ₹. 56,000 per month) ₹. 8 per unit
Variable Overheads ₹. 3 per unit
Fixed Overheads ₹. 1,04,000 per annum

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Semi-Variable Overheads ₹. 48,000 per annum at 60% capacity, which increase by ₹. 6,000 per annum for
increase of every 10% of the capacity utilization or any part thereof, for the year as a whole.
The capacity utilization for the next year is estimated at 60% for two months, 75% for six months and 80% for
the remaining part of the year. If the Company is planning to have a profit of 25% on the Selling Price, calculate
the Selling Price per unit. Assume that there are no Opening and Closing Stocks.

Question 14 - Nov 08,May 19

Maximum production capacity of JK Ltd is 5,20,000 units per annum. Details of estimated cost of production
are –
● Direct Material ₹. 15 per unit.
● Direct wages ₹. 9 per unit (subject to a minimum of ₹. 2,50,000 per month).
● Fixed Overheads ₹.9,60,000 per annum.
● Variable Overheads ₹. 8 per unit.
● Semi-Variable Overheads are ₹. 5,60,000 per annum up to 50% capacity and additional ₹. 1,50,000 per
annum for every 25% increase in capacity or a part of it.
JK limited worked at 60% capacity for the First 3 months during the year 2008, but it is expected to work at
90% capacity for the remaining nine months.
The Selling Price per unit was ₹. 44 during the First 3 months.
Calculate what Selling Price per unit should be fixed for the remaining nine months to yield a total profit of ₹.
15,62,500 for the whole year.

Question 15 - May 08
A Factory incurred the following expenditure during last year –
Particulars ₹. ₹.
Direct Material Consumed 12,00,000
Manufacturing Wages 7,00,000
Manufacturing Overhead:
Fixed 3,60,000
Variable 2,50,000 6,10,000
Total 25,10,000
In the next year, the following changes are expected in production and cost of production –
● Production will increase due to recruitment of 60% more workers in the factory.
● Overall Efficiency will Decline by 10% on account of recruitment of new workers.
● There will be an increase of 20% in Fixed Overhead and 60% in Variable Overhead.
● The cost of Direct Material will be Decreased by 6%.
● The Company desires to earn a profit of 10% on Selling Price.
Ascertain the Cost of Production and Sales Value for the next year.

Question 16 - Rtp Nov 2020

The following details are available from the books of R Ltd. for the year ending 31st March 2020:
Particulars Amount (₹.)
Purchase of raw materials 84,00,000
Consumable materials 4,80,000
Direct wages 60,00,000
Carriage inward 1,72,600
Wages to foreman and store keeper 8,40,000
Other indirect wages to factory staffs 1,35,000
Expenditure on research and development on 9,60,000
new production technology
Salary to accountants 7,20,000
Employer’s contribution to EPF & ESI 7,20,000
Cost of power & fuel 28,00,000
Production planning office expenses 12,60,000
Salary to delivery staffs 14,30,000
Income tax for the assessment year 2019-20 2,80,000
Fees to statutory auditor 1,80,000

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Fees to cost auditor 80,000

Fees to independent directors 9,40,000
Donation to PM-national relief fund 1,10,000
Value of sales 2,82,60,000
Position of inventories as on 01-04-2019:
- Raw Material 6,20,000
- W-I-P 7,84,000
- Finished goods 14,40,000
Position of inventories as on 31-03-2020:
- Raw Material 4,60,000
- W-I-P 6,64,000
- Finished goods 9,80,000
From the above information PREPARE a cost sheet for the year ended 31 st March 2020.

Question 17 - Jan 2021

The following data are available from the books and records of Q Ltd. for the month of April 2020:
Direct Labour Cost = ₹. 1,20,000 (120% of Factory Overheads)
Cost of Sales = ₹. 4,00,000
Sales = ₹. 5,00,000
Accounts show the following figures:
1st April, 2020 (₹.) 30th April, 2020 (₹.)
Inventory:
Raw material 20,000 25,000
Work-in-progress 20,000 30,000
Finished goods 50,000 60,000
Other details:
Selling expenses 22,000
General & Admin. expenses 18,000
You are required to prepare a cost sheet for the month of April 2020 showing:
(i) Prime Cost
(ii) Works Cost
(iii) Cost of Production
(iv) Cost of Goods sold
(v) Cost of Sales and Profit earned.

Question 18 - Rtp May 2022

A Ltd. produces a single product X. During the month of December 2021, the company has produced 14,560
tonnes of X. The details for the month of December 2021 are as follows:
● Materials consumed ₹ 15,00,000
● Power consumed 13,000 Kwh @ ₹ 7 per Kwh
● Diesels consumed 1,000 litres @ ₹ 93 per litre
● Wages & salary paid – ₹ 64,00,000
● Gratuity & leave encashment paid – ₹ 44,20,000
● Hiring charges paid for HEMM- ₹ 13,00,000
● Hiring charges paid for ca₹ used for official purpose – ₹ 80,000
● Reimbursement of diesel cost for the ca₹ – ₹ 20,000
● The hiring of ca₹ attracts GST under RCM @5% without credit.
● Maintenance cost paid for weighing bridge (used for weighing of final goods at the time of despatch) –
₹ 7,000
● AMC cost of CCTV installed at weighing bridge (used for weighing of final goods at the time of
despatch) and factory premises is ₹ 6,000 and ₹ 18,000 per month respectively.
● TA/ DA and hotel bill paid for sales manager- ₹ 16,000
● The company has 180 employees works for 26 days in a month.
Required:
(a) PREPARE a Cost sheet for the month of December 2021.

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(b) COMPUTE Earnings per manshift (EMS) and Output per manshift (OMS) for the month of December 2021.

Question 19 - Dec 2021

The Accountant of KPMR Ltd. has prepared for the following budget for the coming year 2022 for its two
products ‘AYE’ and ‘ZYE’:
Particulars Product ‘AYE’ Product ‘ZYE’
Production & Sales (in units) 4,000 3,000
Amount (in ₹) Amount (in ₹)
Selling price per unit 200 180
Direct material per unit 80 70
Direct labour per unit 40 35
Variable overhead per unit 20 25
Fixed overhead per unit 10 10
After reviewing the above budget, the management has called the marketing team for suggesting some
measures for increasing the sales. The marketing team has suggested that by promoting the products on
social media, the sales quantity of both the products can be increased by 5%. Also, the selling price per unit
will go up by 10%. But this will result in increase in expenditure on variable overheads and fixed overhead by
20% and 5% respectively for both the products.
You are required to prepare flexible budget for both the products:
(i) Before promotion on social media,
(ii) After promotion on social media.

Question 20 - May 2022

The following data are available from the books and records of A Ltd. for the month of April 2022:
Particulars Amount (₹.)
Stock of raw materials on 1st April 2022 10,000
Raw materials purchased 2,80,000
Manufacturing wages 70,000
Depreciation on plant 15,000
Expenses paid for quality control check activities 4,000
Lease Rent of Production Assets 10,000
Administrative Overheads (Production) 15,000
Expenses paid for pollution control and engineering & 1,000
maintenance
Stock of raw materials on 30th April 2022 40,000
Primary packing cost 8,000
Research & development cost (Process related) 5,000
Packing cost for redistribution of finished goods 1,500
Advertisement expenses 1,300
Stock of finished goods as on 1st April 2022 was 200 units having a total cost of ₹. 28,000.
The entire opening stock of finished goods has been sold during the month.
Production during the month of April, 2022 was 3,000 units. Closing stock of finished goods as on 30th April,
2022 was 400 units.
You are required to:
a) Prepare a Cost Sheet for the above period showing the:
● Cost of Raw Material consumed
● Prime Cost
● Factory Cost
● Cost of Production
● Cost of goods sold
● Cost of Sales
b) Calculate selling price per unit, if sale is made at a profit of 20% on sales.

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Question 21 - Mock Sept 2022

A manufacturing process yields the following products out of the raw materials introduced in the process:
Main Product X 60% of Raw Materials
By-Product Y 15% of Raw Materials
By Product Z 20% of Raw Materials
Wastage 5% of Raw Materials
Other information is as follows:
Total Cost:
a. Raw Materials 1,000 units of ₹ 9,200;
b. Labour ₹ 8,200;
c. Overheads ₹ 12,000
d. One unit of product z requires ½ the raw materials required for one unit of product Y,
e. One unit of product X requires1½ times the raw materials required for product Y.
f. Product X required double the time needed for production of one unit of Y and one unit of Z.
g. Product Z requires ½ the time required for the production of one unit of product Y.
h. Overheads are to be apportioned in the ratio of 6:1:1.
You are required to CALCULATE the total and per unit of cost of each of the products.

Question 22 - May 2023

The following information is available from SN Manufacturing Limited’s books for the month of April 2023.
April 1 April 30
Opening and closing inventories data:
Stock of finished goods 2,500 units ?
Stock of raw materials ₹ 42,500 ₹ 38,600
Work-in-progress ₹ 42,500 ₹ 42,800
Other data are:
Raw materials purchased ₹ 6,95,000
Carriage inward ₹ 36,200
Direct wages paid ₹ 3,22,800
Royalty paid for production ₹ 35,800
Purchase of special designs, moulds and patterns (estimated life 12 ₹ 1,53,600
production cycles)
Power, fuel and haulage (factory) ₹ 70,600
Research and development costs for improving the production ₹ 31,680
process (amortized)
Primary packing cost (necessary to maintain quality) ₹ 6,920
Administrative overhead ₹ 46,765
Salary and wages for supervisor and foremen ₹ 28,000
Other Information:
● Opening stock of finished goods is to be valued at ₹ 8.05 per unit.
● During the month of April, 1,52,000 units were produced and 1,52,600 units were sold. The closing
stock of finished goods is to be valued at the relevant month’s cost of production. The company
follows the FIFO method.
● Selling and distribution expenses are to be charged at 20 paisa per unit.
● Assume that one production cycle completed in one month.
Required:
1. Prepare a cost sheet for the month ended on April 30, 2023, showing the various elements of cost (raw
material consumed, prime cost, factory cost, cost of production, cost of goods sold, and cost sales.)
2. Calculate the selling price per unit if profit is charged at 20 percent on sales.

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