COST ACCOUNTING—I

BCOM SEMESTER 2 BCOM SEMESTER 2

CCF [NEW SYLLABUS]
INTRODUCTION CCF [NEW SYLLABUS]
THEORY
Define Costing

Costing refers to the process of determining or estimating the cost of producing a product,
providing a service, or executing a project. It involves identifying and calculating all the
expenses involved, including direct costs like materials and labour, as well as indirect costs
such as overhead, utilities, and administrative expenses. Costing is crucial for businesses
to set prices, budget effectively, manage resources, and ensure profitability

Define Cost Accounting

Cost accounting is a branch of accounting that focuses on capturing, recording, analysing,

and reporting all costs associated with producing goods or providing services. It involves
tracking and managing the costs of business activities, from raw materials and labour to
overhead expenses, with the goal of understanding the true cost of operations.

Define Cost Accountancy

Cost accountancy is a broader field that encompasses both cost accounting and the
application of cost management principles to guide business decisions. It involves the use
of various accounting techniques to determine and control costs, ensuring that an
organization can operate efficiently and profitably. Cost accountancy combines the practice
of cost accounting with the strategic use of cost information for planning, controlling, and
decision-making purposes.
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INTRODUCTION CCF [NEW SYLLABUS]
THEORY
Objectives of Cost Accounting

the primary objectives of cost accounting:

1. Cost Control: Cost accounting helps in identifying inefficiencies and areas where costs
can be reduced. By analysing cost data, managers can implement strategies to control
and reduce costs, improving overall efficiency.

2. Cost Determination: It involves determining the cost of producing a product or

providing a service. This includes direct costs like raw materials and labour, as well as
indirect costs such as overhead and administrative expenses.

3. Cost Planning and Budgeting: Cost accounting aids in setting budgets and planning for
future expenses. By analysing historical cost data, organizations can forecast future
costs and create budgets that align with their financial goals.

4. Pricing Decisions: Cost accounting provides the necessary data to set appropriate prices
for products or services. Understanding the cost structure ensures that prices cover
all costs and contribute to profitability.

5. Profitability Analysis: It helps in determining the profitability of different products,

services, or departments. By analysing costs and revenues, managers can identify the
most profitable areas of the business and make informed decisions about where to
allocate resources.

6. Inventory Valuation: Cost accounting assists in valuing inventory, which is essential for
financial reporting and understanding the cost of goods sold. Accurate inventory
valuation helps in maintaining proper inventory levels and reducing holding costs.

7. Decision Making: By providing detailed cost information, cost accounting supports

various strategic decisions, such as whether to make or buy a product, expand or reduce
production, or enter a new market.

8. Performance Evaluation: Cost accounting provides data for evaluating the performance
of different departments, products, or projects. This helps in assessing the efficiency of
operations and the effectiveness of management in controlling costs.
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INTRODUCTION CCF [NEW SYLLABUS]
THEORY
Essential of Good Cost Accounting System

To be effective, a cost accounting system should have the following essential features:
1. Accuracy

• The system must accurately capture and record all costs associated with production or
services. Accurate data ensures reliable cost analysis, pricing, and financial reporting.
2. Simplicity

• The system should be easy to understand and operate. Complex systems can lead to
errors, confusion, and inefficiency. Simplicity helps in ensuring that all users can
effectively use the system.
3. Relevance

• The system should provide relevant information that meets the specific needs of the
organization. This includes delivering data that is timely and pertinent to decision-
making processes.
4. Flexibility

• A good cost accounting system should be adaptable to changes in business processes,

production methods, or organizational structure. It should accommodate new products,
services, or cost centres without requiring a complete overhaul.
5. Integration
• The system should be integrated with other business systems, such as financial
accounting, inventory management, and production planning. This ensures consistency
and accuracy across all financial data.
6. Cost Control

• The system should facilitate effective cost control by providing detailed information on
cost variances, inefficiencies, and areas where savings can be made. It should support
budget monitoring and variance analysis.
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INTRODUCTION CCF [NEW SYLLABUS]
THEORY
Steps for Installing a Cost Accounting System

When a new system of Cost Accounting is going to be installed it must be economically

viable and free from technical defects. The steps to be followed for such installations are:

(i) A careful study of the Product/Products should be made.

(ii) The nature of the business and the organisational structure should be realised.
(iii) The purpose and goal of introducing the costing system should be pre-determined with
attention and care.
(iv) Proper Notification about the costing system should be made to concerned persons,
departments and sections.
(v) Proper planning should be made regarding the operation of the system.
(vi) Updating of knowledge is required through arrangement of proper training & workshop.
(vii) Organisation of the cost office is essential
(viii) Setting standards for different elements of costs like materials cost, labours cost
and overhead costs will be necessary.
(ix) A System of Appraisal of Performances should be arranged.
(x) Proper Control and Reconciliation should be made possible.
(xi) Other Aspects like designing of Forms, Formats, Reports and Vouchers, listing of
policies regarding wastage of materials, treatment of overtime payments etc. should
deserve due attention.
(xii) Workability of the system and its Flexibility to rise-up to changed situations must be
ensured.
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INTRODUCTION CCF [NEW SYLLABUS]
THEORY
Meaning of Cost

Cost refers to the monetary value associated with producing goods or services or
undertaking an activity. It encompasses all expenses involved, including direct costs like
materials and labour, as well as indirect costs such as overhead and administrative
expenses. Understanding cost is essential for pricing, budgeting, and financial planning, as
it helps businesses determine profitability and make informed decisions about resource
allocation and operational efficiency.

Cost Centre /Object

A cost center is a department, function, or segment within an organization where costs are
incurred but revenue is not directly generated. Its primary purpose is to track and control
expenses associated with specific activities or functions, such as production, maintenance,
or administration. By monitoring costs at the cost centre level, organizations can analyse
performance, manage budgets more effectively, and identify areas for cost reduction. Cost
centres are crucial for evaluating operational efficiency and ensuring that resources are
used efficiently within the organization.

Cost Unit

A cost unit is a specific measure or quantity of a product or service for which costs are
calculated. It is used to allocate and analyse costs associated with producing or providing
that particular unit. Examples of cost units include a single product, a batch of items, or a
service rendered. By assigning costs to each unit, organizations can determine the cost per
unit, set pricing strategies, and evaluate profitability.
Types of cost units with examples:

1. Unit Cost: Cost per individual item, e.g., cost per kg.
2. Batch Cost: Cost for a batch of items, e.g., cost for a batch of 100 shirts.
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INTRODUCTION CCF [NEW SYLLABUS]
3. Job Cost: Cost for a specific job or project, e.g., cost for a custom furniture order.
THEORY
4. Service Cost: Cost for a service provided, e.g., cost per consultation session.

Classification of Cost

Direct anD inDirect cOSt

Direct costs are expenses that can be directly attributed to a particular product, service,
or project. These costs vary directly with the level of production or activity. Examples
include raw materials used in manufacturing a product, direct labour wages for workers
assembling the product, and specific equipment rental for a project.

Indirect costs, on the other hand, are expenses that cannot be directly traced to a single
product, service, or project but are necessary for overall operations. These costs are usually
spread across multiple cost centres or projects. Examples include utilities, rent for office
space, and administrative salaries, which support the organization as a whole rather than a
specific output.

elementwiSe
• Materials: This includes all expenses related to raw materials and components used in
production. For example, the cost of steel in manufacturing cars or the cost of flour in
baking bread.
• Labour: This encompasses wages and salaries paid to employees directly involved in
production. For instance, the wages of factory workers assembling electronics or the
salaries of construction workers on a building site.
• Overhead: This category covers indirect costs that are not directly traceable to specific
products or services but are necessary for overall operations. Examples include utilities,
rent for factory space, and administrative salaries.

FunctiOnwiSe
1. Production Costs: These are costs directly associated with the manufacturing of goods.
Examples include raw materials, direct labour, and factory overhead. For instance, the
cost of materials and labour required to assemble a car falls under production costs.
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INTRODUCTION CCF [NEW SYLLABUS]
2. Administrative Costs: THEORY
These are expenses related to the overall management and
administration of the organization. Examples include salaries of executive staff, office
supplies, and utilities for administrative offices. For example, the salary of the
company's CEO and the cost of office supplies are administrative costs.
3. Selling and Distribution Costs: These costs are incurred to promote, sell, and deliver
products to customers. Examples include advertising expenses, sales commissions, and
shipping costs. For instance, the cost of a marketing campaign and the expense of
delivering products to retail stores are selling and distribution costs.
4. Research and Development Costs: These are costs associated with developing new
products or improving existing ones. Examples include research staff salaries,
laboratory equipment, and prototype development. For instance, the cost of designing
and testing a new product prototype is a research and development cost.

BehaviOur wiSe
• Fixed Costs: These costs remain constant regardless of production volume or business
activity levels. Examples include rent for office space or salaries of permanent staff.
Fixed costs do not fluctuate with changes in output.
• Variable Costs: These costs vary directly with the level of production or business
activity. For instance, raw materials and direct labour costs increase as more units are
produced. Variable costs are proportionate to changes in activity levels.
• Semi-Variable Costs: Also known as mixed costs, these have both fixed and variable
components. An example is a utility bill with a fixed monthly charge plus a variable
component that depends on usage, such as electricity costs for running machinery.

Other cOStS
• Opportunity Cost: The value of the next best alternative foregone when a decision is
made to pursue a particular course of action. It represents the potential benefits that
could have been gained from choosing an alternative option. For example, if a company
invests Rs100,000 in a new project, the opportunity cost is the potential return it could
have earned if the money was invested elsewhere.
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INTRODUCTION CCF [NEW SYLLABUS]
• Sunk Cost: Costs that have already THEORY
been incurred and cannot be recovered. These costs
should not influence future decisions because they remain unchanged regardless of the
outcome. For example, if a company spends Rs.50,000 on research and development for
a product that is later abandoned, the Rs.50,000 is a sunk cost.
• Imputed Cost: A notional or hypothetical cost that is not actually incurred but is used
for decision-making purposes. Imputed costs help in evaluating the economic impact of
decisions by considering what the cost would be if an alternative resource was used. For
instance, the rental value of owned property used in business operations can be
considered an imputed cost.
• Normal Cost: Costs that are typical or expected under standard operating conditions.
These costs reflect the usual level of expenses for producing a product or providing a
service. For example, the standard cost of materials and labour for manufacturing a
product represents the normal cost.
• Abnormal Cost: Costs that are unusual or unexpected and deviate significantly from the
norm. These costs are often the result of inefficiencies or extraordinary circumstances.
For example, costs incurred due to equipment breakdowns or production delays beyond
the normal operating conditions would be considered abnormal costs.
• Controllable Costs are expenses that can be influenced or managed by a specific
department or manager within an organization. For example, a department head can
control spending on office supplies.
• Uncontrollable Costs are expenses that cannot be influenced or managed by a specific
department or manager, often due to external factors. For instance, rent or utility
costs are usually fixed and outside the control of individual managers.
• Incremental Cost refers to the additional cost incurred from producing one more unit
or making a specific decision. For example, the extra cost of producing one additional
unit of a product.
• Differential Cost (or Marginal Cost) is the difference in total cost between two
alternative decisions or options. For example, the cost difference between choosing to
produce Product A versus Product B.
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INTRODUCTION CCF [NEW SYLLABUS]
THEORY
Methods and Techniques of Costing

some common methods and techniques of costing:

1. Job Costing: Tracks costs for individual jobs or projects, used in custom manufacturing
or services. For example, construction projects or consulting assignments.

2. Process Costing: Assigns costs to processes or production stages, used in mass

production environments. For example, in the production of chemicals or food products.

3. Activity-Based Costing (ABC): Allocates overhead costs based on activities that drive
costs, providing a more accurate cost distribution. For example, allocating costs based
on machine hours or number of setups.

4. Standard Costing: Uses predetermined costs (standards) to compare with actual costs,
helping in variance analysis. For example, setting standard costs for materials and
labour and comparing them with actual expenditures.

5. Marginal Costing: Focuses on variable costs associated with producing additional units,
used for decision-making. For example, analysing the cost of producing one more unit
of a product.

6. Absorption Costing: Allocates both fixed and variable costs to products, ensuring that
all costs are covered in the product cost. For example, including factory rent and
utilities in product cost calculations.

Different Cost Units for Different Business Activities or Industries

Costs are determined and expressed in relation to cost units. A cost unit is a quantitative
unit of product or service. This unit differs from industry to industry. For each product /
industry that cost unit is chosen which is the most natural to that product.
The following chart will show the different cost units used.
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INTRODUCTION CCF [NEW SYLLABUS]
THEORY
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CCF [NEW SYLLABUS] MATERIAL COST CCF [NEW SYLLABUS]

ECONOMIC ORDER QUANTITY

1. A producer has estimated annual purchase requirement of 30,000 units of a material.

Unit price of material is 50. Annual cost of carrying inventory is 20%. Order cost for
ordering an order is 60. Find out Economic Order Quantity (EOQ).
Ans: 600 Units [D.U.B.Com. (Hons.) 2004 (External]

2. From the following particulars, find out the Economic Order Quantity (EOQ).
(1) Annual demand 12,000 units
(ii) Ordering cost ₹90 per order
(iii) Inventory carrying cost per annum ₹15
Ans: 379.473 Units (say) 380 units. [C.U.B.Com. (Hons.) - Adapted)]

3. A manufacturer uses 75,000 units of a particular material per year. The material cost
is 1.50 per unit and carrying cost is estimated to be 25% p.a. of average inventory cost.
The cost of placing an order is 18. You are required to determine the Economic Order
Quantity (EOQ) and frequency of orders p.a.
Ans: 28 Orders (approx.) [C.U.B.Com. (Hons.) Adapted]

4. The following information relating to a type of raw material is available:

(i) Annual demand 2,000 units
(ii) Unit price ₹20
(iii) Ordering cost per order ₹20
(iv) Store cost 2% p.a.
(v) Interest rate 8% p.a.
(vi) Lead time Half month
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Calculate Economic Ordering Quantity and Annual Inventory Cost of the raw materials.
Ans: EOQ= 200 Units & AIC= 400 Units

5. Sachin Ltd. furnishes the following information:

(i) Consumption-300 units per quarter; (ii) Cost per unit 40;
(iii) Cost of processing an order 600; (iv) Obsolescence 15% p.a.;
(v) Insurance on inventory 25% p.a.
Compute:
(a) Economic Order Quantity;
(b) Number of orders per year
(c) Time between two consecutive orders
A supplier offers a discount of 5% on a purchase of 600 units. Should it be accepted?
Ans: 300 units; 4 orders per year; 3 months [C.U.B.Com. (Hons.) Adapted)

6. A company manufactures a special product which requires a component Alpha'. The

following particulars are available for 2010;
Annual Demand 8,000 units
Cost of placing an order 200 per order
Cost per unit of 'Alpha ₹400
Carrying cost % p.a. 20%
The company has been offered a discount of 4% on the purchase of Alpha" provided the
order size is 4,000 components at a time.
Required:
(i) Calculate Economic Order Quantity.
(ii) Advise whether the discount offer can be accepted.
Solution: EOQ= 200 units (D.U.B.Com. (Hons.)- 2011)
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7. Compute the Economic Batch Quantity and total number of batches during the year
from the following information:
Average number of units to be produced in a month 2,000 units
Set-up cost per batch ₹60
Total cost of production per unit ₹5
Annual rate of interest 10%
Ans: 10 Batches [C.U.B.Com. (Hons.)-2006]

8. The following data is available in respect of a material used in the production of goods
for the year 2008:
Cost of the material per unit: 50
Weekly consumption: 300 units
Ordering cost per order: 650
Stock holding cost: 2% per month (on cost)
Compute (assuming 52 weeks):
(a) Economic Order Quantity;
(b) Optimum Number of Orders per Year; and
(c) Time Lag between two consecutive orders.

Solution: 1,300 units; 12 Orders; 1 Month [C.U.B.Com.(General) – 2009]

9. A manufacturer uses 200 units of a component every month and he buys them entirely
from outside supplier.
The order placing and receiving cost is 100 and annual carrying cost is 12.
From this set of data, calculate 'Economic Order Quantity and number of orders.
Solution: 200 units; 12 Orders [C.U.B.Com.(General) - 2014]
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10. Pooja Pipes Ltd, uses about 75,000 valves per year and the usage is fairly constant at
6,250 valves per month. The valve costs ₹1.50 per unit when brought in large quantities,
and the carrying cost is estimated to be 20% of average inventory investment on an
annual basis. The cost to place an order and process the delivery is ₹18. It takes 45 days
to receive delivery from the date of an order and a safety stock of 3,250 valves is
desired. You are required to determine—
(i) the most economic order quantity and frequency of orders;
(ii) the re-order point; and
(iii) the most economical order quantity if the valves cost ₹4.50 each instead of ₹1.50
each. Solution: EOQ= 3,000 valves; 25 order p.a.; 14.6 days or 15 days.
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COST OF MATERIAL

1. At what price per unit would Part No. A32 be entered in the Stores Ledger, if the following
invoice was received from a supplier:
Invoice ₹
200 units Part No. A32 @ ₹5 1,000
Less: 20% Discount 200
800
Add: GST @ 18% 144
944
Add: Packing Charges (5 non-returnable boxes). 50
994
Notes:
(1) A 2% discount will be given for payment in 30 days.
(ii) GST paid is adjustable with output GST. [C.U.B.Com. (Hons.) Adapted]

2. Modern Manufacturing Company, Kolkata, not registered under GST, purchased a

material of 20 tonnes from a mining company. The following data is available for the
lot of material purchased:
(1) Invoice price of material @ ₹ 2,000 per tonne.
(ii) Trade discount @20% on invoice price.
(ⅲ) CGST @ 9%.
(iv) SGST @ 9%.
(v) Freight and Insurance @ 2% of net materials cost after GST.
(vi) Other charges for delivery @ 100 per tonne.
(vii) Cost of containers@20 per box of one quintal.
(viii) Cost of loading and unloading @ 1% of total cost.
Compute total material purchase cost and cost per tonne to Modern Manufacturing
Company. [C.U.B.Com. (Hons.) Adapted]
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LEVEL OF INVENTORY

1. In a factory component 'A' is used as follows:

(i) Normal usage 50 kg per week.
(ii) Maximum usage 75 kg per week.
(iii) Re-order quantity 300 kg.
(iv) Re-order period 4 to 6 weeks.
Calculate for component 'A':
(a) Re-order level; (b) Maximum level; (c) Minimum level; (d) Average stock level.

Solution: (a) 450 kg; (b) 650 kg; (c) 200 kg; (d) 425 kg
2. From the following particulars compute:
(1) Re-order level;
(ii) Re-order quantity;
(iii) Average stock level; and
(v) Maximum re-order period.
Normal usage-100 units per day
Minimum usage 60 units per day Maximum usage 130 units per day
Minimum level-1,400 units Maximum level-7,800 units
Re-order period: Normal 25 days, Minimum 20 days.
Solution: (i) 3,900 units; (ii) 5,100 units; (iii) 4,600 units; (iv) 30 days

3. Calculate: (i) Re-order level, (ii) Maximum level and (iii) Minimum level from the
following data:
(i) Re-order quantity: 7,500 units.
(ii) Re-order period: 4-6 weeks
(iii) Maximum consumption: 900 units per week
(iv) Minimum consumption: 550 units per week
(v) Normal consumption: 600 units per week

Solution: (i) 5,400 units; (ii) 10,700 units; (iii) 2,400 units
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4. KT Ltd. provides you the following information:
(a) Reorder Level: 64,000 units
(b) Reorder Quantity: 40,000 units
(c) Minimum Stock Level: 34,000 units
(d) Maximum Stock Level: 94,000 units
(e) Average lead time in the past has been 2.5 days.
(f) The difference between maximum and minimum lead time is 3 days
Determine the maximum and minimum usage rates and lead times.

5. XYZ Ltd. manufactures 2,000 units of a product per month.

The purchase price of the raw materials is ₹10.00 per kg. The consumption of raw
material varies from 100 kg to 400 kg per week. The re-order period is 4-8 weeks. The
average (normal) consumption per week of the raw material is 250 kg. The cost of
placing an order is ₹130.00, carrying cost of inventory is 20% per annum. You are
required to calculate:
(i) Re-order Quantity
(ii) Re-order Level
(iii) Maximum Level
(iv) Minimum Level
Solution: (i) 1,766 kg; (ii) 3200 kg; (iii) 4,566 kg; (iv) 1,700 kg
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STORES LEDGER

1. From the following information prepare Stores Lodger Card under LIFO and FIFO
system. Calculate the value of Closing Stock under both the systems.
Jan. 1 Opening Stock 200 pieces @2.00 each
5 Purchases 100 pieces @2.20 each
10 Purchases 150 pieces @2.40 each
20 Purchases 120 pieces @2.50 each
22 Issue 150 pieces
25 Issue 100 pieces
27 Issue 100 pieces
28 Issue 200 pieces

2. The following transactions took place in respect of Material 'MP—6' in the store of a
manufacturing company in the month of November, 2001:
Opening stock: 400 units @15 per unit.
Purchased on 11.11.2001: 8,000 units @ 10 per unit.
Issued on 19.11.2001—7,800 units,
The company follows 'Simple Average Method' for pricing material issues. What is the
value of closing stock of materials on 19.11.2001?
Solution: (-) ₹11,500 [C.U.B.Com. (Hons.)-2002]

3. Prepare Stores Ledger under three different methods from the following information
related to raw material 'X'. Also calculate the cost of total issue and value of closing
stock.
01.01.18 Balance 100 units @1.00 p.u. (Base stock) and 500 units @ 6.00 p.u.
03.01.18 Receipt 1000 units @5.00 p.u.
04.01.18 Issue 800 units
10.01.18 Receipt 1000 units @7.00 р.u.
11.01.18 Issue 900 units
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4. From the following particulars, prepare Stores Ledger for the month of March, 2008
under FIFO method:
2008 March 1 Opening stock 100 units @ 12 each.
4 Purchased 50 units @ 14 each.
6 Issued 80 units.
9 Received from Department 'X' 30 units @10.
13 Returned to Supplier 10 units from the material purchased on 4th March.
15 Transferred to Department 'Y' 50 units.
19 Purchased 60 units @₹15
24 Shortage detected 10 units.
30 Transferred to Department 'Z' 60 units.
[C.U.B.Com. (General) 2008]

5. From the information for the month of March 2011, prepare Stores Ledger Account
using appropriate method:
March 1 Opening Stock 100 units @ 10 per unit
4 Received materials 50 units @ 12 per unit
6 Issues 80 units
9 Received 30 units @ 14 per unit
13 Return to Suppliers 10 units (out of 4th March Purchases)
15 Issues 50 units
19 Received 60 units @ 15 per unit
30 Issues 60 units

6. The following information is provided in respect of Material Exe by Sunrise Ltd. for the
month of March 2010:
1.3.2010 Stock : 200 units @5 per unit
5.3.2010 Purchase : 600 units (@3 per unit
8.3.2010 Issued : 500 units
25.3.2010 Purchased : 800 units @4 per unit
31.3.2010 Issued : 700 units
You are required to calculate:
(i) the value of stock on 31.3.2010.
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(ii) the value of materials consumed during the month of March 2010. The accountant
of Sunrise Ltd. followed FIFO Method of pricing issues.

7. ABC Ltd. furnishes the following information regarding an item of raw material for the
month of December, 2011:
Opening Stock: 50,000 units @3.00 per unit.
Purchases:
December 1 1,00,000 units @ 2.50
December 30 50,000 units @₹3.00
Issue:
December 20 1,40,000 units
ABC Ltd. uses LIFO method of stock valuation for the said period.
Compute:
(a) Value of Inventory on 31st December, 2011.
(b) Amount of cost of goods sold for December, 2011.

8. The following transactions in respect of material A occurred during the month of

December, 2014:
Date Purchase (units) Price per unit (₹) Issue (units)
2014
December 2 200 25 —
December 10 300 24 —
December 12 — — 250
December 20 400 26 —
December 22 — — 300
December 26 500 23 —
December 31 — — 550
The chief accountant argues that the value of closing stock on 31.12.2014 remains the same
in case of FIFO or LIFO method of pricing of material issues is used. Do you agree? Give your
opinion by showing value of closing stock of material on 31.12.2014 under FIFO and LIFO
methods.
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9. Sunita Ltd. furnishes the following stock records for the month of December, 2015:

December 1 Stock of material 400 units @ 5 per unit

December 5 Purchased 600 units @ 3 per unit
December 10 Issued 500 units
December 20 Purchased 700 units @ 4 per unit
December 31 Issued 400 units
You are required to calculate:

the value of Closing Stock on 31.12.2015; (ii) the value of materials consumed during
the month of December, 2015. The accountant of Sunita Ltd. follow LIFO method of
pricing issues. [C.U.B.Com. (Hons.) 2016]
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CCF [NEW SYLLABUS] LABOUR COST CCF [NEW SYLLABUS]
1. In a factory, wages are paid on a weekly basis (40 hours per week) at a guaranteed hourly
rate of 10. A study has revealed that standard output per hour is 40 units. During a
particular, week, A produced 1400 units and B produced 1800 units. Calculate the
earnings and labour cost per 100 units in case of each of the two worked under:
(i) Straight Piece Rate: and
(ii) Piece Work with a Guaranteed Weekly Wage.

2. Using the following data, calculate the wages payable to workman under:
(i) Halsey Premium Bonus Plan; and
(ii) Rowan Premium Bonus Plan
Time allowed: 48 hours’
Time taken: 40 hours
Rate per hour ₹1

3. From the following particulars, calculate the earnings of workers Asim and Biman for a
day under:
(i) Halsey Premium Bonus Plan Method; and
(ii) Rowan Premium Bonus Plan Method
a) Standard production: 8 units per hour
b) Normal time rate: Asim—₹10 per hour
Biman—₹12 per hour
c) Working hours of the day: 8 hours
d) Output: Asim—60 units
Biman—80 units
4. From the data as given below, determine the total remuneration and effective hourly
rate of wages of a worker under (i) Halsey Plan (50%) and (ii) Rowan Plan:
Basic rate of wages per hour 10.80
Time allowed for the job. 16 hours
Time actually taken 12 hours

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5. Time allowed for the production of 100 'Bolt' is 2 hours and hourly rate of wages payment
is ₹12. M & N produced 600 and 500 pieces of "Bolt' respectively in a particular day of 8
hours. Calculate their earnings under Halsey Premium Bonus and Rowan Premium Bonus
Method.

6. During first week of April, 2017 the workman Mr. Kalyan manufactured 300 articles. He
received wages for guaranteed 48 hours week at the rate of ₹40 per hour. The estimated
time to produce one article is 10 minutes and under incentive scheme the time allowed
is increased by 20%. Calculate his gross wages according to:
(a) Piece work with a guaranteed weekly wages; piece rate is ₹8;
(b) Rowan premium bonus plan, and
(c) Halsey premium bonus plan 50% to workman.

7. In a factory, wages are paid on a weekly basis (40 hours per week) at a guaranteed hourly
rate of ₹10. A study has revealed that standard output per hour is 40 units. During a
particular week, A produced 1400 units and B produced 1800 units.
Calculate the earnings and labour cost per 100 units in case of each of the two worked under:

(i) Piece-work with a guaranteed weekly wage;

(ii) Halsey Premium Plan; and,
(iii) Rowan Premium Plan,

8. Calculate the total monthly remuneration of three workers P, Q and R who are working
in a factory, based on the following data:
(i) Standard production per month per worker: 2000 units.
(ii) Piece work rate: ₹0.50 per unit.
(iii) Production bonus to be given as follows:

Up to 85% efficiency : Nil

Between 85% and 100% efficiency: Incentive bonus at ₹40 for every 5% increase above 85%.
Above 100% efficiency : Incentive bonus at ₹40 for every 5% increase above 85%
plus 20% additional bonus on the incentive earned.

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(iv) P.Q and R had a production of 1600 units, 2000 units and 2200 units respectively
during January, 2001.

9. A time study was conducted for a worker in a factory. The observations are as under:
Observed time 40 hours week
Output 120 units
Time for which worker could not work 20%
Performance rating 125%
It was also though appropriate to make the following allowances:
Fatigue 10%
Personal needs. 7%
Unavoidable work delay 3%
You are required to determine:
(a) Productive Time;
(b) Normal Time; and
(c) Standard Time if above allowances are applied to standard time.

10. Ascertain the normal and overtime wages payable to a workman on the basis of the
following information:
Days Hours Worked
Monday 10
Tuesday 8
Wednesday 9
Thursday 11
Friday 9
Saturday 5
Normal working hours are 8 hours per day and the normal rate of wages is ₹1.25 per hour.
Overtime is paid at the following rates:
Up to 9 hours in a day at single rate and over 9 hours in a day at double rate.

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11. A worker takes 90 hours to do a job for which the time allowed is 120 hours. His daily wage
rate is ₹10 per hour. Calculate the earnings of a worker under the following methods of
payment of wages:
Time rate; (b) Piece rate; (c) Halse Plan; and (d) Rowan Plan.

12. From the following details, calculate the total earnings of a worker and the effective
hourly rate of labour wages where bonus is paid under:
(i) The Halsey (50%) scheme;
(ii) The Rowan scheme.
Basic rate of wages per hour ₹10
Time allowed for the job 16 hours
Time actually taken 12 hours

13. A worker takes 100 hours to do a job for which the time allowed is 125 hours. His hourly
wage rate is ₹20. Calculate the direct wages of the job under the following methods of
payment of wages: (a) Piece rate: (b) Halse Plan; and (c) Rowan Plan.

14. From the following information calculate monthly remuneration of three workers: Papa,
Munia and Tintu.
Standard production per month 100 units
Actual production during the month:
Papa—85 units, Munia—72 units, Tintu—96 units.
Piece rate wages ₹2 per unit.
Fixed Dearness Allowance ₹100 per month, fixed house rent allowance ₹80 per month,
additional bonus ₹10 for each percentage of actual production exceeding 80% of
standard production.

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15. A factory pays its workers under Rowan Premium Bonus Scheme. Workers also get
dearness allowance of ₹250 per week of 48 hours.
A worker's basic wages is ₹100 per day of 8 hours and his time schedule for a week is
summarized below:
Job No. Time Allowed Time Taken
103 25 hours 20 hours
107 30 hours 20 hours
Idle time (waiting) — 8 hours
48 hours

Calculate the gross wages he has earned for the week and indicate the accounts to which the
wage amounts will be debited.

16. Sunshine Ltd. employs its workers for a single shift of 8 hours for 25 days in a month.
Details of wages payable to the workers are as follows:
(a) Basic wages per unit ₹2 (subject to a guaranteed minimum wage of ₹60 per day)
(b) Dearness allowance ₹40 per day.
(c) Standard output per day per worker—40 units.
(d) Incentive bonus:
— upto 80% efficiency: Nil
— above 80% efficiency: ₹50 for every 1% increase above 80%.

The details of performance of three workers for the month of January '09 are as follows:

Workers No. of days worked Output (units)

A 25 820
B 18 500
C 25 910

Calculate the total earnings of each of three workers.

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17. In a factory A took 30 hours to complete a job. The factory cost of the job is ₹5,200. Raw
materials cost of the job is ₹4,000. Hourly rate of wages is ₹20. Works overhead is
recovered on the job at ₹15 per hours worked. A is entitled to receive bonus according to
Rowan Plan. Calculate standard time for completion of the job.

18. From the particulars given below, calculate earnings of the workers, Satyen and Goutam,
under differential piece-rate system:
Standard time allowed 40 units per hour
Time rate wage ₹4.00 per hour
Differential piece rates to be applied:
75% of piece rate when below standard.
125% of piece rate when at and above standard.
The workers have produced in a day of 8 hours as follows:
Satyen 400 units
Goutam 240 units

19. Pradeep Kar working under a bonus scheme saves 12 hours in a job for which the standard
time is 60 hours. Calculate the rate per hour worked and wages payable to Pradip Kar if
incentive bonus of 10% on the hourly rate is payable when standard time (namely 100%
efficiency) is achieved, and a further incentive bonus of 1% for each additional percentage
in excess of that 100% efficiency is payable. Normal rate of wage is ₹5.00 per hour

20. In a factory, Sudhir took 26 hours to complete a job. The standard time for this work was
40 hours. He was paid at ₹10 per hour. He worked under Halsey Scheme.

Find out:

(a) Effective hourly rate of wages of Sudhir.

(b) Employer's savings from the work.

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21. From the following particulars, calculate the Gross Earnings and Net Earnings for the
month of March 2013 of Sri Netai Ghosh:
(a) Basic wages ₹10,000,
(b) Dearness Allowance-50%
(c) Own contribution to Provident Fund (on basic wage)-8%
(d) Own contribution to ESI (on basic wage)-2%
(e) Overtime 10 hours
The normal working hours for the month of March 2013 is 200 hours. Overtime is paid
at double rate of normal wages and dearness allowance.

22. In an assembly shop of a motorcycle factory, 4 workmen P, Q, R and S work together as

a team. They are paid on group piece rate and they also work individually on day rate
jobs. In a 46 hours week, the following hours have been spent by P, Q, R and S on group
piece work, viz., P—40 hours, Q—40 hours, R—30 hours and S—20 hours. The balance of
time has been booked by each worker on day rate jobs. Their hourly rates are: P ₹5.00;
Q ₹7.50; R ₹10.00; S ₹10.00
The group piece rate is ₹10.00 per unit and the team has produced 180 units.
Calculate gross weekly earnings of each workman taking into consideration that each
worker is entitled to dearness allowance of 25% of time wages.

23. In a factory, standard time for a job is 84 hours. The hourly rate of wage is ₹50. Halsey-
premium plan is in operation at the factory. Jayanta, a worker, completed the job at less
than standard time and his effective hourly rate of wage was ₹60.
What will be his total earnings if he worked under Rowan-premium plan?

24. In a factory, a job can be executed either by workman X or Y. X takes 32 hours to

complete the job while Y finishes it in 30 hours. The standard time to finish the job is 40
hours. The raw material input cost and normal rate of wages are same for both the
workers. X is entitled to receive bonus according to Halsey Plan. Y is paid bonus under
Rowan Plan. Works overhead is recovered in the job @ ₹15 per labour hour worked. The
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factory cost of the job comes to ₹10,400 irrespective of the workman engaged. Find the
normal rate of wages per hour.

25. Calculate total monthly remuneration of workers, A, B and C on the basis of the
following information for the month of March, 2017:
(a) Standard production for each worker—2000 units.
(b) Rate of wages—₹5 per unit.
(c) Bonus ₹100 for each 2% increase over 90% of the standard.
(d) Dearness allowance 50% of piece wage.
The units completed by the three workers were as under:
A—1900 units; B—1760 units and C—2120 units.

26. In an assembly shop four workmen (A, B, C, D) work together as a team and are paid on
group piece rate. They also work individually on hourly rate jobs. In a 44-hour week, the
following hours have been spent by them on group piece work.
A: 40 hours; B: 40 hours; C: 30 hours and D: 20 hours. The balance of the time in the
week has been booked by each worker on day work jobs. The hourly rates are as follows:
A—₹3,00; B—₹4.50; C—₹6.00; D—₹6.00
The group piece rate is ₹6.00 per unit and the team has produced 150 units. Calculate
the gross weekly earning of each workman taking into consideration that each individual
is entitled to dearness allowance of ₹50 per week.

27.From the following data, calculate the labour-turnover rate by applying:

(a) Separation method (b) Replacement method (c) Flux method.
Number of workers on the payroll:
at the beginning of the year—1,800
at the end of the year—2.000.
During the year 20 workers left, 80 workers were discharged and 300 workers were
recruited. Of these, 50 workers were recruited in the vacancies of those left, while the
rest were engaged for an expansion scheme.
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28. Labour Turnover
From the following data, calculate the Labour-Turn Over Rate by applying:
(a) Separation Method, (b) Re- placement Method, (c) Flux Method:
(i) Number of Workers at the beginning of the year - 900;
(ii) Number of Workers at the end of the year 1,100.
During the year 10 workers left and 40 workers were discharged and 150 workers were
recruited. Of these, 25 workers were recruited in the vacancies of those left while the
rest were engaged for the expansion.

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1. Simple cost — direct labour cost unknown.
From the following data, prepare a cost sheet:

Opening Stock of Direct Materials ₹30,000

Closing Stock of Direct Materials ₹20,000
Purchase of Direct Materials ₹1,90,000
Sales ₹6,50,000
Prime Cost ₹4,10,000
Factory Expenses ₹1,20,000
Administration Expenses ₹90,000
10% of the output remained unsold. There were no direct expenses. (2004)

2. From the following particulars, prepare a Statement of Cost for the year ended 31.3.2023:
₹ ₹
Stock of Materials on 1.4.2022 50,000 Carriage on Goods Sold 3,000
Purchase of Materials during the year Rent, Rates and Taxes on the works 5,000
2022-23 1,40,000 Depreciation on Machinery 2,800
Materials Returned to Suppliers Stock of 4,000 Carriage on Materials Purchased 1,000
Materials as on 31.3.2023 37,600 Office Stationery and Other Expenses 3,000
Wages Paid to Productive Workers 36,000 Abnormal Loss of Materials 2,400
Wages Paid to Non-Productive Workmen 4,000
Salaries Paid to Office Staff 10,000 Chargeable Expenses 1,600
Maintenance and Repair to Plant and Advertising and Sales Promotion 2,400
Machinery 1,200
[2015]
3. Finding out materials purchased [2000 & 2007]

From the following information, compute the raw materials purchased:

Opening Stock of Raw Materials 20,000
Closing Stock of Raw Materials 30,000
Direct Wages 2,10,000
Factory Overhead 60% of Direct wages.
General Overhead 10% of Works cost
Cost of Production 6,88,600
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4. From the following information, prepare a Statement of Cost for the year 2023, showing
therein (a) Prime Cost; (b) Works Cost; (c) Cost of Production; (d) Profit or Loss:
₹
Raw Materials Consumed 80,000
Direct Wages 50,000
Direct Expenses 15,000
Indirect Wages 20,000
Depreciation on Machinery 16,000
Office Overhead 20% on work cost
Selling Overhead 2.50 per unit
Units Produced 20,000
Units Sold 16,000 @20 each
[2011]

5. From the following particulars, relating to production and sales for the year ended
31.3.2023, prepare a Statement of Cost Showing therein the cost per unit at each
stage:

As on 1.4.2022 As on 31.3.2023
(₹) (₹)
Raw Materials 28,000 32,000
Work-in-Progress 19,700 26.300
Finished Goods at Cost 40,020 (4,000 units) 35,760 (4,800 units)

(₹)
Raw Materials Purchased 1,18,000
Direct Wages 42,000
Administrative Overhead 29,100
Selling and Distribution expenses @1 per unit amounted to 29,200. Factory Overhead-1.50
per unit; Sales-11 per unit. [2008]

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6. Particulars for the month of September, 2023 extracted from the records of a factory
and given below
(₹)
Opening Stock of Finished Goods (5,000 units) 45,000
Purchase of Raw Materials 2,50,000
Carriage Inward 7,100
Direct Wages 1,00,000
Factory Overhead 150% of Direct Wages
Administrative Overhead 2.50 per unit
Selling Overhead 10% of Sales
Sales (45,000 units) 6,60,000
Closing Finished Stock (10,000 units) ?
From the above particulars, prepare a Cost Sheet for the month of September, 2023
assuming sales are made under FIFO method. [2016]

7. From the following information, prepare a statement of cost for the year 2022 showing
therein (a) Prime Cost; (b) Works Cost; (c) Cost of Production; (d) Profit & Loss:

Raw Materials Consumed 6,00,000

Direct Wages 4,00,000
Direct Expenses 80,000
Indirect Wages 1,00,000
Depreciation on Machinery 1,20,000
Office Overhead 20% of Work Cost
Selling Overhead ₹20 per unit Sold
Units Produced 15,000 units
Units Sold 12,000 untis@150 per unit
[2023]

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8. Preparation of Cost Sheet (Multi-Products).
Your company manufactures two Products A and B. During a month 300 units of Product A
and 400 units of Product B have been manufactured. The total expenses incurred in the said
month had been as follows:
Materials 2,97,000
Direct Wages 18,000
Stores Overhead 29,700
Machinery Maintenance 8,700
Depreciation 4,350
Workmen's Amenities 2,250
General Works Expenses (to be charged as a % on direct wages) 15,000
Administration and Selling Expenses (to be charged as % of works cost) 18,750
Other data available are:
A:B
Material Cost ratio per unit 1:2
Direct Labour ratio 2:3
Machine utilization ratio 3:5

Calculate cost per unit of each product [C.U. B.Com. (Gen.)]

9. Consideration of cost behaviours.

Mohit Ltd. finished the following information in relation to the production of 2,000 units of
product 'N' for the year 2023:
Direct Materials 2,00,000
Direct Labour 1,50,000
Indirect Wages (50% fixed) 40,000
Consumable Stores (70% variable) 30,000
Office Rent (100% fixed) 60,000
Selling Expenses (40% variable) 80,000
In the year 2024, it is estimated that the production will increase by 50%. The price of
material and labour will go up by 10% and 20% respectively.
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You are required to compute selling price per unit of product 'N' for the year 2024 if the
company wishes to maintain profit @ 10% on cost. [2001]

10. Units given — per unit cost and per unit profit to be found out — application of FIFO basis.
From the following particulars for the year ended 31, December, 2023, prepare a
statement of cost showing, inter alia, the prime cost, factory cost, cost of production,
cost of goods sold as well as per unit cost of sales and profit:

As on 1.1.2023 As on 31.12.2023
₹ ₹
Raw Materials 16,000 19,600
Work-in-Progress 12,600 4,600
Finished Goods (at cost) 16,400 [3,000 units] [2,500 units]
Other information for the year
₹
Purchase of Raw Materials 1,11,600
Sale of Finished Goods (40,500 units) 2,83,500
Productive Wages 67,200
Office and Administration Overheads 20,800
Selling and Distribution Overheads 50 paise per unit sold
Machine hour rate 2.50
Machine hours worked 8,000 hours
Assume that sales are made on 'first in, first out' principle.
[C.U. B.Com. (Hons.) — dates changed)

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11. Application of weighted average method for stock valuation.

From the following particulars regarding the single output of Anirban & Co. for the quarter
ended 31s December 2023, prepare @ a statement of Cost of Production and (b) a
Statement of Profit or Loss, assuming weighted of finished goods Average Method is followed
by the company for valuation of closing stock:

1.10.2023 31.12.2023
₹ ₹
Stock: 40,000 50,000
Raw Materials 50,000 70,000
Work-in-Progress 72,000 5,000
Finished Goods [4,000 units] units
₹
Purchase of Raw Materials 1,60,000
Direct Labour 1,10,000
Chargeable Expenses 40,000
Machine Hour Rate 16 per hour
Machine Hours Worked 5,000 hours
Office & Administration Overhead @4.80 per unit
Selling & Distribution Overhead @3.00 per unit
Sale of 24,000 units @26 per unit
What would be the difference in stock value if the company follows FIFO method for valuation
of closing stock of finished goods? [2002]

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12. Computation of Purchase of Raw Materials and Valuation of Closing Finished Goods.
ARB Ltd. furnished the following information for the year 2023-24.
₹
Stock of Raw Materials on 1.4.2023 1,00,000
Stock of Finished Goods on 1.4.2023 (500 tons) 8,00,000
Freight Paid 2,00,000
Prime Cost 44,50,000
Stock of Raw Materials on 31.3.2024 3,00,000
Stock of Finished Goods on 31.3.2024 (750 tons) ?
Direct Labour:
60 Skilled Labourers @50 per day for 250 days
200 Unskilled Labourers @30 per day for 250 days
Indirect Wages 40,000
Factory Rent, Rates and Power 30,000
Salary of Managing Director 50,000
Office Rent and Taxes 1,00,000
Donation 30,000
Advertisement 4,50,000
Income Tax 60,000
Depreciation on Plant and Machinery 35,000
Selling Overhead 5,00,000
Packing and Distribution Expenses 85,990
Fuel 65,000
Other Information:

(a) During the year 2023-24 2,250 tons of finished goods were sold.
(b) The company valued the closing stock of finished goods under FIFO basis.
(c) The company maintains profit @ 20% on sales.

On the basis of above-mentioned data, you are required to prepare a detailed cost sheet for
the year 2023-24. [2007]

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13. A firm manufactures its product at ₹100 per unit. Total cost is composed of as follows:
Direct Materials 40%
Direct Wages 30%
Overhead 30%
An increased in material price by 15% and wage rate by 10% is expected in the next year.
As a result, the profit at current selling price will decrease by 45% of the present profit.
What is the current selling price per unit? [2006]

14. Finding out total cost and cost per unit, valuation of unsold stock of finished goods
under LIFO and simple average method. The following figures for the month of April,
2010, were extracted from the records of a factory:
Opening Closing
1.4.2023 (₹) 30.4.2023 (₹)
Stock of Raw Materials 20,000 25,000
Semi-Finished Goods 25,000 35,000
Unsold Goods 36,000 ?
(4,000 units) (5,000 units)
Purchase of Materials ₹80,000
Machine Hour Rate ₹16 per unit
Machine Hours Worked 2,500 hours
Productive Labour ₹55,000
Chargeable Expenses ₹20,000
General Office Overhead ₹2.40 per unit
Selling & Distribution Overhead ₹1.50 per unit
Sale of 24,000 units ₹15 per unit
(i) Prepare cost sheet for the month of April, 2023 assuming that sales are made on the
basis of last in first out principle.
(ii) What would be the difference in profit and value of closing stock of unsold goods if
such stock is valued at Simple Average Method'?
[2009]

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15. Estimation of overheads as well as chargeable expenses. The following data relate
to the manufacture of a standard product during the four weeks of July, 2023:
Raw Materials Consumed ₹25,000
Manual and Machine Labour Wages (Directly Chargeable) ₹15,000
Chargeable Expenses ₹4,500
Machine Hours Worked 1,000 hrs.
Machine Hours Rate ₹2.50
Establishment and General Expenses ₹4,700
Selling and Distribution Overhead per unit 8 paise
Units Produced 10,000 units
Units Sold 8,000 units
Selling Price per unit ₹6
(i) You are required to prepare a cost sheet in respect of the above showing therein the
cost per unit under each element of cost and the profit for the period. Also show the
percentage that the works overhead cost bears to the Manual, Machine Labour Wages and
the percentage that the Establishment and General Expenses bears to the Works Cost.
(ii) What price should the company quote to produce 1,000 units of another product which
will require an expenditure of ₹8,000 for raw materials and ₹6,000 for direct wages, so
that it will yield a profit of 25% on the cost of sales? [1997]

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 COST ACCOUNTING—I
BCOM SEMESTER 2 BCOM SEMESTER 2
CCF [NEW SYLLABUS]
COST SHEET CCF [NEW SYLLABUS]
16. From the following Profit and Loss Account presented by Sun & Co. for the year ended
31st March, 2023 prepare the estimated Cost Sheet for the year ended 31st March, 2024
bearing in mind that the rate of profit will be @ 25% on costs.
Profit & Loss Account for the year ended on 31.03.2023
₹ ₹
To Purchase of Raw Materials 4,30,000 By Sales (4,000 units) 9,86,800
To Direct Wages 2,75,000 By Closing Stock of Raw Material 24,200
To Direct Expenses 72,600
To Other Chargeable Expenses 93,500
To Gross profit c/d 1,39,900
10,11,000 10,11,000
To Office Rent 34,600 By Gross Profit b/d 1,39,900
To Office Salary 72,000 By Discount received 21,000
To Selling Expenses. 17,290 By Dividend received 42,000
To Preliminary Expenses written off 4,720
To Depreciation Office Premises 10,000
To Net Profit 64,290
2,02,900 2,02,900
It is estimated for the year ended 31st March 2024 that:

(i) Production and sales will increase by 15%.

(ii) Price of raw materials will go up by 20%.
(iii) Direct wages will go up by 20%.
(iv) Direct expenses will increase to ₹86,400,
(v) Other chargeable expenses will increase by 15% per united
(vi) Depreciation on office premises will be ₹8,000.
[2005]

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 COST ACCOUNTING—I
BCOM SEMESTER 2 BCOM SEMESTER 2
CCF [NEW SYLLABUS]
COST SHEET CCF [NEW SYLLABUS]
17. Quotation price of 'JOB NO 356' was 25,000 in the year 2023. A profit of 25% on cost
was included in the above quotation. From the following information ascertain the
quotation price of similar type of job for the year 2024:
(i) The ratio of cost of material, wages and overhead in the total cost of the above job is
2 : 2 : 1.
(ii) 25% increase in material cost; 20% increase in labour cost and 25% decrease in
overhead cost are expected in the year 2024.
(iii) Same percentage of profit as charged in 2023 on the quotation price is to be
maintained. [2010]

18. Delta Engineering Ltd. produces a uniform type of product and has a manufacturing
capacity of 3,000 units per week of 48 hours. From the cost records of the company, the
following data are available relating to output and cost for three consecutive weeks:
Weeks Units manufactured Direct Materials Cost Direct Labour Cost Overhead
and sold (₹) (₹) (₹)
1 1,200 units 9,000 3,600 31,000
2 1.600 units 12,000 4,800 33,000
3 1,800 units 13,500 5,400 34.000
Assuming that the company charges a profit of 20% on sales, find out the Selling Price per
unit when the weekly production and sales is 2,000 units. [(Hons.) Part-II, 2009]

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 COST ACCOUNTING—I
BCOM SEMESTER 2 BCOM SEMESTER 2
CCF [NEW SYLLABUS]
COST SHEET CCF [NEW SYLLABUS]
19. A firm produces and sells a single output. From the following particulars, prepare a
statement for the year ended 31.3.2024 showing therein (1) Prime Cost; (2) Works Cost;
(3) Cost of Production; (4) Cost of Sales and (5) Profit per unit:
₹
Raw Materials as on 1.4.2023 25,000
Purchase of Raw Materials 2,20,000
Work-in-Progress as on 1.4.2023:
At Prime Cost ₹30,000
Add: At Manufacturing Expenses ₹6,000 36,000
Finished Goods at Cost as 1.4.2023 (16,000 units) 1,20,000
Freight on Raw Materials purchased 10,000
Loss of Materials by Fire 10,000
Factory Expenses 1,37,500
Chargeable Expenses 50,000
Direct Wages 2,70,000
Administrative Expenses ₹2 per unit
Selling Expenses ₹1 per unit
Distribution Expenses 15,000
Sale of Goods (56,000 units) 8,00,000
Raw Materials as on 31.3.2024 40,000
Work-in-Progress as on 31.3.2024
At Prime Cost ₹20,000
Add: At Manufacturing Expenses ₹16,000 36,000
Stock of Finished Goods as on 31.3.2024 (10,000 units) ?
Apply the principle of Simple Average in the valuation of finished goods. [2011]

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 COST ACCOUNTING—I
BCOM SEMESTER 2 BCOM SEMESTER 2
CCF [NEW SYLLABUS]
COST SHEET CCF [NEW SYLLABUS]
20. Bright Ltd. produces televisions. Following figures are extracted from the records of
the company for the year ended 31st December 2012.
Raw Materials ₹7,00,000
Wages ₹5,40,000
Factory Overhead ₹1,62,000
Administration Overhead. ₹1,12,160
In the next year, it is estimated that raw materials and wages will be required to produce a
T.V. set as ₹2,000 and ₹2,400 respectively. Factory Overheads absorb on the basis of wages
and administrative overheads on the basis of works cost. A profit of 25% on the selling price
is required. Determine the Quoted Price of the tele- vision for the year 2013 of Bright Ltd.
[C.U. B.Com. (Hons.) Part-II, 2013]
21. Study of Cost Behaviour.

A manufacturing company provides you with a summary of the production costs at three
production levels:

Cost Items 1,000 Units 2,000 units 3,000 units

₹ ₹ ₹
A 2,000 4,000 6,000
B 5,000 5,000 5.000
C 1,500 5,000 2,500
Total (₹) 8,500 11,000 13,500
(i) Indicate the Cost Behaviour of the cost items.
(ii) What would be the Total Cost if the company produces 4,000 units? [2013]

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 COST ACCOUNTING—I
BCOM SEMESTER 2 BCOM SEMESTER 2
CCF [NEW SYLLABUS]
COST SHEET CCF [NEW SYLLABUS]
22. Preparation of Cost Sheet—Multi-Products.
In a factory, mobile sets are produced, namely 'A' and 'B'. Labour Cost of A is two times that
of B. In 2014, 1,500 of A and 3,600 of B were produced; but 60% of Product A and 80% of
Product B were sold during the year, there being no opening finished stock or work-in-
progress. From the following particulars, ascertain the cost of sales of each type mobile
sets:

A B Total
₹ ₹ ₹
Materials 42,000 63,000 1,05,000
Labour — — 1,17,000
Works overhead is 50% of labour cost and office overhead is 20% of works cost. Selling and
distribution overhead is ₹40 and ₹30 per unit of Product A and B respectively.

[(Hons.) Part-II. 2015]

23. Dasgupta Ltd. produces and sells a single product. From the following particulars,
prepare a statement showing Prime Cost, Factory Cost, Cost of Production, Cost of
Sales and Profit or Loss assuming LIFO method is followed for valuation of closing stock
of finished goods. [2016]

1.4.2015 31.3.2016
₹ ₹
Stock of Raw Materials 1,00,000 1,25,000
Stock of Work in Progress 1.25,000 1,75,000
Stock of Finished Goods 1,80,000 ?
(4,000 units) (5,000 units)
Purchase of Raw Materials ₹4,00,000
Direct Wages ₹2,75,000
Chargeable Expenses ₹1,00,000
Machine Hours Worked 5,000 hours
Machine Hour Rate ₹40 per hour
Office and Administrative Overhead ₹7.00 per unit
Selling & Distribution Overhead ₹10.00 per unit
Sale (24,000 units) ₹70.00 per unit

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 COST ACCOUNTING—I
BCOM SEMESTER 2 BCOM SEMESTER 2
CCF [NEW SYLLABUS]
COST SHEET CCF [NEW SYLLABUS]
24. Prospects Ltd. is currently operating at 80% of its production capacity, producing and
selling 4,000 units of a product. The following information is available from the cost
book.
₹
Raw Materials consumed in production 6,40,000
Wages for the period 4,80,000
Chargeable Expenses 80,000
Production Overhead (recovered on direct labour cost) 2,40,000
Office Overhead (Fixed) 2,00,000
Selling Overhead (100% variable) 1,60,000
Distribution Overhead [1/3 fixed] 1,20,000
Selling Price per unit 600
Following changes are anticipated in the coming year 2017-18:

(a) The full production capacity is expected to achieve in the coming year.
(b) Rate of material will be reduced by 25%. However, there will be an increase in
consumption of material by 40% due to inferior quality of materials.
(c) Labour rate will go up by 25% and efficiency of labour will increase by 20%.
(d) Chargeable expenses would be doubled in total.
(e) Production overhead will decrease by 20%.
(f) Profit per unit remain unchanged.
𝟐
(g) Trade discount 16 %.
𝟑

You are required to calculate the catalogue price of the product for the year 2017-18.
[C.U. B.Com. (Hons.), 2017]

25. A company estimated its cost as below: [2018]

Material ₹14,000
Wages ₹10,000
Factory Overhead 60% of wages
Administrative & Selling Overhead (excluding commission) 20% of works cost
If sales commission is 5% on sales and rate of profit is 25% on cost, find the selling price.

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 COST ACCOUNTING—I
BCOM SEMESTER 2 BCOM SEMESTER 2
CCF [NEW SYLLABUS]
COST SHEET CCF [NEW SYLLABUS]
26. P Ltd. a manufacture of fans, manufactured and sold 2,000 fans during the year ended
31.3.2023. Following is the Profit and Loss Account of the company during the year.
Dr. Profit and Loss Account for the year ended 31.3.2023 Cr
Particulars Amount Particulars Amount
₹ ₹
To Opening Stock of Raw Materials 20,000 By Sales 6,00,000
To Purchases of Raw Materials 1,30,000 By Closing Stock of Raw Materials 30,000
To Wages 1,80,000
To Manufacturing Expenses 75,000
To Gross Profit c/d 2,25,000
6,30,000 6,30,000
To Rent, Rates and Taxes 20,000 By Gross Profit b/d 2,25,000
To Administration Expenses 1,00,000 By Dividend Received 3,000
To Selling and Distribution Expenses 45,000
To Preliminary Expenses written off 8,000
To Donation 5,000
To Net Profit c/d 50,000
2,28,000 2,28,000
The estimates made by the company for the year ending 31.3.2024 are as under:

(a) The production and sales of fans will increase by 50%.

(b) The price of material per fan would increase by 20%.
(c) The labour cost per fan would go up by 10%.
(d) Of the manufacturing expenses ₹15,000 are fixed and the balance are variable. The
variable portion will be in the same proportion of material consumed and wages as
in the previous year.
(e) Selling and distribution expenses per fan would remain unchanged.
(f) Selling price per fan will decrease by 10%.

You are required to prepare two separate cost sheets for the year 2022-23 and 2023-24
showing cost, profit and selling price per fan and the total cost, total profit and total sales.
[C.U. B.Com. (Hons.), 2000-Adapted]

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