Question

A cost sheet/ statement is to be created

5. The following is the summarized Trading and Profil and Loss A/C of K M. Lid. for the year ending 31 March 1995 in which 300 waterproots were sold by the said company. Trading and PRLAC To Cost of Materials 32 000 By Salos 1,60,000 To Direct Wagus 48 000 Tog Charges 20.000 To Gross Prolit 60.000 160.000 1.60 000 To Office Salaries 24 000 By GP. 60.000 To Rent & Taxes 4000 To Selling Expenses 8 000 To General Expenses 12 000 To Net Profit 12 000 60.000 60.000 Following estimates were made by the company for the year ended 31- March 1996- () The output and sales will be of 1000 water proofs. (h) The price of materials will ise by 25% over previous year's level ic) Wages during the year will nse by 12% (d) Manufacturing cost will rise in proportion to the combined cost of material and wages el Selling cost per unit will remain unchanged (1) Other expenses will remain unaffected by the nse in output From the above information prepare a cost statement showing the price at which the waterproots would be marketed so as to show a profit of 10% on the selling pnce. Steiny

Answer 1

K M LTD.

Cost Stetement for the year ended 31st March,1996

Descriptions $ $

Cost of materials consumed($32000×125%) 40000

Direct Wages ($48000×112.5%)   54000

Prime Cost 94000

Manufacturing Overhed($93760×25%) (Note1)   23500

Factory Cost/Works Cost 117500

Office and Administrative Overhead:

Office Salaries 24000

Rent & Taxes 4000

General Expenses 12000 40000

Cost of Production 157500 Selling Expenses (1000 water proofs×$10)(Note 2)   10000 Cost of Sales/Total Cost 167500

Profits (1/9th of cost or 10% of selling price)   18611 Total Sales 186111   

Notes:-

1.Manufacturing overhead proportion is claculated as follows :

Direct material(Given) $32000

Direct Labour (Given) $48000

​p​​​​​​​​​​​​rime cost $80000

Manufacturing Overhead $20000

=Manufacturing Overhed/Prime Cost

=$20000/$80000

=0.25

2.Calculation of Selling cost per Unit:-

Total selling expenses $8000

Units Produced are 800 waterproofs

Therefore,Selling cost per unit=Selling expenses/No of waterproofs

=$8000/800

=$10 per waterproofs.