St.

Joseph’s College of Commerce, Bangalore (Autonomous)

PROBLEMS ON MODULE 2
COST SHEET

1) Identify whether the following costs are materials, labour or expenses and whether they are direct
or indirect for the production of toy cars.

Cost Materials, labour or Direct or indirect?

expense
The hire of specific tools or
equipment
Rent of the factory
Supervisors’ salaries
Oil for lubricating machines
Wages of factory workers
involved in production
Depreciation of equipment

2) Which of the following would be classed as indirect labour?

A) Assembly workers
B) A stores assistant in a factory storeroom
C) Plasterers in a building company
D) An audit clerk in an accountancy firm
3) Direct costs are:
A) costs which can be identified with a cost centre but not a single cost unit
B) costs which can be identified with a single cost unit or cost centre
C) costs which can be attributed to an accounting period
D) none of the above
4) Complete the following table by classifying each expense correctly.

Classifications: 1 = Production 2 = Selling 3 = Distribution 4 = Administrative 5 = Finance

Cost Classification
Overalls for machine workers
Cost of printer cartridges in general office
Salary of factory supervisor
Salary of payroll supervisor
Rent of warehouse for storing goods ready for sale
Loan interest
Salary of factory security guard
Salary of the Chairman’s PA
Road tax licence for delivery vehicles
Bank overdraft fee
Salesmen's commissions

5) ILCB has the following information relating to one of its products:

• Direct material cost per unit $1

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 St. Joseph’s College of Commerce, Bangalore (Autonomous)

• Direct labour cost per unit $3

• Variable production cost per unit $3
• Fixed production overhead $30,000 per month
• Budgeted production 15,000 units per month
Required: Calculate the cost per unit and the total cost of the budgeted monthly production?
6) Classify the following items of expenditure according to their behaviour i.e., as fixed, variable, semi-
variable or stepped fixed costs.
1) Monthly rent
2) Council tax charge
3) Production line workers’ wages
4) Electricity bill
5) Telephone bill
6) Annual salary
7) Depreciation of 1, 2 or 3 machines
8) Raw materials
7) A company has a mix of variable, semi variable, fixed and stepped fixed costs. Total cost at different
activity levels
Cost 1,000 units 3,000 units 5,000 units 7,000 units

1 $19,000 $33,000 $47,000 $61,000

2 $1,920 $5,760 $9,600 $13,440
3 $7,000 $7,000 $7,000 $7,000
4 $12,500 $12,500 $17,000 $17,000
Cost per unit at different activity levels:
Cost 1,000 units 3,000 units 5,000 units 7,000 units

1 $19.00 $11.00 $9.40 $8.71

2 $1.92 $1.92 $1.92 $1.92
3 $7.00 $2.33 $1.40 $1.00
4 $12.50 $4.17 $3.40 $2.43
Identify the behaviour for each of the costs
8)
Output (in units) Total Cost ($)
200 7,000
300 8,000
400 9,000
Required:
(a) Calculate the variable cost per unit.
(b) Calculate the total fixed cost.
(c) Estimate the total cost if output is 350 units.
(d) Estimate the total cost if output is 600 units.

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 St. Joseph’s College of Commerce, Bangalore (Autonomous)

9) The total costs incurred at various output levels in a factory have been measured as follows:
Output in units Total Cost ($)
26 6,566
30 6,510
33 6,800
44 6,985
48 7,380
50 7,310
Required: Using the high/low method, analyse the total cost into fixed and variable components.
10) An organisation has the following total costs at three activity levels
Activity Level in units 4000 6000 7500
Total Cost ($) 40,800 50,000 54,800
Variable cost per unit is constant within this activity range and there is a step up of 10% in the total
fixed costs when the activity level exceeds 5,500 units.
What is the total cost at an activity level of 5,000 units?
11) The following information relates to the manufacture of Product LL:
Output in units Total Cost ($)
200 7,000
300 8,000
400 8,600
For output volumes above 350 units the variable cost per unit falls by 10%. (Note: this fall applies to
all units – not just the excess above 350).
Required: Estimate the cost of producing 450 units of Product LL.
12) The total costs incurred in 20X3 at various output levels in a factory have been measured as
follows:
Output in units Total Cost ($)
26 6,566
30 6,510
33 6,800
44 6,985
48 7,380
50 7,310
When output is 80 units or more, another factory unit must be rented and fixed costs therefore
increase by 100%.
Variable cost per unit is forecast to rise by 10% in 20X4.
Required: Calculate the estimated total costs of producing 100 units in 20X4.

13) An organisation has the following total costs at three activity levels:
Activity level (units) 8,000 12,000 15,000
Total cost $204,000 $250,000 $274,000
Variable cost per unit is constant within this activity range and there is a step up of 10% in the total
fixed costs when the activity level exceeds 11,000 units. What is the total cost at an activity level of
10,000 units?

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14) A firm has to pay a $0.50 per unit royalty to the inventor of a device which it manufactures and sells.
How would the royalty charge be classified in the firm’s accounts?
15) Pliant plc produces cars and motorbikes. The company is split into four different divisions:
Car sales division – this department’s manager has been given responsibility for selling the cars, as
well as keeping control of the division’s costs.
Motorbike sales division – this department’s manager has been given responsibility for selling the
motorbikes as well as controlling divisional costs. In addition, they have been told to plan what
assets they should purchase for the coming year.
Manufacturing division – this division makes the cars and bikes and passes them to the finishing
division. The divisional manager is only responsible for controlling the division’s costs.
Finishing division – this division tests the cars and cleans them ready to be sold. They transfer the
goods to the sales divisions and charge the sales divisions a set price, which is set by the finishing
division’s manager. The manager is also responsible for managing the division’s costs as well as the
investment in divisional assets.
Are these centres being operated as a cost, profit or investment centre?
Division Cost Centre Profit Centre Investment Centre
Car sales
Motorbike sales
Manufacturing
Finishing
16) Which of the following can be included when valuing inventory? (i) Direct material (ii) Direct labour
(iii) Administration costs (iv) Production overheads
17) Which of the following is usually classed as a step cost?
A) Supervisor’s wages B) Raw materials C) Rates D) Telephone
18) Which of the following is NOT a cost object?
A) cost centre B) A customer C) A manager D) A product
19) Which of the following describes depreciation of fixtures?
A) Not a cash cost so is ignored in the cost accounts B) Part of overheads C) Part of prime cost
D) Is a cash outflow
20) Which of the following costs would NOT be classified as a production overhead cost in a food
processing company?
A) The cost of renting the factory building B) The salary of the factory manager
C) The depreciation of equipment located in the materials store D) The cost of ingredients
21) Which TWO of the following are included in the prime cost of a product?
A) Direct material B) Direct labour C) Administration costs D) Production overheads
22) There is to be an increase next year in the rent from $12,000 to $14,000 for a warehouse used to
store finished goods ready for sale. What will be the impact of this increase on the value of inventory
manufactured and held in the warehouse?
23) Gilbert plc is a furniture manufacturer. How would it classify the following costs?
Cost Fixed Variable Semi‐variable
Director’s salary
Wood
Rent of factory
Phone bill – includes a
line rental
Factory workers wage

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24) How would a clothes retailer classify the following costs?

Cost Materials Labour Expenses
Designer skirts
Heating costs
Depreciation of fixtures
and fittings
Cashier staff salaries
25) Which of the following would be classified as direct labour?
A) Personnel manager in a company servicing cars B) Bricklayer in a construction company
C) General manager in a shop D) Maintenance manager in a company producing cameras
26) Which of the following describes cost centres?
A) units of product or service for which costs are ascertained B) amounts of expenditure attributable to
various activities C) functions or locations for which costs are ascertained D) a section of an
organisation for which budgets are prepared and control exercised.
27) The following data relate to two output levels of a department:
Machine hours 17,000 18,500
Overheads $246,500 $251,750
What is the amount of fixed overheads?
28) A kitchen fitting company receives an invoice for sub‐contractors who were used to connect the gas
supply to a cooker installed in a new kitchen. How would this invoice be classified?
A) Direct expenses B) Indirect expenses C) Direct labour D) Indirect labour
29) A manufacturing company has four types of cost (identified as T1, T2, T3 and T4). The total cost for
each type at two different production levels is:
Cost type Total cost for 125 units Total cost for 180 units
$ $
T1 1,000 1,260
T2 1,750 2,520
T3 2,475 2,826
T4 3,225 4,644
Which two cost types would be classified as being semi‐variable?
A) T1 and T3 B) T1 and T4 C) T2 and T3 D) T2 and T4
30) P Harrington is a golf ball manufacturer. Classify the following costs by nature (direct or indirect) in
the table below.
Cost Direct Indirect
Machine operator’s wages
Supervisor’s wages
Rubber for golf balls
Salesmen’s salaries
31) The following data relate to the overhead expenditure of contract cleaners at two activity levels:
Square metres cleaned 12,750 15,100
Overheads $73,950 $83,585
Using the high‐low method, what is the estimate of the overhead cost if 16,200 square metres are to be
cleaned?
32) A company manufactures and sells toys and incurs the following three costs:
(i) Rental of the finished goods warehouse (ii) Depreciation of its own fleet of delivery vehicles (iii)
Commission paid to sales staff.
Which of these are classified as distribution costs?

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 St. Joseph’s College of Commerce, Bangalore (Autonomous)

A) (i) and (ii) only B (ii) and (iii) only C (ii) only D (i) and (iii)
33) A company incurs the following costs at various activity levels:
Total cost ($) Activity level (Units)
250,000 5,000
312,500 7,500
400,000 10,000
Using the high‐low method what is the variable cost per unit?
34) An organisation manufactures a single product. The total cost of making 4,000 units is $20,000 and
the total cost of making 20,000 units is $40,000. Within this range of activity the total fixed costs remain
unchanged. What is the variable cost per unit of the product?
A) $0.80 B) $1.20 C) $1.25 D) $2.00
35) The following production and total cost information relates to a single product organisation for the
last three months:
Month Production (units) Total cost ($)
1 1,200 66,600
2 900 58,200
3 1,400 68,200
The variable cost per unit is constant up to a production level of 2,000 units per month but a step up of
$6,000 in the monthly total fixed cost occurs when production reaches 1,100 units per month. What is
the total cost for a month when 1,000 units are produced?
36) Camberwell runs a construction company. Classify the following costs by nature (direct or indirect) in
the table below.
Cost Direct Indirect
Bricks
Plant hire for long term contract
Builders’ wages
Accountants’ wages
37) Generally, for the purpose of cost sheet preparation, costs are classified on the basis of:
Functions Variability Relevance Nature
38) Which of the following does not form part of Prime Cost?
Cost of packing Cost of transportation GST paid on raw Overtime premium
paid to bring materials materials (input credit paid to workers
to factory can be claimed)
39) A Ltd. received an order for which it purchased a special frame for manufacturing, it is part of:
Direct Material Direct Expense Factory Overheads Administrative
Overheads
40) Salary paid to plant supervisor is a part of:
Direct Expense Factory Overheads Quality Control Cost Administration Cost
41) Depreciation of director’s laptop is treated as part of:
Administration Factory Overheads Direct Expenses Research and
overheads Development Cost
42) A manufacturer has set-up a lab for testing of products for compliance with standards. Salary of
this lab staffs are part of:
Works Overheads Quality Control Cost Direct Expenses Research and
Development Cost
43) Audit fees paid to auditors is part of:

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 St. Joseph’s College of Commerce, Bangalore (Autonomous)

Administration Cost Production Cost Selling and Not shown in cost

Distribution Cost sheet
44) Salary paid to factory store staff is part of:
Factory Overheads Production Cost Direct Expenses Direct Material Cost
45) Canteen expenses for factory workers are part of:
Factory Overheads Administration Cost Marketing Expenses None of these
46) A Company pays royalty to State Government on the basis of production, it is treated as:
Direct Material Cost Factory Overheads Direct Expenses Administrative Cost

47) From the following particulars prepare a Cost Sheet showing the total cost per tonne for the period
ended 31st December, 20X1.
Rs. Rs.
Raw Materials 33,000 Rent and Taxes (Office) 500
Productive Wages 38,000 Water supply (Works) 1,200
Unproductive Wages 10,500 Factory Insurance 1,100
Factory Rent and Taxes 7,500 Office Insurance 500
Factory Lighting 2,200 Legal Expenses 400
Factory heating 1,500 Rent of warehouse 300
Motive Power 4,400 Depreciation of:
Haulage (Works) 3,000 - Plant and Machinery 2,000
Director’s fees (Works) 1,000 - Office Building 1,000
Director’s fees (Office) 2,000 - Delivery Vans 200
Factory cleaning 500 Bad Debts 100
Sundry Office expenses 200 Advertising 300
Estimating Expenses (Works) 800 Sales Department’s salaries 1,500
Factory stationery 750 Upkeep of delivery vans 700
Office stationery 900 Bank charges 50
Loose tools written off 600 Commission on sales 1,500
The total output for the period has been 14,775 tonnes.

48) The accounts of Z manufacturing Company for the year ended December, 20X2 show the following:
Rs. Rs.
Factory Office Salaries 6,500 Travelling Expenses 2,100
General Office Salaries 12,600 Traveler’s Salaries and 7,700
Commission
Carriage Outward 4,300 Productive Wages 1,26,000
Carriage on Purchases 7,500 Depreciation on Plant, 6,500
Machinery and Tools
Bad Debts written off 6,500 Depreciation on Furniture 300
Repairs of Plant, Machinery and 4,100 Director’s Fees 6,000
Tools
Rent, Rates, Taxes and Gas and Water:
Insurance:
- Factory 8,500 - Factory 1,200
- Office 2,000 - Office 400

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 St. Joseph’s College of Commerce, Bangalore (Autonomous)

Sales 4,61,100 Manager’s Salary (3/4 Factory 10,000

and 1/4 Office)
Stock of Materials: General Expenses 3,400
st
- 31 Dec, 20X1 62,800 Income Tax 2,500
- 31st Dec, 20X2 48,000 Dividend 2,000
Materials Purchased 1,85,000
Prepare statement giving the following information:
Material Consumed Prime Cost Factory Cost
Cost of Production Total Cost Net Profit

49) A manufacturing concern requires a statement showing the result of its production operation for
September, 20X1. Cost records give the following information:
1st September, 20X1 (Rs.) 30th September, 20X1 (Rs.)
Raw Material 1,00,000 1,23,500
Finished Goods 71,500 42,000
Work-in- progress 31,000 34,500
Transactions during the month of September, 20X1:
Rs.
Purchases of Raw Materials 88,000
Direct Wages 70,000
Work Expenses 39,500
Administrative Expenses 13,000
Sale of Factory Scrap 2,000
Selling and Distribution Expenses 15,000
Sales 2,84,000

50) From the following particulars, prepare a Cost Statement showing the components of Total Cost and
Profit for the year ended 31st December, 20X1.
1st January, 20X1 (Rs.) 31th December, 20X1 (Rs.)
Raw Material 40,000 50,000
Finished Goods 6,000 15,000
Work-in- progress 15,000 10,000

Rs. Rs.
Purchases of Raw Materials 4,75,000 Sales for the year 8,60,000
Carriage inwards 12,500 Income Tax 500
Wages 1,75,000 Dividend 1,000
Works Manager’s Salary 30,000 Debenture Interest 5,000
Factory employee’s salaries 60,000 Transfer to Sinking Fund for 10,000
replacement of machinery
Factory rent, taxes and 7,250 Goodwill written off 10,000
insurance
Power expenses 9,500 Payment of Sales Tax 16,000
Other production expenses 43,000 Selling Expenses 9,250
General expenses 32,500

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 St. Joseph’s College of Commerce, Bangalore (Autonomous)

51) A Company furnishes the following information relating to the manufacture of a standard product
during the month of April, 20X1:
Raw Materials Consumed Rs. 15,000
Direct Labour Charges Rs. 9,000
Machine Hours worked 900
Machine Hour Rate Rs. 5
Administrative Overheads 20% of Works Cost
Selling Overheads Re. 0.50 per unit
Units produced 17,100
Units sold 16,000 at Rs. 4 per unit
You are required to prepare a Cost Sheet from the above, showing:
The cost of production per unit Profit per unit sold
Profit for the period

52) Bangalore Ltd. furnishes the following information for the year 20X1:
Output 4,000 tons
Rs.
Materials:
- Purchases 8,60,000
- Opening Inventory 40,000
- Closing Inventory 1,00,000
Wages 4,80,000
Production Overheads 3,20,000
Administrative Overheads 1,60,000
Selling and Distribution Overheads 40,000
Rate of profit is 25% on Selling Price.
It is estimated that production can be increased in the year 20X2 by 50% due to spare capacity. Raw
Material Price will increase by 20%. The rate of profit will remain the same. 50% of all overheads
are fixed and the other 50% are variable. The wages will increase by 10%.
Prepare a statement showing:
Cost Profit Sales

53) The following data relates to the manufacture of a standard product during the month of April,
2018.
Raw Materials Rs. 1,80,000
Direct Wages Rs. 90,000
Machine hours worked (hours) 10,000
Machine hour rate (per hour) Rs. 8
Administration Overheads Rs. 35,000
Selling Overheads (per unit) Rs. 5
Units produced 4,000
Units sold 3,600
Selling Price per unit Rs. 125

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 St. Joseph’s College of Commerce, Bangalore (Autonomous)

You are required to prepare a Cost Sheet in respect of the above showing:
a) Cost per unit.
b) Profit for the month.

54) The following information has been obtained from the records of ABC Corporation for the period
from June 1 to June 30, 2018.
Particulars 1st June, 2018 30th June, 2018
(Rs.) (Rs.)
Cost of Raw Materials 60,000 50,000
Cost of work-in-progress 12,000 15,000
Cost of stock of finished goods 90,000 1,10,000
Purchase of raw materials during June, 2018 4,80,000
Wages paid 2,40,000
Factory overheads 1,00,000
Administrative overheads (related to production) 50,000
Selling and 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.

55) The books of Adarsh Manufacturing Company present the following data for the month of April,
2019:
Direct labour cost Rs. 17,500 being 175% of works overheads.
Cost of goods sold excluding administrative expenses Rs. 56,000.
Inventory accounts showed the following opening and closing balances:
Particulars 1st April (Rs.) 30th April (Rs.)
Raw Materials 8,000 10,600
Work-in-progress 10,500 14,500
Finished goods 17,600 19,000
Other data are:
Particulars (Rs.)
Selling Expenses 3,500
General and Administration Expenses 2,500
Sales for the month 75,000
You are required to:
a) Compute the value of materials purchased.
b) Prepare a cost statement showing the various elements of cost and also the profit earned.

56) 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:

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 St. Joseph’s College of Commerce, Bangalore (Autonomous)

Level Works Cost per unit (Rs.)

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

It can market 30% of its output at Rs. 550 per unit without incurring any of the expenses referred to
in (a) to (d) above.

Prepare a cost sheet for the month showing total cost and profit at 30% and 100% capacity level.

57) Prepare the Cost Sheet with as many details as possible and ascertain the selling price per unit of
the product.
1. Direct Materials of 12.5% 4. General 100% of Factory Cost
Selling Price Administration
Overheads
2. Direct Labour of 17.5% 5. Profit (Rs. 750 per 15% of Sales
Selling Price unit)
3. Production 1/3rd of prime cost
overheads
You may ignore direct expenses, quality control cost, R & D costs and Administrative OH attributable
to production.

58) From the following particulars, prepare a Cost Statement showing the component of Total Cost and
the Profit for the year ended 31st December.
Particulars On 1st Jan (Rs.) On 31st December (Rs.)
Stock of Raw Materials 4,00,000 5,00,000
Stock of Finished Goods 60,000 1,50,000
Stock of WIP 1,50,000 1,00,000

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 St. Joseph’s College of Commerce, Bangalore (Autonomous)

Particulars Rs. Particulars Rs.

Raw Materials purchased 47,50,000 Sales for the year 90,00,000
Carriage Inwards 1,25,000 Selling expenses 92,500
Wages 17,50,000 General expenses 3,20,000
Works Manager’s Salary 3,00,000 Debenture interest 50,000
Salary – Factory Employees 3,00,000 Dividend paid 10,000
Salary – Office Staff 2,00,000 Income tax provision 5,000
Salary – Salesmen 1,00,000 Goodwill written off 1,00,000
Factory rent and insurance 72,500 Sales tax paid 1,60,000
Power expenses 95,000 Transfer to machinery 1,00,000
replacement fund
Other Production expenses 4,20,000 Interest on loan 75,000
Bad debts written off 15,000 Bank charges 5,000
Loose tools written off 10,000 Discount allowed 27,000
Quality Control Cost 15,000 Research and Development 15,000
cost

59) A fire occurred in the factory premises on 31st October of a year. The accounting records have been
destroyed. Certain accounting records kept in another building, reveal the following for the period
1st September to 31st Oct.
Particulars Rs. Particulars Rs.
Direct Material purchased 2,50,000 Sale revenue 7,50,000
Work in progress Inventory 40,000 Direct labour 2,22,250
on 1st September
Direct Material Inventory on 20,000 Prime costs 3,97,750
1st September
Finished Goods inventory on 37,750 Cost of goods available for 5,55,775
st
1 September sale
Indirect Manufacturing costs 40% of Gross margin percentage 30%
conversion cost based on revenues
The loss is fully covered by insurance. The insurance company wants to know the historical cost of
the inventories as a basis for negotiating a settlement, although the settlement to be based on
replacement cost, not historical cost. You are required to compute the following items as on 31 st
October:
a) Finished goods inventory
b) Work in Progress inventory
c) Direct Materials Inventory.

60) ML Auto Ltd. is a manufacturer of auto components and the details of its expenses for the previous
year are given below:
Rs.
1 Opening Stock of Materials 1,50,000
2 Closing Stock of Materials 2,00,000
3 Purchase of Materials 18,50,000
4 Direct Labour 9,50,000

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 St. Joseph’s College of Commerce, Bangalore (Autonomous)

5 Factory Overheads 3,80,000

6 Administrative Overheads related to Production activity 2,50,400
During next year, the company has received an order from a Car Manufacturer where it estimates
that the cost of material and labour will be Rs. 8,00,000 and Rs. 4,50,000 respectively. ML Auto Ltd.
charges Factory overheads as a percentage of Direct Labour and Administrative Overheads relation
to production as a percentage of factory cost on previous year’s cost. Cost of delivery of the
components at customer’s premises is estimated at Rs. 45,000.
You are required to:
a) Calculate the overhead recovery rates based on actual costs for the previous year.
b) Prepare a detailed cost statement for the order received in the next year, and the price to be
quoted if the company wants to earn a profit of 10% on sales.

61) Vinayak Ltd. is planning to submit a tender for a new job that requires Material Costing Rs. 20,000
and Labour Costing Rs. 12,000. For estimation of OH, the company furnishes the following data in
respect of the previous year:
Materials consumed = Rs. 2,91,200; Wages paid = Rs. 1,98,800; Works OH = Rs. 43,736,
Administrative Oh related to production = Rs. 35,524.
What should be the quotation for the new job if the company desires a profit of 25% on Total Cost?
(Absorb Production OH on direct labour and Administrative OH based on Works Cost).

62) Following information is extracted from the job ledger in respect of Job No. 303:
Materials Rs. 3400
Wages - 80 hours at Rs. 2.50 per hour.
Variable overheads incurred for all jobs Rs. 5000 for 4000 labour hours.
Find the profit if the job is billed for Rs. 4200.

63) From the following information, prepare only an estimate for Job. No. 150:
Direct Materials Consumed Rs. 1,000.
Direct Wages paid Rs. 2,000.
Factory expenses 60% of Wages.
General Administrative Expenses 20% of Factory Cost.
The Tender should include a profit of 20% on Selling Price.

64) Poornima Scooters finds that the total cost of producing 100 scooters in the year 20X1 was Rs.
30,00,000 which were sold at Rs. 33,000 each. The cost consisted of materials Rs. 12,00,000; Direct
Wages Rs. 13,50,000; Factory overheads Rs. 2,70,000; Administrative Overheads relating to
production Rs. 1,41,000 and Distribution overheads Rs. 390 per scooter.
For the year 20X2, cost of manufacturing scooter is estimated as under:
a) Each scooter will require materials of Rs. 13,500 and labour Rs.13,500.
b) Factory overheads will bear the same relation to wages as in the previous period.
c) The percentage of administrative overheads relating to production on factory cost will be
the same as in the past.

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 St. Joseph’s College of Commerce, Bangalore (Autonomous)

d) There will be an increase of Rs. 90 per scooter in selling and distribution overheads.
Prepare a statement showing the profit that the company would make per scooter if it increases the
sale price of the scooter by Rs. 3,000.

65) The Company’s records show the following particulars for the year 20X1:
Production and sale 100 Fans
Rs.
Direct Materials 25,000
Direct Labour 10,000
Direct Charges 1,000
Works Overheads 9,000
General Administrative Overheads 5,000
Selling Overheads 5,000
Profit 11,000
You ascertain that 80% of Works Overhead fluctuates directly with production and 70% of selling
overheads fluctuate with sales. It is ascertained that the company would produce 500 Fans for the
year 20X2 and that direct labour charges per unit will be reduced by 10%. Fixed Works overhead
charges will increase by Rs. 2,400 . General Administrative overheads and fixed selling overhead
charges are expected to show an increase of 10% and 20% respectively but otherwise no changes
are anticipated.
Prepare a statement of cost and Profit for the year 20X2.

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