UNIT OR OUTPUT

IV1-14
COSTING
LONG ANSWER TYPE
Namethe undertakinge
signiflcant from cost to
costing?
What are the Main features of one oporation(unit) considerod
1.
which
they are most sulted. Why is this
point of view ?
2. Wite short
notes : (a)
on
method of

Work-in-Progross.
costing

() Tonder Price. (c) Productlon Account.

ac ountlng
PRACTICAL PROBLEMS
1 The accounts of a machine manufacturing company disclose the following information for the
six months ending 31st December, 2014:
Materials used 1,50,000; Direct Wages 1,20,000 ; Factory Overheads 30,000 and
Administrative Expenses 15,000.
repare the Cost Sheet of the machines and calculate the price which tne company shoulA
e or ne manufacture of a machine requiring materials valued 1,250 and expenditure in
productive wages 750 sothat the price might vield a profit of 20% on the seling price.
Ans. [Price to be quoted
2,871.10]
Hint : Absorb Factory Overheads on the basis of Direct Wages and Admin:stration Expenseg
on Works Cost basis.
On 1stnAugust 2014, the New India Cvcle Manufacturing Co. was required to quote for a
contract tor the supply of 500 bicycles. Fromthe following details prepare a statement showing
e prce
during to be quoted to give the same percentage of net profit on turnover as was realised
the six months to 30th June, 2014.
Stock of materials on 1st Jan.. 2014 50.000 Indirect charges during
Stock of materials on 30th June, 2014 7,000 6 months to 30th June, 2014 25,000
Purchase of materials during Completed stock-in-hand on
6 months to 30th June,
2014 75,000 1st Jan., 2014 Nil
Direct wages for six months to Completed stock-in-hand on
30th June, 2014 1,50,000 30th June, 2014
The number of bicycles manufactured during the six months was 50,000
and those in stock at the end of the period. The bicycles to be 2,000 including those sold
size and quality and similar to those manufactured quoted for are to be of uniform
during the six months to 30th June, 2014.
As from 1st August, the cost of factory labour has increased
15%. Sales.during six months to 30th June, 2014, by 10% and that of materials by
Ans. [Total Cost 2,93,000; Amount of Tender were2,70,000.
10%] 91,167;Percentage of Profit on selling Price
Hint: Calculate percentage of indirect charges on direct wages
i.e., 16.67%.
3. The cost of manufacturing 5,000 units of a
25,000; Chargeable Expenses 400; Fixed commodity comprises Material 20,000; Wages
4,000. Overheads 16,000 ; Variable Overheads
For manufacturing every 1,000 extra units of the
follows : commodity the cost of production increase as
Materials : Proportionately.
Wages: 10% less than proportionately.
Chargeable expenses : No extra cost.
Fixed overheads: 200 extra.
Variable overheads : 25% less than proportionately.
Calculate the estimated cost of
would differ if a flat rate of factory producing
overheads
8,000 units of commodity and show how much it
Ans.[Estimated Factory Cost 93,300; 8,400].based on wages were charged.
4/ Afactory can produce 60,000 units per
costs of production are as under: annum at its optimum (100%) capacity. The estimated
UNIT OR OUTPUT COSTING
1/1-16
Direct Materials3 per unlt.
Direct Labour- 2per unit (subject to a
Overhead: Flxed minimum of 6,000 p.m.).
Variable 1,00,000 p.a.
2per unit.
Sem-variable 40,000 upto 60% capacity and an addlitlonal 10,000 tof every
increase in capacity or partp.a.thereot. 7
Each unit of raw material ylelds scrap, which is aold at the rate of 20 palse per
In 2014 the factory worked t 50% carnaciy
would work at 80% capacity tor the for the fret three months but It wasun.
expected that r
remaining
During the first three months the seling nine months.
price per unit was ? 12. What should be the pnGe o
the remaining nine months to
Ans. R 12.88) produce a total profit of 1,00,000 r
5. rom the undermentioned particulars
appearing in the books of the Delhi Bricks Works, you
are required to prepare a monthlv Cost-`heet
and profit per 1,000 bricks : of bricks made in January, 2014 showing cost

Overhead
Materials:
Coal
31,500 Factory Expenses (including indirect labour)
25% on Prime Cost
Royalty 5,550 Office 10% on Works Cost
Stores
15,000
Labour :
Brick-making
Indirect
50,000
15,000
Production per month 74,00,000 Bricks
Sales per month 70,00,000 Bricks
@27.50 per 1,000:
Stock 1st January, 2014 2,00,000 Bricks
Stock 31st January, 2014 6,00,000 Bricks
YOu have to assume that opening stock was valued at the same rate per
thousand bricks as
the production of January, 2014. Calculations may be made to the nearest paise.
Ans. Total Cost per 1,000 21.196; Profit per 1,000 bricks 6.304]
6. In a factory two types of articles are manufactured viz., No. 1 and No. 2 From the
following
particulars prepare a statement of cost showing total cost of each variety and ascertain the
total profit. There is no opening or closing stock.
No. 1 No. 2
Materials 30,000 50,000
Labour 60,000 70,000
Works on cost is charged at 40% of works cost and office on cost is taken at 20% on total cost.
No. 1article sold during the period is 180 at 1,200 each and No. 2 are 200 at 1.500 each.

Ans. Profit No. 1 is 28,500; No. 2 is 50,0001

7./The data pertaining to 'XYZ' factory using a job costing system are as follows at the end of 31
10-2013. Direct material9,00,000; Direct wages7,50,000; Selling and distribution overhead
75,25,000; Administrative overhead 4,20,000, Factory overhead 4,50,000 and Profit
76,09,000.
() Prepare a cost sheet showing all the details.
(i) For 2013-14, the factory has received an order fora number of jobs. It is estimated that
the direct materialswould be ? 12,00,000 and direct labour cost 7,50,000. What would
be the price of order if the factory intends to earn the same rate of profit on sales,
assuming that the selling and distribution overhead has gone up by 15%? The factory
recovers factory overhead as a percentage of direct wages and administrative and
 UNIT ORa
MV-16 QUTPUT CO8TIN
cost, based on the
apercentago of works
Selling and distributlon overhead as (B.Com. OAmanlta
prevalent in the previous year.
Ans. ( 46,08,000) was 25%. For the
works cost
Hint. ofLastselling
year andof distribution distribution
selling andoverhead to works costtois 40% (L.e. 25% +15% Increase)
overhead

of afactory.
CUrrent yoat
8. Following are obtained trom the records
particulars64,000.
Maternial issued- Wages paid - 56,000. Factory overheads-60% of wages.
been returned to the
Out of the issued, ? 800 worth of goods have
materials
transtered to other jobs.
stores and? 40n
per
10 per cent of the production has been scrapped as bad and a further 20
Centcent has
the wagesbeen.
overheads to 80 per of
brought up to the specification by increasingthe factory
If the SCrapped production fetches only 470, find the production cost per unit of the
Moouct it the total production (including the quantity scrapped) be 100 units.
Ans. [Cost per unit : 1,713].
finished
ne cost structure of an article the selling price of which is 45,000 is as followS:
Direct Materials 50%: Direct Labour 20%;Overheads 30%.
An increase of 15% in the cost of materials and of 25% in the cost of labour is
These increased costs in relation to the present selling price would cause a 25%
the amount of present profit per article.
You are required:
decranticeiasepated.in
() Toprepare a statement of profit per article at present, and
(2) The revised selling price to produce the same percentage of profit to sales as betore.
Ans. [() 15,000; () 50,625]
1O, In respect ofa factory the following information has been obtained for the year 2014:
Cost of material 12,00.000: Direct wages 10,00,000; Factory overhead ? 6,00,000.
Administration overhead 6,72,000 : Selling overhead4,48,000 ; Distribution overhead
?2,80,000; Sales 50,40,000.
Work order has been executed in 2013 for which the following expenses have
Materials 16,000: Wages 10,000. Assuming that in 2013 the rate of factorybeen incurred
Overhead has
increased by 10% distribution overheads have gone down by 10%, selling and
have each gone up by 25% at what price should the product be sold so as to administrations
rate of profit on the selling price as in 2014. earn the same
Factory Overhead is based on direct wages and all other overheads are based on
factory cost.
Ans. [Tender 62,200]
11. From the folowing information in respect of a
factory
two varieties, prepare the plastic goods account and findmanufacturing
the
plastic material goods of
ofevery variety : profit or loss per unit of productior:

Weight of finished product

Variety Variety
1,216 lbs. 684 lbs.
Wages 2,560 1,840
Sales 14,880
No. of units of finished product 10,208
2,480 1,276
Factory overhead is 60% of wages and office
plastic materials is3 per lb. and the wastage in overhead is 25% oi factory cost. The cost of
the process of manufacture is 5%. There is
no opening or closing balance of raw plastic materials or
N.B.-Each work order is to be debited with the cost of thework-in-progress.
it gross weight of material issued for
Ans. [Profit -Variety |7 4,960; Variety Il 3,828]
12./Following data relating to the working ßf afactory in 2014 are available
Materials consumed 2,00,000; Direct wages 1,50,000; Factory
Administration expenses 88,000 expenses 90,000;
UNIT OR OUTPUT COSTING I/1-17

Based on the above data, findout the cost of job to be dono in 2014 ;
Materials required for the job wil be 2,000 ;Wages for the job wllbe 2,000
What will be the quotation for the job ifa profit at 20% on slling price Is required:
Ans. 7,800]
13. An respect of a factory the following fiqures have been obtained for the year 2013
6,00,000, Administration
Maternals t 12,00,000, Direct wages 10.00.000. Factoy overhead
overhead 6,72,000, Selling overhead 4.48.000. Distribution overhead 2,80,000 and prol
execute a work order in 2014 which reguires 16,000 towaras
T 8,40,000. The firm wants to
price at which the work order
materials and e 10,000 towards direct wages. Determine the as In ulo
should be accepted so as to enable it to earn the same rate of profit on selling price
Ans. 57,602]
showing total COst arid
14. Fromthe following particulars of Product X' compile a cost statement
COst per unit.
Purchases 1.50.000 : Closing Stock 10,000 ;
Haw Material : Opening Stock 20.000: Office &Administration Overheads
Direct Labour 60,000: Factory Overheads 22.500 :
27,500
Finished Stock:
Opening Stock 500 units at 11.20 per unit
Closing Stock 1,500 units
Profit on Sales 20%
Selling and distribution expenses 20,000 (B.Com. Osmania)
Units produced 25,000
Production270,000: Cost per Unit 10.80; Profit 69,850; Sales
Ans. [Total Cost of
73,49,250]

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