Q1. A, B & N are partners doing business as engineers sharing profits and losses equally. A

is a sleeping partner; B looks after factory and N after the administration. The following

figures are extracted from their books for the year ended 30th June, 2014:

Particulars Amount (Rs.) Particulars Amount (Rs.)

Raw Materials Purchased 50,000 Advertising 3,000

Opening Stock

Raw Materials

Finished Goods

20,000

5,000

Closing Stock

Raw Materials

Finished Goods

20,000

3,000

Power 1,000 Agent’s Commission 5,000

Office Salaries 10,000 Plant Maintenance 4,000

Wages: Direct

Indirect

30,000

5,000

Rent Rates Taxes(9/10

Works, 1/10 Office)

1,000

Sundry ExpensesWorks

Office

1,000

2,000

Salary to Partners:B

N

2,000

1,000

Sales 2,00,000 Building Repairs 1,000

Carriage Outward 3,000 Depreciation

Plant & Machinery

Building

2,000

1,000

Travelling Expenses 1,000 Carriage Inward 1,000

Building is occupied 9/10 by factory and 1/10 by office.

You are required to prepare a detailed cost statement, assuming that 10,000 units were

produced during the year.

State by what % the average selling price should be raised to double the net profit.

Q2.

Particulars Amount Particulars Amount

Raw materials 48000 Office & Admin 3200

Direct Wages 40000 Closing WIP 6400

Opening Stock

Raw Materials

Finished Goods (1600 units)

8000

6400

Closing Stock

Raw Materials

Finished Goods (3200 units)

8800

?

Opening WIP 1920 Advertising, Discount and

selling cost

40 paise per unit

Works Overheads 16800 Sale of Finished Goods 120000

During the year 25,600 units were produced. From the above prepare a cost sheet showing

unit cost

Q3. Bajaj Electricals Ltd manufactured and sold 1000 electric irons during the year ended

31st December 2014. Following were the expenses for manufacture of 1000 electric

irons

Particulars Amount Particulars Amount

Materials 80000 Direct Wages 120000

Manufacturing Cost 50000 Selling Exp 40000

Other overhead Exp 90000

For the year ending on 31st December, 2015 it was estimated:

Output and sales will be 1500 electric Irons

Cost of materials will rise by 25% per unit

Wages per unit will decrease by 10%

Manufacturing cost will rise in proportion to the combined cost of materials and wages

Selling expenses per unit will remain unchanged.

Other overheads will increase by Rs. 60000

Prepare cost statement showing price at which the electric irons should be marketed so as to

share a profit of 20% on selling price. Workings to form part of answer.

Q4. M/s Bombay Ltd produces 60,000 units annually at its optimum (100%) capacity. The

estimated costs of production are as under:

Direct Expenses Indirect Expenses

Direct Materials Rs. 3 p.u. Fixed Rs. 150000 p.a.

Direct Labour Rs. 2 p.u. Variable Rs. 5 p.u.

Semi variable Rs. 50,000 p.a. upto 50% capacity and

an extra expense of Rs. 10,000 for every

25% increase in capacity or part thereof

The factory produces only against orders and not for own stocks. If the production

programme of the factory is as indicated below and the management desires to ensures a

profit of Rs. 100000 for the year, work out the average selling price at which each unit should

be quoted.

First three months of the year (50% Capacity)

Remaining nine months (80% Capacity)

Ignore selling and distribution overheads

Q5. The All India waterproof manufacturers ltd manufactured and sold 850 waterproofs in

the year ending 31st March, 2015. The summarized Trading and Profit and Loss A/c is

given below:

Particulars Amt (Rs.) Particulars Amt (Rs.)

To Cost of Materials 64,000 By Sales 3,20,000

To Direct Wages 96,000

To Manufacturing Exps 40,000

To Gross Profit 1,20,000

3,20,000 3,20,000

To Office Salaries 48,000 By Gross Profit 1,20,000

To Rent, Rates & Taxes 8,000

To Selling Expenses 16,000

To General Expenses 24,000

To Net Profit 24,000

1,20,000 1,20,000

For the year ending 31st March, 2016, it has been estimated that:

1. Output and sales will be 1000 waterproofs

2. Price of materials will rise by 25% on the previous year’s level

3. Wages will rise by 12.5%

4. Manufacturing expenses will rise in proportion to the combined cost of materials and

wages.

5. Selling expenses per unit will remain unaffected by the rise in the output.

6. Other expenses will remain unaffected by the rise in the output.

Prepare a cost statement, showing the price at which the waterproofs would be marketed so as

to show a profit at 12% on the selling price.

Q6. M/S Universal products manufacturers of bags, manufactures two types of bags styled

as ‘dolly Bag’ and ‘Jolly Bag’

You are supplied with the following data:

Direct Material consumed 2560000

Direct Wages 2400000

Production overheads 495000

The following is the additional information:

Direct materials per unit for type dolly was 160% of that of jolly

Each unit of dolly and jolly has to pass through 2 departments viz department X and Y for

completion. The time taken by each unit is as under:

Department X Department Y

Dolly 3 hours 2 hours

Jolly 2 hours 1 hour

The hourly rate of department X is double than that of department Y

Production overheads for Jolly was 60% of that of Dolly

Administrative overheads were Rs. 15 per unit of Dolly and Rs 9 per unit of Jolly

The total selling and distribution overheads amounted to Rs. 492500 to be allocated as

Dolly Rs. 364500 Jolly Rs. 128000

The production was as follows

Dolly 150000 units (9/10 sold) Jolly 80000 units (8/10 sold)

Selling prices per unit

Dolly Rs 55 Jolly Rs 35