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Labor cost: wages, salary, remuneration facilities to workers, canteen facility. Direct labour cost means directly engaged in production activity. In direct labour cost are salary paid to office staff, etc. Direct expenses refer to only incurred for production activity. Any expenses other than labour direct material cost are direct labour cost. Indirect expenses other than indirect material cost and indirect labour cost. Overheads/ on cost/ other expenses Some total of indirect material cost+ indirect labour cost+ indirect expenses.
1 MACS
Determination of cost of product Cost sheet / statement of cost for the year xxxx
Output: xxx units Particular Direct material cost: Opening stock of raw materials Add: purchase of raw materials Add: carriage inwards Less: a) closing stock of RM b)purchase return c) scrap of RM cost of raw material consumed direct wages (Factory wages) direct expenses PRIME COST ADD: factory overheads a) b) c) d) e) f) g) h) i) j) k) l) Indirect materials Indirect wages Factory rent & rates Factory lighting Power & fuel Repair & maintenance Cost of research expenses Dep on plant & machinery Insurance on fixed assets Salary of factory supervisor (Forman) Factory workers welfare expenses Drawing office expenses xxx xxx xxx xxx xxx Xxx xxx XXX Xx Xx Xx XX Xxx Xxx xxx Xxx total Per units
XXX
XX
2 MACS
xxx Xxx
Less: closing stock of WIP. Factory cost (works costs) Add: office and administration overheads I. Rent, rates and taxes II. Office lighting III. Office salaries IV. Printing and stationery V. Telephone and postage VI. Legal exp VII. Audit fees VIII. Dep on office furniture IX. Dep on office building X. Repair on machinery of office building XI. Countering house salaries XII. Insurance of office building COST OF PRODUTION Add: opening stock of finished goods Less: closing stock of finished goods COST OF GOODS SOLD OR PRODUCTION COST OF GOODS SOLD Add: selling and distribution expenses Salesmen salary Travelling exp of sales men Showroom exp Advertisement exp Depreciation and exp on delivery van Bad debts Carriage outwards Sales promotion exp TOTAL COST PROFIT/LOSS SALES Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx
Xxx xxx Xx
Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx xxx XXX Xxx Xxx Xxx XXX
XXX
XXX
3 MACS
Problem 1: From the following particulars prepare a cost sheet for the year ended 31st December 2010. Stock of finished goods on 1-1-2010, RS. 6,000 Stock of raw materials on 1-1-2010, 40,000 Stock of work in progress 15,000 Purchase of raw materials 4, 75,000 Carriage inwards 12,500 Factory rent, taxes 7250 Other production expenses 43000 Stock of finished goods on 31st December 2010, 15000 Stock of raw materials on 31st December 50,000 Stock of WIP on 31st December 10000 Wages 175000 Work manager salary 30000 Factory employ salary 60000 Power expenses 9500 General expenses 32500 Sales 8, 60,000 Solution:COST SHEET FOR THE YEAR 31ST DECENBER 2010
Rs Opening stock of raw materials Add: purchases of R.M. Add: carriage inwards 40,000 4,75,000 12,500 5,27,500 Less: closing stock of RM Raw material consumed wages PRIME COST Add: factory overheads Factory rent and taxes Other production expenses Work managers salary Factory employee salary Power expenses Factory cost Add: opening stock of WIP 7,250 43,000 30,000 60,000 9,500 50,000
Rs
MACS
8,17,250 Add: office and administrative overheads: General expenses COST OF PRODUCTION Add: opening stock of finished goods 32,500 8,39,750 6,000 8,45,750 Less: closing stock of FG 15,000 8,30,750 Add: selling & distribution OH TOTAL COST PROFIT (SALES-TOTAL COST) SALES Nil 8,30,750
29,250
8,60,000
Problem 2: A factory produces standard product, the following information given to you from which you are require to prepare cost sheet for the month of January 2011 Raw materials consumed Direct wages Other direct expenses 91,000 29,000 11,000
5 MACS