ABC Ltd is engaged in producing electronic equipments. It has furnished following details related to its products produced during a month: Units…

CA Intermediate · Cost and Management Accounting · MTP · September 2024
ABC Ltd is engaged in producing electronic equipments. It has furnished following details related to its products produced during a month: Units Amount (₹) Opening stock 10,000 5,00,00,000 Purchases 4,90,000 25,20,00,000 Closing stock 17,500 85,00,000 Works-in-progress Opening 20,000 1,20,00,000 Closing 10,000 60,50,000 Direct employees' wages, allowances etc. 5,50,50,000 Primary packaging cost (per unit) 140 R&D expenses & Quality control expenses 1,90,00,000 Guards' salaries 20,00,000 Directors' salaries 60,00,000 Consumable stores, depreciation on plant related to factory overhead 3,42,00,000 Product inspection (before primary packaging) 22,00,000 Rearrangement design of factory machine 75,00,000 Administrative overheads related to production 3,45,00,000 Selling expenses 3,94,50,000 Royalty paid for production 3,10,50,000 Cost of web-site (for online sale) maintenance 60,75,000 Gifts & Snacks 30,50,000 GST (credit allowed) 5,50,00,000 AMC cost of CCTV 10,00,000 Hiring of cars for the transportation of employees and guests 25,00,000 Audit and Legal Fees 29,00,000 Secondary packaging cost (per unit) 20 Distribution of the following costs: Guard's salaries to Factory, Office and Distribution in the ratio 7: 2:1.Hiring of cars is only for selling and distributionAMC of CCTV to Factory, Office and Selling in the ratio 6:2:2. The company paid EPF of 12% over above basic pay. However, Guards will not receive any incentive or EPF. It has lucky draws every month giving the first prize of 1,00,000; 2nd prize of 50,000, 3rd prize of 20,000 and three consolation prizes of 10,000 each to customers buying the product. It also sponsors a television programme every week at a cost of 20,00,000 per month. The hiring of cars attracts GST under RCM @5% without credit. There was a normal scrap of 2,000 units of direct material which realized 350 per unit. The entire finished product was sold at a profit margin of 25% on sales. You are required to PREPARE a cost sheet

Suggested Answer and Working Notes:

Cost Sheet Particulars Units Amount (₹) Material Opening stock 10,000 5,00,00,000 Add: Purchases 4,90,000 25,20,00,000 Less: Closing stock (17,500) (85,00,000) 4,82,500 29,35,00,000 Less: Normal wastage of materials realized @350 per unit (2,000) (7,00,000) Material consumed 29,28,00,000 Direct employee's wages and allowances 5,50,50,000 Direct expenses- Royalty paid for production 3,10,50,000 Prime cost 4,80,500 37,89,00,000 Factory overheads - Consumable stores, depreciation etc. 3,42,00,000 Rearrangement design of factory machine 75,00,000 Gross Works Cost 4,80,500 38,64,00,000 Add: Opening WIP 20,000 1,20,00,000 Less: Closing WIP (10,000) (60,50,000) Factory/Works Cost 4,90,500 39,23,50,000 Administrative Overheads related to production 3,45,00,000 R&D expenses and Quality control cost 1,90,00,000 AMC cost of CCTV installed at factory premises 6,00,000 Guard Salaries for factory premises 14,00,000 Product Inspection 22,00,000 Add: Primary packaging cost @140 per unit 6,86,70,000 Cost of production 4,90,500 51,87,20,000 Administration Overheads Guard salaries for office 4,00,000 Audit and legal fees 29,00,000 Director's Salaries 60,00,000 EPF Director's Salaries @12% 7,20,000 AMC cost for CCTV installed at office. 2,00,000 Selling and Distribution Overheads Cost of maintaining website for online sale 60,75,000 Secondary packaging cost @20 per unit 4,90,500 98,10,000 Gift and snacks 30,50,000 Guard salaries for selling department 2,00,000 AMC cost for CCTV installed at selling department 2,00,000 Hiring charges of cars 25,00,000 Add: GST @5% on RCM basis 1,25,000 Television programme sponsorship cost 20,00,000 Customers' prize cost* 2,00,000 Selling expenses 3,94,50,000 Cost of sales 58,64,75,000 Add: Profit @ 25% on sales or 33.333% of cost 19,54,89,712 Sales value 78,19,64,712 *Customers' prize cost: Amount (₹) 1 st Prize 1,00,000 2 nd Prize 50,000 3 rd Prize 20,000 Consolation Prizes (3 × ₹ 10,000) 30,000 Total 2,00,000

Topics: Cost Sheet

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