A jobbing factory has undertaken to supply 300 pieces of a component per month for the ensuing six months. Every month a batch order is opened…
CA Intermediate · Cost and Management Accounting · RTP · September 2024
A jobbing factory has undertaken to supply 300 pieces of a component per month for the ensuing six months. Every month a batch order is opened against which materials and labour hours are booked at actual. Overheads are levied at a rate per labour hour. The selling price contracted for is 8 per piece. From the following data CALCULATE the cost and profit per piece of each batch order and overall position of the order for 1,800 pieces. Month Batch Output Material cost (₹) Direct wages (₹) Direct labour hours January 310 1150 120 240 February 300 1140 140 280 March 320 1180 150 280 April 280 1130 140 270 May 300 1200 150 300 June 320 1220 160 320 The other details are: Month Chargeable expenses (₹) Direct labour (Hours) January 12,000 4,800 February 10,560 4,400 March 12,000 5,000 April 10,580 4,600 May 13,000 5,000 June 12,000 4,800
Suggested Answer and Working Notes:
13. Statement of Cost and Profit per batch Particulars Jan. Feb. March April May June Total Batch output (in units) 310 300 320 280 300 320 1,830 Sale value (₹) 2,480 2,400 2,560 2,240 2,400 2,560 14,640 Material cost (₹) 1,150 1,140 1,180 1,130 1,200 1,220 7,020 Direct wages (₹) 120 140 150 140 150 160 860 Chargeable expenses* (₹) 600 672 672 621 780 800 4,145 Total cost (₹) 1,870 1,952 2,002 1,891 2,130 2,180 12,025 Profit per batch (₹) 610 448 558 349 270 380 2,615 Total cost per unit (₹) 6.03 6.51 6.26 6.75 7.10 6.81 6.57 Profit per unit (₹) 1.97 1.49 1.74 1.25 0.90 1.19 1.43 Overall position of the order for 1,800 units Sales value of 1,800 units @8 per unit = 14,400 Total cost of 1,800 units @6.57 per unit = 11,826 Profit = 2,574 *Chargeable expenses = Chargeable expenses × Direct labour hours for batch Direct labour hour for the month
Topics: Unit & Batch Costing
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