IC Ltd. manufactures two types of phone covers, one is 'plastic' phone cover and another is 'silicon' phone cover. The cost data relating to the…

CA Intermediate · Cost and Management Accounting · RTP · January 2025
IC Ltd. manufactures two types of phone covers, one is 'plastic' phone cover and another is 'silicon' phone cover. The cost data relating to the manufacturing of both the phone covers for the year ended 31 st March is provided below: Particulars Amount (₹) Direct Materials 1,00,00,000 Direct Wages 56,00,000 Production Overhead 32,00,000 Total 1,88,00,000 Other information relating to the production of the phone covers is as follows: Direct material cost per unit of 'silicon' phone cover was twice than that of 'plastic' phone cover.Direct wages per unit for 'plastic' phone cover were 60% of those for 'silicon' phone cover.Production overhead per unit was at same rate for both the type of phone covers.Administration overhead being part of cost of production was 50% of Production overhead.Selling cost and Selling Price of 'silicon' phone cover were 8and 140 per unit respectively.No. of units of 'silicon' phone covers sold- 90,000No. of units of Production of -'silicon' phone cover: 1,00,000'plastic' phone cover: 3,00,000 You are required to PREPARE a cost sheet for 'silicon' phone cover showing Cost and Profit (per unit and Total).

Suggested Answer and Working Notes:

Preparation of Cost Sheet for 'silicon' phone covers No. of units produced = 1,00,000 units No. of units sold = 90,000 units Particulars Per unit (₹) Total (₹) Direct Materials (Working note- (i)) 40.00 40,00,000 Direct Wages (Working note- (ii)) 20.00 20,00,000 Prime Cost 60.00 60,00,000 Production Overhead (Working note- (iii)) 8.00 8,00,000 Factory Cost 68.00 68,00,000 Administration Overhead (50% of Production Overhead) 4.00 4,00,000 Cost of Production 72.00 72,00,000 Less: Closing stock (1,00,000 units - 90,000 units) - (7,20,000) Cost of Goods Sold i.e. 90,000 units 72.00 64,80,000 Selling cost 8.00 7,20,000 Cost of Sales/ Total Cost 80.00 72,00,000 Profit 60.00 54,00,000 Sales Value (₹ 140 × 90,000 units) 140.00 1,26,00,000 Working Notes: (i) Direct material cost per unit of 'plastic' phone cover = M Direct material cost per unit of 'silicon' phone cover = 2 M Total Direct Material Cost = 2 M × 1,00,000 units + M × 3,00,000 units Or,1,00,00,000 = 2,00,000 M + 3,00,000 M Or, M = 1,00,00,000 / 5,00,000 = 20 Therefore, Direct material Cost per unit of 'silicon' phone cover = 2 × ₹ 20 = 40 (ii) Direct wages per unit for 'silicon' phone cover = W Direct wages per unit for 'plastic' phone cover = 0.6W So, (W x 100,000) + (0.6W x 3,00,000) = 56,00,000 Or, 1,00,000 W + 1,80,000 W = 56,00,000 Or, W = 56,00,000 / 2,80,000 = 20 per unit Therefore, Direct wages per unit of 'silicon' phone cover = 20 (iii) Production overhead per unit = 32,00,000 / (1,00,000 + 3,00,000) = 8 Production overhead for 'silicon' phone cover = 8 × 1,00,000 units = 8,00,000

Topics: Cost Sheet

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