The following is the summarised Trading and Profit and Loss Account of XYZ Ltd. for the year ended 31st March 2024: Particulars Amount (₹)…

CA Intermediate · Cost and Management Accounting · MTP · May 2025
The following is the summarised Trading and Profit and Loss Account of XYZ Ltd. for the year ended 31st March 2024: Particulars Amount (₹) Particulars Amount (₹) Direct Material 14,16,000 Sales (30,000 units) 30,00,000 Direct wages 7,42,000 Finished stock (2,000 units) 1,67,500 Works overheads 4,26,000 Work-in-progress: Administration overheads 1,50,000 Materials 34,000 Wages 16,000 Selling and distribution overheads 1,65,000 Works overhead 4,000 Net profit for the year 3,22,500 54,000 32,21,500 32,21,500 The company's cost records show that in course of manufacturing a standard unit (i) works overheads have been charged @ 20% on prime cost, (ii) administration overheads are related with production activities and are recovered at 5 per finished unit, and (iii) selling and distribution overheads are recovered at 6 per unit sold. You are required to PREPARE: (i) Costing Profit and Loss Account indicating the net profits, (ii) A Statement showing reconciliation between profit as disclosed by the Cost Accounts and Financial Accounts.

Suggested Answer and Working Notes:

(i) Costing Profit and Loss Account for the year ended 31st March 2024: Particulars Amount (₹) Particulars Amount (₹) Material consumed 14,16,000 Sales (30,000 units) 30,00,000 Direct wages 7,42,000 Prime Cost 21,58,000 Works overheads (20% of Prime cost) 4,31,600 25,89,600 Less: Work in progress (54,000) Factory cost 25,35,600 Administration overheads (₹ 5 × 32,000 units) 1,60,000 Cost of production of goods produced 26,95,600 Less: Finished stock (1,68,475) Cost of production of goods sold 25,27,125 Selling and distribution overheads (₹ 6 × 30,000 unit) 1,80,000 Cost of sales 27,07,125 Profit (balancing figure) 2,92,875 30,00,000 30,00,000 (ii) Statement reconciling the profit as per costing profit and loss account with the profit as per financial accounts Particulars Amount (₹) Amount (₹) Profit as per cost records 2,92,875 Add: Overheads over-absorbed: Works overheads (₹ 4,31,600 - 4,26,000) 5,600 Administration OH (₹ 1,60,000 - 1,50,000) 10,000 Selling and Distribution (₹ 1,80,000 - 1,65,000) 15,000 30,600 Less: Closing stock overvalued (₹ 1,68,475 - 1,67,500) (975) Profit as per financial accounts 3,22,500 *It is assumed that there is no opening stock

Topics: Cost Accounting Systems

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