Example: Find the total cost of a product with the help of given information:
Raw material Rs.6 per unit, Labour cost Rs. 10 per unit, direct expenses Rs. 8 per unit, Office and administrative expenses Rs. 1, 00,000, selling and distribution expenses Rs. 2, 35,000. Total unit produced 7000 units.
Solution: Statement of cost
|
Particulars |
Cost per unit |
Total cost |
|
Raw material |
6 |
42,000 |
|
Labour cost |
10 |
70,000 |
|
Direct expenses |
8 |
56,000 |
|
Prime cost |
|
1,68,000 |
|
Add: office and administrative expenses |
|
1,00,000 |
|
Office cost |
|
2,68,000 |
|
Add: Selling and distribution expenses |
|
2,35,000 |
|
Total cost Cost per unit
5,03,000/7000 = 71.8 |
71.8 |
5,03,000 |
Example: Find out the items comes under the headings of
a) Direct expenses
b) Factory expenses
c) Office and administrative expenses
d) Selling and distribution
· Office rent
· Raw material
· Office stationery
· Dividend received
· wages
· Patent fees
· Advertising
· Factory rent
· Supervisor salary
· Power and fuel
Solution:
a) Direct expenses: raw material, wages
b) Factory expenses: factory rent, patent
fees, power and fuel, supervisor salary
c) Office and administrative expenses:
office stationery, office rent
d) Selling and distribution: Advertising
Example: With the help of given information prepare statement of cost:
· Office stationery Rs. 1500
· Depreciation on factory machine 1800
· Office rent Rs. 1100
· Direct material Rs. 1000
· Direct wages Rs. 1200
· Selling expenses Rs. 2000
Solution: Statement of Cost
|
Particulars |
Total cost (Rs.) |
|
Direct material |
1000 |
|
Direct wages |
1200 |
|
Prime Cost |
2200 |
|
Add: Factory expense: |
|
|
Depreciation on factory machine |
1800 |
|
Factory Cost |
4000 |
|
Add: Office expenses: |
|
|
Office rent |
1100 |
|
Office stationery |
1500 |
|
Office Cost |
6600 |
|
Add: Selling and distribution expenses: |
|
|
Selling expenses |
2000 |
|
Total cost |
8600 |
Example: Find out the cost per unit of a product with the help of given information:
|
Particulars |
Total cost |
|
Direct material (40% fixed) |
1,20,000 |
|
Direct wages (30% fixed) |
1,26,000 |
|
Direct expenses (40% fixed) |
1,70,000 |
|
Office salary |
1,80,000 |
|
Depreciation on factory machine |
1,00,000 |
|
Promotion expenses |
2,10,000 |
|
Supervisor salary |
1,40,000 |
Solution: Statement of Cost
|
Particulars |
Total cost (Rs.) |
|
Direct material : Fixed cost: 40/100*1,20,000= 48,000 Variable cost: 60/100* 1,20,000= 72,000 |
1,20,000 |
|
Direct wages : Fixed cost: 30/100 *1,26,000 = 37,800 Variable cost: 70/100*1,26,000 = 88,200 |
1,26,000 |
|
Direct expenses : Fixed cost: 40/100*1,70,000 = 68,000 Variable cost: 60/100*1,70,000 = 1,02,000 |
1,70,000 |
|
Prime Cost |
4,16,000 |
|
Add: Factory expenses: |
|
|
Supervisor salary |
1,40,000 |
|
Depreciation on factory machine |
1,00,000 |
|
Work Cost or Factory cost |
6,56,000 |
|
Add: Office & administrative expenses: |
|
|
Office salary |
1,80,000 |
|
Cost of
production or office cost |
8,36,000 |
|
Add: Selling and distribution expenses: |
|
|
Promotion expenses |
2,10,000 |
|
Total cost |
10,46,000 |
Example: Company PQR and Company LMN have produced product A and product B respectively. Find the total cost and cost per unit of both the product with the help of given information:
|
Particulars |
Product A |
Product B |
|
Unit produced |
10,000 |
10,000 |
|
Raw material |
Rs.7 per unit |
Rs. 8 per unit |
|
wages |
Rs. 10 per unit |
Rs. 9 per unit |
|
Office expenses |
Rs. 12 per unit |
Rs. 10 per unit |
|
Factory expense |
45,000 |
45,000 |
|
Selling expenses |
Rs. 14 per unit |
Rs. 11 per unit |
Solution: Statement of Cost
|
Particulars |
Product A |
Product B |
|
Unit produced |
10,000 unit |
10,000 unit |
|
Raw material |
70,000 |
80,000 |
|
wages |
1,00,000 |
90,000 |
|
Prime cost |
1,70,000 |
1,70,000 |
|
Add: Factory expense |
45,000 |
45,000 |
|
Work Cost |
2,15,000 |
2,15,000 |
|
Add: Office expenses |
1,20,000 |
1,00,000 |
|
Cost of production |
3,35,000 |
3,15,000 |
|
Add: Selling expenses |
1,40,000 |
1,10,000 |
|
Total Cost |
4,75,000 |
4,25,000 |
|
Cost per unit |
4,75,000/10,000 =47.5 |
4,25,000/10,0000 =42.5 |
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