Total cost of production 9375 add selling and

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Total cost of production 9375 Add: - selling and distribution overhead:- Indirect material 150 Indirect expenses 350 Advertisement 125 ------------ 475 ------------- 625 Cost of sales 10,000 Profit 2,500 ----------- Sales 12,500
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281 Illustration 8. Prepare a statement of cost from the following trading and P/L account for the year ending March 31, 2008 Particular Amount (Rs) Particular Amount (Rs) To opening stock material 12,000 By sales 2,00,000 Finished goods 40,000 By closing stock material 20,000 To purchases 1,20,000 Finished goods 50,000 To cost of moulds 3,000 To salary of factory manger 1,000 To depreciation of machine 800 To gross profit 63,200 ------------ ----------- 2,70,000 ---------- 2,70,000 ---------- To office salary 9,000 By Gross profit 63,200 To salesman salary 6,000 By interest from bank 800 To insurance of office building 1,000 By dividend received 200 To godown expenses 800 By rent received 900 To directors fees 2,000 To telephone charges 700 To showroom expenses 1,200 To delivery van expenses 1,500 To preliminary expenses 2,000 To interest on deb. 700 To market research exp. 600 To net profit 39,000 -------------- -------------- 65,100 -------------- 65,100 --------------
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282 Solution Statement of cost (For the year ending 31 st March 2008) Particular Details (Rs) Amount (Rs) Direct material or Raw material purchased 1,20,000 Add:- opening stock of raw materials 12,000 Raw material for consumption 1,32,000 Less :- Closing sock of raw materials 20,000 Raw material consumed 1,12,000 Add: - Direct labour 30,000 Prime cost 1,42,000 Add :- Factory overhead:- Cost of moulds 3,000 Factory manager salary 1,000 Depreciation on machinery 800 --------------- 4,800 --------------- Factory cost 1,46,800 Add: - office and administrate overhead Salary 9,000 Insurance 1,000 Directors fees 2,000 Telephone charges 700 --------------- 12,700 ------------- Cost of production 1,59,500 Add: - Opening stock of finished goods 40,000 -------------- Goods available for sales 1,99,500 Less :- Closing stock of finished goods 50,000 -------------- Cost of goods sold 1,49,500 Add :- selling & distribution ext:- Salesman’s salary 6,000 Insurance (godown) 800 Showroom expenses 1,200 Expenses of delivery van 1,500 Market research expenses 600 ------------- 10,100 ---------------- Cost of sales 1,59,600 Profit 40,400 ---------------- Sales 2,00,000
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283 Illustration 9. The following inventory data relate to Nazia Ltd. Inventories Opening Closing Finish goods Rs 1,100 Rs 950 Work in progress Rs 700 Rs 800 Raw materials Rs 900 Rs 950 Additional information:- Cost of goods available for sales = Rs 6840 Total goods processed during the period = Rs 6540 Factory on cost = Rs 1670 Direct material used = Rs 1930 Requirements:- i. determine raw material purchase ii. determine the direct labour and cost incurred iii. determine the cost of goods sold Solution (i) Raw material purchased:- Raw material consumed = opening stock + purchases closing stock OR Rs 1,930 = Rs 900 + Purchases Rs 950 OR Rs 1,930 + Rs 50 = purchases Rs 1,980 = Raw material purchased (ii) Direct labour cost:- Cost of goods processed during the year = Rs 6,540 Less: - Opening work in progress = Rs 700 --------------- Rs 5,840 Less: - Factory overheads = Rs 1,670 --------------- Prime cost = Rs 4,170 Less: - Raw material consumed = Rs 1930 -------------- Direct labour cost = Rs 2,240 (iii) Cost of goods sold:- = cost of goods available for sales closing stock finished goods = 6840 950 = Rs 5890 Illustration 10. Mr. Zia furnishes the following data related to the manufacture of a standard product during the month of August 2008
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284 Raw material consumed - Rs 15,000 Direct labour - Rs 5,000 Machine hours worked - Rs 900 Machine hour rate - Rs 5 Administration overheads = 20% of works cost Selling overheads - Rs 0.50 per unit Unit produced - Rs 17,100
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