3901803 Cost Ascertainment

8/3/2019 3901803 Cost Ascertainment

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Cost Ascertainment


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Cost

Amount of Expenditure (actual or notional) incurred or attributable

to a given thing- material purchased


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Cost Object

Anything for which a measurement of cost

is desired

It could be a product, Service, Customer,

Brand, Activity, Department


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Cost Assignment

Tracing Accumulated Costs that have direct

relationship to a cost object & allocating

accumulated costs that have an indirect

relationship to a cost object

Allocation & Apportionment


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Cost Accumulation

Collection of Cost Data in some organized

way by means of an accounting system

Keeping Cost Accounts


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Cost Unit

A unit of Quantity of product, service or time

in relation to which costs may be expressed

It is unit of Measurement of Cost

Automobile -number

Cloth -metreSugar -Quintal

Tele-call -minute/seconds

Power -KW/H

Transport T/KM


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Cost Centre

A Location, person ,or item of equipment or

group of these for which costs may be ascertainedand used the purpose of Cost Control

Personal or Impersonal Cost Centre

Production And Service Cost Centre

Operation and Process Cost Centre


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Components Of Total Cost

Prime CostTotal Of DMC,DLC & DE

Factory Cost or

Works Cost - Prime Cost +Factory Overheads

Office Or COP- Factory Cost +AOH

Total Cost - COP+ Selling & Distribution OH


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Prime Cost

F Cost

COPcos

D Materials

D .Labour

D. Expenses

Prime Cost F. Overhead

F Cost

A.Overhead

COP

SD overhead

cos

PROFIT

salesCost Accumulation

Prime

Cost


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Components Of Total Cost

Direct Materials+ Direct Labor+

Direct Expenses

Prime Cost+Factory Over Heads

Factory Cost

+Administration

Overheads

COP

+SD Overheads

Prime Cost Or

Direct Cost

Factory Or Works OrManufacturing Cost

Office Cost Or

Cost Of Production

Total Cost Or

Cost Of Sales

Cost Of Sales

+Profit

Selling Price

Or Sales


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Cost Sheet

Reveals Total Cost Of Production Per Unit

Discloses Break Up Of Total Cost

Helps in Preparation Of Estimate

Helps in Fixing Sales Price

Comparison Of Costs


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Few Instructions for Preparation

Of Cost Sheet


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Particulars Total(Rs.)

Per Unit

(Rs.)

Opening Stock of Raw Materials

Add : Purchases

Expenses on Purchases

Less: Closing Stock of Raw Materials

Value of raw materials consumedDirector Labour

Direct Expenses

Prime CostFactory Overheads :

Add OP stock OF WIP

Less Cl. Stock of WIP

Factory CostOffice & Administration Overheads

+ Opening Stock Of FG

-Cl Stock Of FG

Cost of ProductionSelling and distribution Overheads

Cost of Sales

Profit

Sales

COST SHEETName of the Company ----------------------------

Cost Sheet of (Name of the Product) -----------------

For the period ending ------------------------------ Units--


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Production Account/Statement

ParticularsAmount

Rs ParticularsAmount

Rs

To Direct Materials Cons.

To Direct Lab our

To Direct Expenses

Prime Cost ------------

To Factory Overheads

Factory Cost ----------

To O A Overheads

To Cost Of Prod b/d -----------

To Opening Stock Of FG

To Cost Of Goods Sold b/d ---------

To SD Overheads

To Cost Of Sales b/d

To Profit ---------

By Cost Of Production C/d ------------

By CL Stock Of FG

By Cost Of Goods Sold C/d

By Cost Of Sales Sales c/d

By Sales


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Preparation Of Cost Sheet

1 Computation Raw Materials Consumed

2 Computation Of Value of Work In Progress

3 Computation Of Value Of Finished Materials

4 Computation Of Profit

5 Estimation Of Overheads

6 Treatment Of Scrap/By Product

7 Treatment Of Shortage of FG

8 Treatment Of Subsidy


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1 Computation Of Raw Materials Consumed

Opening Stock Of Raw Materials ---------

Add Purchases Of Raw Materials ---------Expenses On Purchase --------

------------

Less Closing Stock Of Raw Materials-----

Defective Materials Returned -----Abnormal Wastage Of RM ------

Cost Of Raw Materials Consumed



------------


Defective Materials Returned -----Abnormal Wastage Of RM ------

Cost Of Raw Materials Consumed



------------


Defective Materials Returned -----Abnormal Wastage Of RM ------ ----------

Cost Of Raw Materials Consumed ------------


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2 Computation Of Value Work In Progress

Consists of

Cost Of Materials To date

Cost Of Labor to date Factory Overheads to date

Valued At Factory Cost

Prime Cost

Add Opening Stock Of WIP

Less Closing Stock Of WIP

Factory Cost

Value At Prime Cost

Direct Materials

Direct Labour

Direct Expenses

+OP Stock Of WIP

-CL Stock Of WIP

Prime Cost


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3 Computation Of Value Of Finished Materials

Cost Of Production ---

Add Opening Stock Of FG---

Less Closing Stock Of FG----

Cost Of Goods Sold


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4 Computation Of Profit

1 Profit As % of Cost( Total Cost Given)

Profit=Cost x Profit%100

2 Profit as a percentage of Selling Price (Total Cost is given)

Profit=Cost X Profit%

100-profit%3 Profit as percentage Of Cost ( Selling Price is given)

Profit =Selling Price x Profit %

100+profit%


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5 Estimation Of Overheads

1 As % Of Prime Cost

2 As % Of Direct Wages3 As % of Labor Cost

4 As % of Administration Cost

5 As Cost Of Direct Materials


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6 Treatment Of Scrap/By Product-

Reliable Value deducted from FOH

7 Treatment Of Shortage of FGNormal Shortage added to Cost Of Production

8 Treatment Of Subsidy

To be deducted from profit


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Items Excluded From Cost

1 Purely Financial Incomes

2 Purely Financial Charges3 Appropriation Of Profit

4 Abnormal Expenses


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Purely Financial Incomes

Interest On Investments

Interest on Bank Deposits

Share Transfer fee

Rent Receivable

Capital Profit

Dividend Received Cash Commission or Discount


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2 Purely Financial Charges

Capital Losses

Damages Payable

Penalties and Fines

Expenses On Transfer Of Company Office

Interest On Bank Loan, Debentures

Discount On Bonds etc

Losses on investmentCash Discount


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3 Appropriation Of Profit

Appropriation Of Sinking FundDividend Paid

Taxes On Income & Profits

Charitable Donations

Transfer To Reserves


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4 Abnormal Expenses & Losses

Cost Of Abnormal Wastage of MaterialsLoss by theft

Loss by fire

Cost of Abnormal Idle Time

Exceptional Bad Debts


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Factory Overhead

Operating Supplies- lubricating Oil, detergent, Welding Materials, paints,

nuts, bolts, dyes, nondurable tools

Repairs & Maintenance-gears, pulleys, belts, washers

Labour cost of Set up, Inspection, Rearranging of Machinery & Equipments

Unproductive Wages or Indirect Wages

Factory Rent

Internal Transport, Overhead Crane

Factory Rates & Insurance

Power & Fuel

Salaries of Foremen ,Supervisor ,technical Directors & Staff

Wages of gateman, time keeper, factory Clerk, Tool Room Staff store keeper

Lighting & Heating Of Factory

Depreciation Of PM, Factory building, tools

Waste Disposal

Training Factory Staff

Canteen

Drawing Office Cost,

Dispensary


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Administration Overheads

Rent, Rates & Insurance of Gen Office

Lighting Heating Of Office

Office Salaries

Depreciation of office building, furniture, equipments

Bank Charges,Audit Fee,

Counting House,

Legal Expenses

Office Telephone & Postage,

Printing & Stationery

Superannuationetc


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Selling & Distribution Overheads

Salaries, commission, traveling of sales Staff

Advertising,

Catalogues, price lists

Rent & Rates,

Maintenance & Insurance of Sales Office, Show

Rooms

Selling Department Salaries & StationeryBad Debts, Collection Charges

Telephones & Postage for Selling

Trade Discount

Market Research

Carriage Out and transport

Normal Wastage of finished Goods

SamplesWarehousing Expenses

Packing,

Rent, Rates & Insurance Of Warehouse

Dep & Running Cost Of Delivery Vans

Wages of Packers ,Van Drivers


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Cost Sheet Of Jay Engineering LtdFor the period Ending 31st March,2004

ParticularsAmount

in Rs

Question No1

Direct Materials 80,000

Direct Labour 40,000

Direct Expenses 12,000

Prime Cost 1,32,000

Factory Overheads:Indirect Wages 10,000

Electric Power 1,000

Depreciation On P&M 2,000

Oil & Waste 200

Lubricants 300

Consumable Stores 1,000Lighting Factory 1,200

Store Keeper Wages 2,000

Rent-Factory 2,000

Gn. Factory Expenses 500

Factory Cost 1,51,200


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Cost Sheet Of Jay Engineering LtdFor the period Ending 31st March,2004

ParticularsAmount

in Rs

Question No1

Factory Cost C/F 1,51,000

Office & Administration OH:

Depreciation Of Office Building 1,000

Directors Fee 2,000

Postage & Telegraph 500

Lighting-Office 400Printing & Stationery 500

Telephone Charges 800

Rent-Office 1,000

Managers Salary 3,000

Cost Of Production 1,60,400

Selling & Distribution OHBad Debts 2,000

Carriage Outwards 300

Gn. Selling Expenses 2,000

Traveling Expenses 1,000

Cost Of Sales 1,65,700


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Particulars Amountin Rs

Amount

in Rs

Ques No

2

COST SHEET

Raw Materials 2,00,000Add Carriage Inwards 1,200

Value Of Materials Consumed 2,01,200

Manufacturing Wages 1,80,000

Chargeable Expenses 3,800

PRIME COST 3,85,000

Factory Overheads:Depreciation-P &M 10,000

Oil & Waste 500

Motive Power 5,000

Lighting & Heating 800

Rent: Factory 2,000

Gas & Water-factory 1,500Repairs-factory 7,200

Unproductive Wages 14,000

Stationery Works 1,200

Managers Salary 18,000

(60% Of 30000) 60,000

FACTORY COST 4,45,000


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Particulars Amountin Rs

Amount

in Rs

Ques No

2

COST SHEET

Factory Cost C/F 4,45,200

OA OverheadsDepreciation 800

Salaries 15,000

Rent 1,000

Gas & Water 600

Directors Fee 7,000

Gn. Administration Expenses 5,000Stationery 800

Managers Salary (40%0 12,000 42,200

COST OF PRODUCTION 4,87,400SD Overheads:

Traveler's Commission 4,000

Bad Debt 6,200Rent-Warehouse 1,500

Carriage Outwards 3,200Discount Allowed 2,100

Packing Expenses 2,100

Advertising 5,000

COST OF SALES 5,11,500

Profit 88,500

Sales 6,00,000


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ParticularsTotal Cost

Rs

Ques No

3

Per Qtl Cost

Rs

Cost Sheet Of A Product OutPut 17,200units

Raw Materials 28,000 1.63Process & General Wages 63,000 3.69

Prime Cost 91,500 5.32

Factory Overheads :Fuel 6,900 0.40

Electric Power 1,340 0.08

Repairs 2.400 0.14

Haulage 1,060 0.06

Light & Water 400 0.02

Rent 2,000 0.11

Rates and Insurance 2,500 0.15

Depreciation On Machinery

Factory Cost 1,08,400 6.30

O &A Overheads

Office Salaries 7,000 0.41

Administration Exp 5,000 0.29

Cost Of Production 1,20,000 7.00

Total Cost Per Unit=Rs 7.00


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Cost Sheet for the Half Year Ended

30th September,2004 Units-25,600

ParticularsAmount

in Rs

Question No4

Raw Materials Purchased 1,32,000

Add Opening Stock 22,000

Carriage Inward 1,584

1,55,584

Less Closing Stock 24,464

a) Value Of Materials Consumed 1,31,120Direct Wages 1,10,000

PRIME COST 2,41,120

Works Overheads

Rent, Taxes, Insurance & Others 44,000

Cost Of Supervision 8,800

Opening WIP 5,280

2,99,200

Less Closing Stock Of WIP 17,600

b) Cost Of Manufacturing 2,81,000

Add Opening Stock Of Finished Goods 17,600

2,99,000

Less Closing Stock Of Finished Stock 35,200

Cost Of Production 2,64,000


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Cost Sheet for the Half Year Ended

30th September,2004 Units-25,600

ParticularsAmount

in Rs

Question No4

Cost Of Production C/F 2,64,000

Add Selling & Distribution Expenses 18,000

24000 tons@ 75 paise per ton

C) Cost of Sales 2,82,000

d) Net Profit 48,000

SALES 3,30,000

Workings

1 Profit Per Ton = 48,000/24000= Rs 2 Per ton

2 Qty Sold= Opening Stock Of finished Goods+ Produced-Cl. Stock Of Finished Goods

1600 tons+25,600-32000=24,000tons

3901803 Cost Ascertainment

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