Post on 06-Apr-2018
transcript
8/3/2019 3901803 Cost Ascertainment
1/36
Cost Ascertainment
8/3/2019 3901803 Cost Ascertainment
2/36
Cost
Amount of Expenditure (actual or notional) incurred or attributable
to a given thing- material purchased
8/3/2019 3901803 Cost Ascertainment
3/36
Cost Object
Anything for which a measurement of cost
is desired
It could be a product, Service, Customer,
Brand, Activity, Department
8/3/2019 3901803 Cost Ascertainment
4/36
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
8/3/2019 3901803 Cost Ascertainment
5/36
Cost Accumulation
Collection of Cost Data in some organized
way by means of an accounting system
Keeping Cost Accounts
8/3/2019 3901803 Cost Ascertainment
6/36
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
8/3/2019 3901803 Cost Ascertainment
7/36
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
8/3/2019 3901803 Cost Ascertainment
8/36
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
8/3/2019 3901803 Cost Ascertainment
9/36
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
8/3/2019 3901803 Cost Ascertainment
10/36
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
8/3/2019 3901803 Cost Ascertainment
11/36
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
8/3/2019 3901803 Cost Ascertainment
12/36
Few Instructions for Preparation
Of Cost Sheet
8/3/2019 3901803 Cost Ascertainment
13/36
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--
8/3/2019 3901803 Cost Ascertainment
14/36
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
8/3/2019 3901803 Cost Ascertainment
15/36
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
8/3/2019 3901803 Cost Ascertainment
16/36
Preparation Of Cost Sheet
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
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
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 ------------
8/3/2019 3901803 Cost Ascertainment
17/36
Preparation Of Cost Sheet
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
8/3/2019 3901803 Cost Ascertainment
18/36
Preparation Of Cost Sheet
3 Computation Of Value Of Finished Materials
Cost Of Production ---
Add Opening Stock Of FG---
Less Closing Stock Of FG----
Cost Of Goods Sold
8/3/2019 3901803 Cost Ascertainment
19/36
Preparation Of Cost Sheet
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%
8/3/2019 3901803 Cost Ascertainment
20/36
Preparation Of Cost Sheet
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
8/3/2019 3901803 Cost Ascertainment
21/36
Preparation Of Cost Sheet
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
8/3/2019 3901803 Cost Ascertainment
22/36
Items Excluded From Cost
1 Purely Financial Incomes
2 Purely Financial Charges3 Appropriation Of Profit
4 Abnormal Expenses
8/3/2019 3901803 Cost Ascertainment
23/36
Items Excluded From Cost
Purely Financial Incomes
Interest On Investments
Interest on Bank Deposits
Share Transfer fee
Rent Receivable
Capital Profit
Dividend Received Cash Commission or Discount
8/3/2019 3901803 Cost Ascertainment
24/36
Items Excluded From Cost
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
8/3/2019 3901803 Cost Ascertainment
25/36
Items Excluded From Cost
3 Appropriation Of Profit
Appropriation Of Sinking FundDividend Paid
Taxes On Income & Profits
Charitable Donations
Transfer To Reserves
8/3/2019 3901803 Cost Ascertainment
26/36
Items Excluded From Cost
4 Abnormal Expenses & Losses
Cost Of Abnormal Wastage of MaterialsLoss by theft
Loss by fire
Cost of Abnormal Idle Time
Exceptional Bad Debts
8/3/2019 3901803 Cost Ascertainment
27/36
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
8/3/2019 3901803 Cost Ascertainment
28/36
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
8/3/2019 3901803 Cost Ascertainment
29/36
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
8/3/2019 3901803 Cost Ascertainment
30/36
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
8/3/2019 3901803 Cost Ascertainment
31/36
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
8/3/2019 3901803 Cost Ascertainment
32/36
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
8/3/2019 3901803 Cost Ascertainment
33/36
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
8/3/2019 3901803 Cost Ascertainment
34/36
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
8/3/2019 3901803 Cost Ascertainment
35/36
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
8/3/2019 3901803 Cost Ascertainment
36/36
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