CA – IPC TEST
COST SHEET+ OPERATING COSTING
Duration: 1hour 50mins
MM: 60Marks
Solution 1: Comparative Production Statement
Particulars
Existing Forge
Production Units
4,000 x 10 = 40,000
Less: Rejects
40,000 x 6% = (2,400)
Net Good Units
37,600
Statement of Comparative Conversion Cost
Costs Items
Amount in (`)
Labour Items
Fuel
Power
Consumables
Repairs and Maintenance
Tooling
Depreciation
Total Cost
Conversion cost per unit
6,000
24,000
10,000
12,000
12,000
8,000
12,000
84,000
`84,000
= `2.234; `140,000 = `1.7857
37,600 units
78,400 units
Solution 2: Computation of Total Output in a year:
Annual installed capacity is 1,20,000 units, i.e., 1,20,000 ÷ 12
Output in 2 months with 60% capacity = 10,000 units x 2 months x 60%
Output in 6 months with 75% capacity = 10,000 units x 6 months x 75%
Output in 4 months with 80% capacity = 10,000 units x 4 months x 80%
New Forge
4,000 x 20 = 80,000
80,000 x 2% = (1,600)
78,400
Amount in (`)
8,000
36,000
14,000
20,000
18,000
20,000
24,000
1,40,000
10,000 units per month
12,000 units
45,000 units
32,000 units
89,000 units
Note: Only one selling price will be calculated for the year, and not separate prices at different capacity utilisations.
Statement of Cost for the year
Particulars
Amount in (`)
Amount in (`)
Amount in (`)
Material 89,000 units x `8
7,12,000
Add: Labour:
For 2 months `56,000 minimum x 2
1,12,000
For 6 months 45,000 units x `8
3,60,000
For 4 months 32,000 units x `8
2,56,000
7,28,000
Prime Cost
14,40,000
Variable Overheads 89,000 units x `3
2,67,000
Fixed Overheads
1,04,000
Semi Variable Overheads:
For 2 months at 60% = (`48,000 ÷ 12) x 2
8,000
For 6 months at 75% being `6,000 more for every 10% increase in
30,000
capacity or part [(`48,000 + `6,000 + `6,000) ÷ 12] x 6
For 4 months at 80% = [(`48,000 + `6,000 + `6,000) ÷ 12] x 4
20,000
58,000
Total Overheads
4,29,000
Total Cost
18,69,000
Profit 25% on sales i.e., one third of cost = `18,69,000 x 1/3
6,23,000
Total Sales
24,92,000
Selling Price per unit (`24,92,000 ÷ 89,000 units)
28
Solution 3:
Cost Sheet of Zubi-dubi Ltd. of 10,000 units produced during for the year
ending 31st March December 2000 (Output 10,000 units)
Total
Cost per unit
Particulars
Amount in (`)
Amount in (`)
Amount in (`)
Amount in (`)
Materials
90,000
9.00
Wages
60,000
6.00
Prime Cost
1,50,000
15.00
Factory Overheads:
Power and Consumable stores
Factory Indirect wages
Lighting of Factory
Defective works (rectification)
Plant repairs etc.
12,000
15,000
5,500
3,000
11,500
47,000
(2,000)
1.20
1.50
0.55
0.30
1.15
4.70
(0.20)
Less: Sale of Scrap
Work on Cost
45,000
4.50
Works Cost
1,95,000
19.50
Clerical Salaries and Management Exp.
33,500
3.35
Cost of Production
2,28,500
22.85
Selling Overheads
5,500
00.55
Cost of Goods Sold
2,34,000
23.40
Profit (Bal. Fig)
82,000
8.20
Sales
3,16,000
31.60
Estimated Cost Sheet for Output 15,000 units in 2001
Particulars
Total Cost in (`)
Cost per unit in (`)
Materials @ 9 (`9 x 15,000 units)
1,35,000
Add: 10% increase in cost
13,500
1,48,500
9.90
Direct wages @ `6 per unit (`6 x 15,000 units)
90,000
Add: 10% increase
9,000
99,000
6.60
Prime Cost
2,47,500
16.50
Factory Overheads: 75% of wages (99,000 x 75/100)
74,250
4.95
Works Cost
3,21,750
21.45
Office and Selling Expenses: 20% of Works Cost (3,21,750 x 20%)
64,350
4.29
Cost of Goods sold
3,86,100
25.74
Profit (balancing figure)
78,900
5.26
Sales
4,65,000
31.00
Working Notes:
(i) Percentage of Factory Overheads to Wages = (45,000 ÷ 60,000) x 100 = 75%
(ii) Percentage of Office and Selling Expenses to Works cost = (39,000 ÷ 1,95,000) x 100 = 20%.
Solution 4:
Cost Sheet for the period ending
Particulars
Amount in (`)
Amount in (`)
Opening Stock of Materials
10,000
Add: Purchases
1,00,000
Less: Closing Stock of Materials
(15,000)
Direct Materials consumed
95,000
Add: Direct Labour
3,00,000
Add: Direct Expenses
20,000
Prime Cost
4,15,000
Add: Motive Power
6,000
Add: Indirect Materials
24,000
Add: Other Factory Expenses
30,000
Gross Works Cost
4,75,000
Add: Opening WIP
30,000
Less: Closing WIP
(18,000)
Net Works Cost/Factory Cost
4,87,000
Add: Office & Administrative Overheads
60,000
Cost of Production (12,000 + 4,000 – 1,000) = 15,000 units
5,47,000
Add: Opening Stock of Finished Goods (1,000 units)
80,000
6,27,000
Less: Closing Stock of Finished Goods of 4,000 units
Based on LIFO:
1,000 units @ `80
(80,000)
3,000 units at (`5,47,000 ÷ 15,000 units) x 3,000 units
(1,09,400)
(1,89,400)
Cost of Production of 12,000 units sold
4,37,600
Add: Showroom Expenses
40,000
Add: Selling Commission @ 5%
60,000
Add: Other Selling Expenses
15,000
1,15,000
Cost of Sales
5,52,600
Profit (Based on LIFO Balancing Figure)
6,47,400
Sales
12,00,000
Based on FIFO:
Cost of Opening Stock of 1,000 units + Current production of 15,000 units
6,27,000
Less: Closing Stock of 4,000 units = (`5,47,000 ÷ 15,000 units) x 4000 units
(1,45,867)
Cost of Production of 12,000 units sold
4,81,133
Add: Total Selling & Distribution Overhead
1,15,000
Cost of Sales
5,96,133
Profit (Based on FIFO Balancing Figure)
6,03,867
Sales
12,00,000
Based on Weighted Average:
Cost of Stock of 1,000 units + Current Production of 15,000 units
6,27,000
Less: Closing Stock of 4,000 units = (`6,27,000 ÷ 16,000 units) x 4,000 units
(1,56,750)
Cost of Production of 12,000 units sold
4,70,250
Add: Total Selling & Distribution Overhead
1,15,000
Cost of Sales
5,85,250
Profit (Based on Weighted Average Balancing Figure)
6,14,750
Sales
12,00,000
Solution 5: Statement Showing Computation of Total Operating Cost per month for each Vehicle
Particulars
Ramgarh
Pratapgarh
Devgarh
Fixed Costs:
Driver’s Salary
18,000
18,000
18,000
Cleaner’s Salary
11,000
11,000
11,000
Allocated Garage Parking Fee
1,350
1,350
1,350
Depreciation (WN 1)
9,183.33
10,933.33
7,708.33
Toll Tax (`2,850 ÷ 4) (`3,020 ÷ 3)
712.50
1,006.67
(A)
40,245.83
42,290
38,058.33
Variable Costs:
Cost of Diesel per vehicle per month (WN 3)
31,320
23,664
18,560
Servicing Cost (WN 4)
2,592
Nil
1,152
(B)
33,912
23,664
19,712
Total Operating Cost per Vehicle per month (A) + (B)
74,157.83
65,954
57,770.33
(ii) Vehicle Operating Cost per litre of milk =
Total Operating Cost per month
Total Milk Carried over a month (WN 5)
= (`74,157.83 x 4 vehicles) + (`66,202 x 3 vehicles) + (`57,770.33 x 5 vehicles)
1,47,00,000 litres
= `7,84,088.97 = `0.053 per litre
1,47,00,000
Working Notes: (1) Calculation of Depreciation per vehicle
Particulars
Ramgarh
Pratapgarh
Devgarh
Original Cost per vehicle
`11,02,000
`13,12,000
`9,25,000
Depreciation per vehicle @10%
`1,10,200
`1,31,200
`92,500
Depreciation per vehicle per month
9,183.33
10,933.33
7,708.33
(2) Distance Covered by Vehicles
Per Vehicle
No. of
All Vehicles
Particulars
(Km)
Vehicles
(Km)
Ramgarh
4,320
4
17,280
(3 trips per day x 2 rounds per trip x 24 Kms per round x 30 days per month)
Pratapgarh
4,080
3
12,240
(2 trips per day x 2 rounds per trip x 34 Km per round x 30 days per month)
Devgarh
1,920
5
9,600
(2 trips per day x 2 rounds per trip x 16 Km per round x 30 days per month)
.
(3) Computation of Cost of Diesel per vehicle per month
Particulars
Ramgarh
Pratapgarh
Devgarh
Year of Use
3rd
2nd
6th
Mileage
8 Kmpl
10 Kmpl
6 Kmpl
Distance covered by a vehicle per month (WN 2) (Km)
4,320
4,080
1,920
Diesel used (in litres) (Distance Covered ÷ Mileage)
540
408
320
Total Cost of Diesel @ `58 per litre
31,320
23,664
18,560
(4) Computation of Servicing Costs
Particulars
Ramgarh Pratapgarh Devgarh
Year of Use
3rd
2nd
6th
Covered under free service warranty
No
Yes
No
Total Distance travelled per vehicle per month (in Km) (WN 2) (I)
4,320
4,080
1,920
Servicing Cost
`3,000 = 0.60 per Km
2,592
Nil
1,152
5000 Km
(5) Total milk Carried per month
Particulars
Working
Litres Carried
Ramgarh
(4 vehicles x 3 trips per day x 30 days x 25,000 litres per vehicle x 70%)
63,00,000
Pratapgarh (3 vehicles x 2 trips per days x 30 days x 25,000 litres per vehicle x 70%)
31,50,000
Devgarh
(5 vehicles x 2 trips per day x 30 days x 25,000 litres per vehicles x 70%)
52,50,000
Note: Alternatively, it may be assumed that Servicing Costs are `3,000 for every completed 5,000 Kms, in that case, the cost of
Servicing Ramgarh vehicles & Devgarh vehicles will be `9,000 and `3,000 respectively. Correspondingly, the Total Operating Cost
per vehicle per month for Ramgarh vehicles shall reduce to `73,815.75 and the same for Devgarh Vehicles shall total to `57,218.40
Solution 6: (i) Variable cost per day per room when occupied = 4 + 9 + 2 = `15
Particulars
Amount in (`)
Variable cost at 50% occupancy level:
87,600
(32 rooms x (50% x 365 days) x `15)
Add: Variable cost for rest of 50% when unoccupied
11,680
(32 room x 50% x 365 days x `2)
Total Variable cost in an year at 50% occupancy
99,280
Add: Fixed charges per annum
4,26,320
Total cost in an year
5,25,600
Total cost is equal to total tariff at Break-Even point
B.E. Tariff =
Total Cost
=
`5,25,600
= `90 per day per room
No. of occupied rooms x Total days 16 rooms x 365 days
Total revenue at 50% occupancy (16 rooms x 365 days x `90)
5,25,600
Less: Variable cost
(99,280)
Contribution
4,26,320
Less: Fixed charges
(4,26,320)
Profit/Loss
Nil
(ii) At 60% occupancy level:
Amount in (`)
Revenue (32 rooms x 60% x 365 days x `90)
6,30,720
Less: Variable cost when occupied (32 x 60% x 365 x 15)
1,05,120
Variable cost for remaining 40% (32 x 40% x 365 x 2)
9,344
(1,14,446)
Contribution
5,16,256
Less: Fixed charges
(4,26,320)
Profit
89,936
(b) At 70% occupancy level:
Amount in (`)
Revenue (32 rooms x 70% x 365 days x `90)
7,35,840
Less: Variable cost when occupied (32 x 30% x 365 x 15)
1,22,640
Variable cost for remaining 30% unoccupied (32 x 30% x 365 x 2)
7,008 (1,29,648)
Contribution
6,06,192
Less: Fixed charges
(4,26,320)
Profit
1,79,872
(c) At 80% occupancy level:
Amount in (`)
Revenue (32 rooms x 80% x 365 days x `90)
8,40,960
Less: Variable cost when occupied (32 x 80% x 365 x 15)
1,40,160
Variable cost for remaining 20% unoccupied (32 x 20% x 365 x 2)
4,672 (1,44,832)
Contribution
6,96,128
Less: Fixed charges
(4,26,320)
Profit
2,69,808
(iii) If tariff per day is reduced by 10% i.e. brought down to `90 – `9 = `81 per day per room:
At 100% occupancy level: :
Amount in (`)
Revenue (32 room x 100% x 365 days x `81)
9,46,080
Less: Variable cost when occupied (32 x 100% x 365 x 15)
(1,75,200)
Contribution
7,70,880
Less: Fixed charges
(4,26,320)
Profit
3,44,560
Thus profit is highest if 10% reduction in tariff results in 100% occupancy.