Q.From the following particulars, prepare a Cost Sheet showing the total cost and profit:
Opening stock of raw materials ₹20,000; Purchases of raw materials ₹1,80,000; Closing stock of raw materials ₹30,000; Direct wages ₹90,000; Direct expenses ₹15,000; Factory overheads ₹45,000; Opening stock of finished goods ₹25,000; Closing stock of finished goods ₹40,000; Office and administration overheads ₹32,000; Selling and distribution overheads ₹28,000; Sales ₹5,00,000.

This cost sheet requires two stock adjustments — raw materials consumed at the start, and finished-goods stock after cost of production.

Two adjustments are needed: raw materials consumed (opening + purchases − closing) at the top, and the finished-goods stock adjustment (add opening, less closing) after cost of production.

Working.

• Raw materials consumed = 20,000 + 1,80,000 − 30,000 = ₹1,70,000.
• Prime cost = 1,70,000 + 90,000 + 15,000 = ₹2,75,000.
• Works cost = 2,75,000 + 45,000 = ₹3,20,000.
• Cost of production = 3,20,000 + 32,000 = ₹3,52,000.
• Cost of goods sold = 3,52,000 + 25,000 − 40,000 = ₹3,37,000.
• Cost of sales = 3,37,000 + 28,000 = ₹3,65,000. …

Independent recomputation: cost of production = materials consumed + wages + direct expenses + factory OH + office OH = 1,70,000 + 90,000 + 15,000 + 45,000 + 32,000 = 3,52,000. Adjust finished goods (+25,000 − 40,000) = 3,37,000; add …

The two most common errors are (i) forgetting to adjust raw-material stock, and using purchases instead of materials consumed for prime cost; and (ii) adjusting finished-goods stock at the wrong stage — finished-goods stock is adjusted after cost of produ …