Illustrations · Q7
Q.Prepare a Cost Sheet from the following particulars, showing Prime Cost, Factory Cost, Cost of Production, Cost of Sales and Sales:
- Direct Material Consumed: ₹60,000
- Direct Wages: ₹20,000
- Direct Expenses: ₹4,000
- Factory Overhead: ₹16,000
- Opening Work-in-Progress: ₹5,000
- Closing Work-in-Progress: ₹9,000
- Office & Administration Overhead: 10% of Factory Cost
- Selling & Distribution Overhead: ₹4,400
- Profit: 10% on Cost of Sales
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Start your 14-day free trial to unlock the full solution →Work-in-Progress represents partly-completed units. Opening WIP was partly done at the start of the period and is now completed WITHIN this period, so its cost is ADDED at the Factory Cost stage. Closing WIP is work started this period but not yet finished, so it must be SUBTRACTED — its cost belongs to a future period's output, not this period's completed production.
| Particulars | Total Cost (₹) |
|---|---|
| Direct Material Consumed | 60,000 |
| Direct Wages | 20,000 |
| Direct Expenses | 4,000 |
| Prime Cost | 84,000 |
| Add: Factory Overhead | 16,000 |
| 1,00,000 | |
| Add: Opening Work-in-Progress | 5,000 |
| Less: Closing Work-in-Progress | (9,000) |
| Factory Cost (Works Cost) | 96,000 |
| Add: Office & Administration Overhead (10% of Factory Cost = 10% × 96,000) | 9,600 |
| Cost of Production | 1,05,600 |
| Add: Selling & Distribution Overhead | 4,400 |
| Cost of Sales | 1,10,000 |
| Add: Profit (10% on Cost of Sales = 10% × 1,10,000) | 11,000 |
| Sales | 1,21,000 |
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