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    Cost Accounting

    Uploaded by

    Xen Xeon
    Cost accounting involves tracking and accumulating costs to determine product costs and profitability. A cost sheet is prepared to calculate prime cost, works cost, cost of goods manufactured, cost of goods sold, and sales. Direct materials, direct labor, and direct expenses are costs that can be traced directly to a cost object like a product or service. The document provides two examples of cost sheets with financial information for different companies. The cost sheets calculate various cost components like prime cost, factory cost, total cost, and break even analysis involving contribution margin, fixed costs, sales mix, margin of safety, and target profit calculations.

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    Cost Accounting

    Uploaded by

    Xen Xeon
    114 views3 pages
    Cost accounting involves tracking and accumulating costs to determine product costs and profitability. A cost sheet is prepared to calculate prime cost, works cost, cost of goods manufactured, cost of goods sold, and sales. Direct materials, direct labor, and direct expenses are costs that can be traced directly to a cost object like a product or service. The document provides two examples of cost sheets with financial information for different companies. The cost sheets calculate various cost components like prime cost, factory cost, total cost, and break even analysis involving contribution margin, fixed costs, sales mix, margin of safety, and target profit calculations.

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    Cost accounting involves tracking and accumulating costs to determine product costs and profitability. A cost sheet is prepared to calculate prime cost, works cost, cost of goods manufactured, cost of goods sold, and sales. Direct materials, direct labor, and direct expenses are costs that can be traced directly to a cost object like a product or service. The document provides two examples of cost sheets with financial information for different companies. The cost sheets calculate various cost components like prime cost, factory cost, total cost, and break even analysis involving contribution margin, fixed costs, sales mix, margin of safety, and target profit calculations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    114 views3 pages

    Cost Accounting

    Uploaded by

    Xen Xeon
    Cost accounting involves tracking and accumulating costs to determine product costs and profitability. A cost sheet is prepared to calculate prime cost, works cost, cost of goods manufactured, cost of goods sold, and sales. Direct materials, direct labor, and direct expenses are costs that can be traced directly to a cost object like a product or service. The document provides two examples of cost sheets with financial information for different companies. The cost sheets calculate various cost components like prime cost, factory cost, total cost, and break even analysis involving contribution margin, fixed costs, sales mix, margin of safety, and target profit calculations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Cost Sheet

    Question
    1. Define cost accounting and its objectives.
    2. What is cost sheet? Why is it prepared?
    3. Define direct material; direct labor and direct expenses with example.

    Problem
    1. From the books of accounts of XYZ Company Ltd., the following details have been extracted
    for the year ending March 31, 2018.
    13
    Particulars Taka Particulars Taka
    Inventories on 1st April 2017: Bad debts 10,000
    Finished Stock 80,000 Purchase return 8,000
    Raw Materials 30,000 Purchase discount 12,000
    Work-in-progress 40,000 Dividend Income 15,000
    Material purchased during Inventories on 31st
    the year 1,100,000 March 2018: 70,000
    Direct labor paid 650,000 Finished Stock 40,000
    Chargeable expenses 100,000 Raw Materials 60,000
    Work-in-
    Freight of materials 10,000 progress 15,000
    Interest on borrowed fund 25,000 Interest received 18,000
    Factory overhead @ 50% of direct labor; Administrative overheads @ 10% of works cost; Selling
    overheads @ 10% of sales; Profit 25% of sales.

    From the above details you are required to prepare a cost sheet showing:
    i) Prime cost;
    ii) Net works cost;
    iii) Cost of Goods Manufactured;
    iv) Cost of Goods Sold and
    v) Sales.

    2. From the books of accounts of XYZ Company Ltd., the following details have been extracted
    for
    the year ending December 31, 2015.
    Particulars Taka
    Stock materials: Opening 188,000
    Closing 200,000
    Material purchased during the year 832,000
    Direct wages paid 238,000
    Indirect wages 16,000
    Salaries to administrative staff 40,000
    Freight: Inward 32,000
    Outward 20,000
    Cash discount allowed 14,000
    Bad debts written off 18,000
    Repairs to plant and machinery 42,000
    Rent, rates, taxes: Factory 12,000
    Office 6,400
    Travelling expenses 12,400
    Salesman salaries and commission 33,600
    Depreciation written off: Plant and Machinery 28,400
    Furniture 2,400
    Director fees 24,000
    Electricity charges (factory) 48,000
    Fuel (for boiler) 64,000
    General Manager's salary 48,000

    From the above details you are required to prepare a statement showing: i) Prime cost
    ii) factory cost and iii) total cost.

    CVP Analysis

    1. What is meant by the term break-even point?


    2. What is meant by the margin of safety and sales mix?

    3. Menlo Company distributes a single product. The company’s sales and expenses for last
    Month are following:

    Total Tk. Per Unit Tk.


    Sales 450,000 30
    Variable expenses 180,000 12
    Contribution margin 270,000 18
    Fixed expenses 216,000
    Net operating income 54,000

    Required:

    i. What is the monthly break-even point in units sold and in sales taka?
    ii. Without resorting to computations, what is the total contribution margin at the
    break-even point?
    iii. How many units would have to be sold each month to earn a target profit of tk.
    90,000?
    iv. Refer to the original data. Compute the company’s margin of safety in both taka and
    percentage terms.

    4. Voltar Company manufactures and sells a specialized cordless telephone for high
    electromagnetic radiation environments. The company’s contribution format income statement
    for the most recent year is given below:
    Total Per Unit Percent of Sales
    Sales (20,000 units) .....................Tk.1,200,000 Tk.60 100%
    Variable expenses .......................... 900,000 45 ?%
    Contribution margin ........................ 300,000 Tk. 15 ?%
    Fixed expenses .............................. 240,000
    Net operating income .....................Tk. 60,000

    Management is anxious to increase the company’s profit and has asked for an analysis of a
    number of items.

    Required:

    i. Compute the company’s CM ratio and variable expense ratio.


    ii. Compute the company’s break-even point in both units and sales Tk. Use the equation
    method.
    iii. Assume that sales increase by Tk.400,000 next year. If cost behavior patterns remain
    unchanged, by how much will the company’s net operating income increase? Use the CM ratio
    to compute your answer.

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