Cost Sheet Overview
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Questions and Answers

What is the expected increase in sales quantity?

  • 30%
  • 10%
  • 20% (correct)
  • 40%

    • What is the expected increase in material prices?

  • 40%
  • 30%
  • 20%
  • 10% (correct)

    • What is the amount of additional Advertisement Expenses incurred?

  • ₹ 45,200 (correct)
  • ₹ 75,320
  • ₹ 54,240
  • ₹ 65,280

    • If the initial output was 100 units, what is the expected output after the increase?

    <p>120 units (B)</p> Signup and view all the answers

    If the initial material cost was ₹ 100, what is the expected material cost after the increase?

    <p>₹ 110 (B)</p> Signup and view all the answers

    What is the monthly production capacity of the plant?

    <p>10,000 units (A), 10,000 units (B)</p> Signup and view all the answers

    If the company produces 10,000 units in a month, what would be the total raw material cost?

    <p>₹200,000 (C)</p> Signup and view all the answers

    Assuming that the company operates at full capacity, what is the total raw material cost for the entire year?

    <p>₹24,00,000 (A)</p> Signup and view all the answers

    If the company decides to purchase raw materials at a discounted rate of ₹18 per unit, what would be the total raw material cost for a production run of 10,000 units?

    <p>₹1,80,000 (D)</p> Signup and view all the answers

    What is the total cost of production for the year 2017?

    <p>₹ 4,00,000 (B)</p> Signup and view all the answers

    What is the cost of goods sold for the year 2017?

    <p>₹ 4,00,000 (D)</p> Signup and view all the answers

    What is the selling price per unit?

    <p>₹ 66.67 (C)</p> Signup and view all the answers

    What is the profit margin percentage?

    <p>20% (A)</p> Signup and view all the answers

    If the selling expenses were increased by 10%, what would be the new profit margin percentage?

    <p>18.18% (B)</p> Signup and view all the answers

    What is the expected net return on the capital employed?

    <p>25% (A)</p> Signup and view all the answers

    What is the purpose of preparing a Cost Sheet?

    <p>All of the above. (D)</p> Signup and view all the answers

    What is the purpose of preparing a price statement?

    <p>All of the above. (D)</p> Signup and view all the answers

    What factors are considered when determining the selling price of a product or service?

    <p>All of the above. (D)</p> Signup and view all the answers

    What is the relationship between the net return on capital employed and the selling price?

    <p>The higher the net return on capital employed, the higher the selling price must be. (C)</p> Signup and view all the answers

    If the Works Overheads for a unit are ₹ 1,000, what would be the Direct Labour cost for that unit?

    <p>₹ 1,750 (A)</p> Signup and view all the answers

    If the Cost of Goods Sold per unit (excluding Administration Overheads) is ₹ 11,200, and the Direct Labour cost is ₹ 1,750, what is the Works Overheads cost for that unit?

    <p>₹ 9,450 (A)</p> Signup and view all the answers

    What would be the total cost per unit, including Selling Expenses, but excluding Administration Overheads?

    <p>₹ 11,900 (A)</p> Signup and view all the answers

    If the Works Overheads for a unit are ₹ 1,000 and Direct materials cost is ₹ 5,000, what would be the total Cost of Goods Sold (excluding Administration Overheads) for that unit?

    <p>₹ 7,750 (D)</p> Signup and view all the answers

    If the Selling Expenses per unit were to increase to ₹ 900, and the Cost of Goods Sold per unit (excluding Administration Overheads) remains at ₹ 11,200, what would be the new total cost per unit, excluding Administration Overheads?

    <p>₹ 12,100 (B)</p> Signup and view all the answers

    What is the value of the opening inventory of raw materials?

    <p>₹ 1,60,000 (C)</p> Signup and view all the answers

    What is the cost of goods sold (COGS) based on the information provided?

    <p>₹ 6,35,000 (B)</p> Signup and view all the answers

    What is the value of the total manufacturing overhead?

    <p>₹ 2,43,700 (C)</p> Signup and view all the answers

    What is the value of the total indirect expenses?

    <p>₹ 93,900 (C)</p> Signup and view all the answers

    What is the value of the cost of goods manufactured (COGM)?

    <p>₹ 6,35,000 (A)</p> Signup and view all the answers

    What is the value of the direct material used in production?

    <p>₹ 3,04,000 (D)</p> Signup and view all the answers

    What is the amount of gross profit based on the given financial data?

    <p>₹ 1,13,000 (A)</p> Signup and view all the answers

    What is the total value of the closing inventory?

    <p>₹ 3,95,000 (B)</p> Signup and view all the answers

    Flashcards

    Installed Capacity

    The total production ability of a plant, measured annually.

    Monthly Distribution

    The capacity of the plant spread evenly across each month.

    Cost Structure

    The breakdown of costs involved in production of a product.

    Raw Material Cost

    The expense associated with materials used to produce a unit.

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    Unit Production Cost

    The total cost incurred for producing a single unit of product.

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    Advertisement Expenses

    Costs incurred for advertising to promote sales.

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    Sales Growth Percentage

    The expected increase in sales quantity by a certain percentage.

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    Material Price Increase

    An increase in the cost of raw materials by a certain percentage.

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    Cost-Benefit of Advertising

    Weighing additional advertising costs against increased sales revenue.

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    Impact of Advertising

    The effect of advertising on increasing output and sales quantity.

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    Total Production

    The total number of units produced in a period, here 10,000 units.

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    Total Costs

    The sum of all costs incurred: ₹ 2,00,000 + ₹ 1,20,000 + ₹ 80,000 + ₹ 40,000 + ₹ 10,000.

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    Selling Price Calculation

    Selling price is determined after adding profit margin to total cost.

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    Factory Overheads

    Indirect costs related to manufacturing, here ₹ 80,000.

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    Rate of Profit

    The percentage of profit based on selling price, which is 25%.

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    Direct Labour

    The labor cost directly associated with the manufacturing of goods, calculated as 175% of Works Overheads.

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    Works Overheads

    Indirect costs associated with production that are not direct labour or materials.

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    Cost of Goods Sold

    Total cost incurred to produce goods sold during a period, excluding administrative expenses; ₹ 11,200 per unit.

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    Selling Expenses

    Total costs incurred to sell products, specifically ₹ 700 per unit in this context.

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    Excluding Administration Overheads

    Refers to costs not included in the Cost of Goods Sold that arise from running the business.

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    Net Return

    The profit earned after all expenses are deducted from the revenue.

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    Capital Employed

    The total amount of capital used for the acquisition of profits.

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    Cost Sheet

    A detailed report showing the costs incurred for a specific unit production.

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    Price Statement

    A document indicating the price quoted to the customer based on costs.

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    Expected Profit Margin

    The percentage of net return anticipated on investment capital.

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    Inventories

    Assets held for sale or use in production.

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    Raw Material

    Basic materials used in the production process.

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    WIP (Work in Progress)

    Goods in the production process but not yet completed.

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    Closing Inventories

    Value of unsold stock at the end of an accounting period.

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    Sales Returns

    Goods returned by customers, reducing total sales.

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    Factory Expenses

    Costs associated with running a manufacturing facility.

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    Sales Commission

    Payment to sales personnel based on sales made.

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    Study Notes

    Cost Sheet

    • A cost sheet is a statement outlining the various subdivisions of costs, illustrating the breakdown of costs according to their nature, relation to cost centers, and relation to functions.
    • Subdivisions of costs include material, labor, and expense.
    • Cost sheet classifications include direct and indirect costs, as well as those related to production, goods sold, and sales.

    Items Excluded from Cost Sheet

    • Items not included on a cost sheet can include write-offs, such as goodwill or preliminary costs; provisions, including those for income tax; and financial income or expense not directly related to sales.
    • Disputed items, such as audit fees, statutory audit fees, and bad debts, have different treatment.

    Valuation of Inventory

    • Inventory valuation can be done using various methods, depending on the specific inventory requirements.
    • These methods may vary for different inventory types.

    Cost Sheet Format and Classification

    • Cost sheets have a specific format for classifying costs, which varies across industries and organizations.
    • A cost sheet often classifies costs into different categories based on whether they are direct or indirect, and whether they pertain to production, sales, or administration.

    Effect of Semi-Variable Overhead

    • Semi-variable overheads have an impact on cost sheets, often influencing the total cost of production.
    • The effect is specific to each cost sheet.

    Multiple Products

    • Cost methods for multiple products vary but are essential for calculating costs for different product types on a cost sheet.

    Treatment of Defectives

    • Defects in production can affect the valuation of inventory and related costs on a cost sheet, and how these costs are handled and accounted for will vary.

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    Related Documents

    Cost Sheet PDF

    Description

    This quiz explores the fundamentals of cost sheets and their classifications. It covers subdivisions of costs, valuation of inventory, and items that are typically excluded from cost sheets. Perfect for accounting students looking to deepen their understanding of cost management.

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