Cost Sheet - Cost Accounting T. Y. B. Com. Sem V 1644476726.pdf
Transcript
5 Cost Sheet PREPARATION OF COST SHEET Cost sheet is a statement designed to show the output of a particular accounting period along with break up of costs. It is often considered good to prepare cost sheet with cost data of previous periods. This...
5 Cost Sheet PREPARATION OF COST SHEET Cost sheet is a statement designed to show the output of a particular accounting period along with break up of costs. It is often considered good to prepare cost sheet with cost data of previous periods. This facilitates comparison and promotes cost control. Cost Sheet (I) Proforma of Cost Sheet Particulars Total Cost Cost Per Unit ` ` Opening Stock of Raw Materials xxx xxx Add: Purchases xxx xxx Add: Carriage Inward xxx xxx Add: Octroi and Customs Duty xxx xxx Less: Closing Stock of Raw Materials Cost of Direct Materials Consumed xxx xxx Direct Wages xxx xxx Direct or Chargeable Expenses xxx xxx Prime Cost xxx xxx Add: Works or Factory Overheads: Indirect Materials xxx xxx Indirect Wages xxx xxx Leave Wages xxx xxx Bonus to Workers xxx xxx Overtime Wages xxx Fuel and Power xxx 142 Cost Accounting Rent and Taxes xxx Insurance xxx Factory Lightings xxx Supervision xxx Works Stationery xxx Canteen and Welfare Expenses xxx Repairs xxx Works Salaries xxx Depreciation of Plant and Machinery xxx Works Expenses xxx Gas and Water xxx Technical Director’s Fees xxx Laboratory Expenses xxx Works Transport Expenses xxx Works Telephone Expenses xxx Add: Opening Stock of Work-in-Progress xxx xxx Less: Closing Stock of Work-in-Progress xxx xxx Less: Sale of Waste scrap xxx xxx Works Costs xxx xxx Add: Office and Administration Overheads: Office Salaries xxx Directors Fees xxx Office Rent and Rates xxx Office Stationery and Printing xxx Sundry Office Expenses xxx Depreciation on Office Furniture xxx Subscription to Trade Journals xxx Office Lightings xxx Establishment Charges xxx Directors Travelling Expenses xxx Consultants’ Fees xxx Contribution to Provident Fund xxx Postage xxx Legal Charges xxx Audit Charges xxx Bank Charges xxx Depreciation and Repairs of Office Equipment xxx Bonus to Staff xxx Cost Sheet 143 Cost of Production xxx xxx Add: Opening Stock of Finished Goods xxx xxx Less: Closing Stock of Finished Goods xxx xxx Cost of Goods Sold xxx xxx Add: Selling and Distribution Overheads: Advertising xxx Showroom Expenses xxx Salesmen’s Salaries and Expenses xxx Packing Expenses xxx Carriage Outward xxx Commssion of Sales Agents xxx Cost of Catalogues xxx Expenses of Delivery Vans xxx Collection Charges xxx Travelling Expenses xxx Cost Tenders xxx Warehouse Expenses xxx Cost of Mailing Literature xxx Sales Managers’ Salaries xxx Insurance of Showroom xxx Sales Directors’ Fees xxx Sales Office Expenses xxx Rent of Sales Office xxx Depreciation of Delivery Vans xxx Expenses of Sales Branch xxx Establishments xxx Branch Office Expenses xxx Total Cost/Total of Sales xxx xxx Profit or Loss xxx xxx Sales xxx xxx Following items are to to be ignored in the cost sheet: (a) Advance tax paid (b) Cash discount allowed on sales (c) Divedend paid (d) Dividend received (e) Debenture interest (f) Donation paid 144 Cost Accounting (g) Interest received (h) Interest paid on loan (i) Income tax paid (j) Interest paid on bank overdraft (k) Income tax refund (l) Interest on capital (m) Bad debts (n) Loss on sale of machinery (o) Purchase of computer for office (p) Purchase delivery van (q) Profit on sale of investment (r) Sale of machinery The following expenses are excluded from cost sheet: (1) Finance Overheads: (a) Interest on Capital (b) Bad Debts. (c) Discount allowed on Sales. (2) Income Tax, Advance Tax and Income Tax Provision. The following incomes are excluded from cost sheet: (1) Non-operating income such as discount received. Note: The following four items are independent variables and they remain constant unless any change is given in them: 1. Units produced and sold. 2. Selling price per unit. 3. Variable cost per unit 4. Total Fixed Cost Cost Sheet 145 Profit Sales Selling and Loss Distribution Value Overheads Total Cost of Sales Office and Cost of Administration Production/ Overheads Cost of Works/Factory Goods Sold Works/ Overheads Factory Cost Direct Material Prime Cost Direct Labour Direct Expenses Fig. Composition of Selling Price Table: Profit Table Percentage on Cost Price Percentage on Sale Price 1 1 (1) 100% 50% 1 2 1 1 %1 3 (2) 50% 33 2 3 1 %1 1 (3) 33 3 25 % 3 4 % 1 1 (4) 25 20 % 4 5 2 % % 1 3 1 (5) 20 16 5 6 1 1 (6) 11.11% 10% 9 10 Steps in Preparation of Cost Sheet: (1) All the cost are classified into Direct Costs or Indirect Costs. (2) Items of costs are arranged in the order of first, Material then Labour and in the last expenses. (3) All Direct Costs are also termed as Prime Costs. In a Cost Sheet all the items of Prime Cost are recorded first strictly in the order of Material, Labour and Expenses. 146 Cost Accounting (4) Then all indirect costs also termed as overheads are recorded. (5) In case of indirect costs the items are broadly categorised into three main groups: (a) Works/Factory Cost: In this case all factory overheads are recorded such as indirect works material, indirect factory labour and indirect factory expenses. All indirect costs related to factory is recorded here. (b) Office and Administration Cost: In this case all administration overheads are recorded such as indirect administration material, indirect administration labour and indirect administration expenses. All indirect costs related to administration is recorded here. (c) Selling and Distribution Cost: In this case all selling and distribution overheads are recorded such as indirect selling and distribution material, indirect selling and distribution labour and indirect selling and distribution expenses. Both selling expenses as well as Distribution expenses are considered together in this case. (6) Finance expenses are not to be considered in the costs sheet. E.g., Interest paid, Bad debts, etc. (7) Non-operating incomes and non-operating expenses are not to be considered in the cost sheet. E.g., Profit or Loss on Sale of Fixed Assets, Fictitious Assets written-off, etc. Method of Preparing Cost Sheet: In case of a cost sheet all the costs are classified into three main elements, i.e., (a) Materials (b) Labour (c) Expenses Further each of the above items are classified into direct and indirect costs. (1) Direct Materials: It includes the cost of direct (main) raw material plus all expenses relating to purchases of such direct material such as carriage inward, octroi duty, custom duty on imported materials, etc. (2) Direct Labour/Wages: It is also known as productive wages. It is the wages paid for the staff (employees) who are engaged directly in productive activities. Employees who take in the raw materials and introduce it in the machine for production purpose is termed as direct labour. E.g., Wages paid to carpenter who converts wood into a fine piece of furniture. (3) Direct (or chargeable) Expenses: Direct expenses are such expenses which are incurred directly with the production activities. According to CIMA, United Kingdom, "Direct expenses are those expenses which can be identified with and allocated to cost centres or units". E.g., Carriage Inwards incurred for purchase of raw materials, Hire charges of special equipment required for a job, etc. (4) Overheads: Overheads is an aggregate of all indirect expenses. It comprises of: (a) Factory overheads. (b) Office overheads. (c) Selling and Distribution overheads. Cost Sheet 147 Further each of the above item is classified into: (i) Material i.e., Indirect Materials. (ii) Labour i.e., Indirect Labour. (iii) Expenses i.e., Indirect Expenses. CLASSIFICATION OF COSTS The term 'cost' is defined in a variety of ways. Its simple meaning is ‘total expense’. Cost can be classified in a number of ways: (a) Direct Costs. (b) Indirect Cost (c) Fixed Cost (d) Variable Cost. (e) Semi-variable Cost. Direct Cost: Direct cost are those costs which can be conveniently associated wholly with a particular unit of a final product. Direct costs can be directly identified with and allocated to cost centres or cost units. E.g.: (i) Materials which form part of the finished product — cost of wood in a firm manufacturing furniture. (ii) Wages payable to worker who is directly involved in production — carpenter's wages in a firm manufacturing furniture. (iii) Carriage expenses on raw materials. (iv) Workers' wages. (v) Raw material charges Indirect Cost: The Institute of Cost and Management Accountants (UK) defines indirect cost as the, "Cost which cannot be allocated but which can be apportioned to or absorbed by cost centers or cost units." They are incurred for the benefit of more than one product, activity or job and must be apportioned by some appropriate bases to the various functions. Costs which cannot be associated or connected with a particular unit of the final product is termed as indirect costs. Indirect costs cannot be identified and allocated with cost centers or cost units and therefore they are apportioned on some equitable basis to cost centers or cost units. E.g.: (i) Advertisement expenses (ii) Office rent 148 Cost Accounting (iii) Packing expenses [Note: Primary Packing Materials - Direct Cost Secondary Packing Materials - Indirect Cost] (iv) Depreciation on Furniture (v) Legal expenses (vi) Cost of consumable stores. (vii) Salaries of foreman, supervisor, factory manager (viii) Rent and rates, (ix) Printing and stationery, (x) Telephone expenses, (xi) Heat and light, (xii) Maintenance, etc. Overheads: Overheads means indirect cost. Overheads are also termed as "On costs". Overheads is an aggregate of indirect materials, indirect labour and indirect expenses. (a) Factory overheads, (b) Administrative overheads, and (c) Selling and Distribution overheads SOLVED PROBLEMS Illustration 1 [M.U., T.Y.B.Com., Modified] The accounts of Z Ltd for the year ended 31st December, 2010, shows the following: Particulars (`) Work Office Salaries 6,500 Administrative Office Salaries 12,600 Cash Discounts allowed 2,900 Carriage Outward 4,300 Carriage Inward 7,150 Bad debts written off 6,500 Repairs to Plant and Machinery 4,450 Rent, rates,taxes, Insurance etc Factory 8,500 Office 2,000 Cost Sheet 149 Sales 4,61,000 Stock of Raw materials: 1st Jan., 2010 48,000 31st Dec., 2010 62,800 Materials Purchased 1.85,00 Travelling Expenses 2,100 Travellers Salaries and Commission 7,700 Productive Wages 1,26,000 Depreciation on Plant and Machinery 6,500 Depreciation on Office Furniture 300 Director’s Fees 6,000 Gas and Water (Factory) 1,200 Gas and Water (Office) 400 Manager’s Salary (1/4 Office and 3/4 Factory) 10,000 General Expenses 3,400 You are required to prepare a cost statement for the year ended 31st December, 2010. Solution Z Ltd. Cost Statement for the year ended 31st December, 2010 Particulars ` ` Raw Materials Consumed: Stock of Raw Materials as on 1st Jan., 2010 48,000 Add: Materials Purchased 1,85,000 Add: Carnage Inward 7,150 Less: Stock of Raw Materials as on 31st Dec., 20010 62,800 Raw Materials Consumed 1,77,350 Productive Wages 1,26,000 PRIME COST 3,03,350 Add: Works/Factory Overheads: Work Office Salaries 6,500 Repairs to Plant and Machinery 4,450 Rent, Rates, Taxes, Insurance etc. – Factory 8,500 Depreciation on Plant and Machinery 6,500 Gas and Water (Factory) 1,200 Manager’s Salary (3/4) 7,500 Works or Factory Overheads 34,650 150 Cost Accounting WORKS/FACTORY COST 34,38,000 Add: Office and Administration Overheads: Administrative Office Salaries 12,600 Rent, Rates, Taxes, Insurance etc. – Office 2,000 Depreciation on Office Furniture 300 Director’s Fees 6,000 Gas and Water (Office) 400 Manager’s Salary (1/4) 2,500 General Expenses 3,400 Office and Administration Overheads 27,200 COST OF PRODUCTION/COST OF GOODS SOLD 3,65,200 Add: Selling and Distribution Overheads: Carriage Outward 4,300 Travelling Expenses 2,100 Travellers Salanes and Commission 7,700 Selling and Distribution Overheads 14,100 TOTAL COST OF SALES 3,79,300 Add: Profit (Balancing Figure) 81,700 SALES 4,61,000 Illustration 2 [M.U., T.Y.B.Com., Modified] From the following date, prepare a Cost Sheet for the year 2010. Number of Units produced: 10,000 Units. Particulars ` Opening Stock of Raw Materials 3,00,000 Purchase of Raw Materials 8,00,000 Closing Stock of Raw Materials 1,00,000 Carriage Outward 8,000 Wages Indirect 20,000 Salary: Office 50,000 Sales Office 40,000 Other Factory Expenses 50,000 Trade Fair Expenses 20,000 Depreciation: Factory 30,000 Office 20,000 Selling 20,000 Direct Salary 50,000 Cost Sheet 151 Advance Interest Received 40,000 Custom Duty Paid for Purchase of Raw Material 5,00,000 Debenture Interest Paid 50,000 Freight Inward 20,000 Custom Duty Paid for Purchase of Plant 50,000 Direct Wages 2,00,000 Other Direct Charges 50,000 Goodwill Written-off 5,000 Number of Units sold 8,000 units at cost plus 18% Profit Direct Salary is to be allocated to factory. Office and Selling in the ratio of 2:1:2. Solution: Cost Statement for the year ended 2010 Particulars Units Total Total Cost Per ` ` Unit ` Raw Materials Consumed: Opening Stock of Raw Materials 3,00,000 30.0 Add: Purchase of Raw Materials 8,00,000 80.0 Add: Custom Duty Paid for Purchase of Raw Materials 5,00,000 50.0 Add: Freight Inward 20,000 2.0 Less: Closing Stock of Raw Materials 1,00,000 10.0 Raw Materials Consumed 15,20,000 152.0 Direct Wages 2,00,000 20.0 Other Direct Charges 50,000 5.0 PRIME COST 10,000 17,70,000 177.0 Add: Works/Factory Overheads: Wages Indirect 20,000 2.0 Other Factory Expenses 50,000 5.0 Depreciation - Factory 30,000 3.0 Direct Salary - Factory (2/5) 20,000 2.0 Works or Factory Overheads 10,000 1,20,000 12.0 WORKS/FACTORY COST 10,000 18,90,000 189.0 Add: Office and Administration Overheads: Office Salary 50,000 5.0 Depreciation – Office 20,000 2.0 Direct Salary – Office (1/5) 10,000 1.0 Office and Administration Overheads 10,000 80,000 8.0 152 Cost Accounting COST OF PRODUCTION 10,000 19,70,000 197.0 Less: Closing Stock of Finished Goods (Valued as per As -2) 2,000 3,78,000 189.0 Cost of Goods Sold 8,000 15,92,000 199.0 Add: Selling and Distribution Overheads: Carriage Outward 8,000 1.0 Salary – Sales Office 40,000 5.0 Trade Fair Expenses 20,000 2.5 Depreciation – Selling 20,000 2.5 Direct Salary – Sales(2/5) 20,000 2.5 Selling and Distribution Overheads 8,000 1,08,000 13.5 TOTAL COST OF SALES 8,000 17,00,000 212.5 Add: Profit @ 18% 3,06,000 38.25 Sales Value 8,000 20,06,000 250.75 20,06,000 Illustration 3 [M.U., T.Y. B.Com., April 1996, Adapted] Swadeshi Electronics Ltd. furnishes you the following information for the year ended 31st March, 2012 Production and Sales Units 15,000 Sales ` 12,75,000 Direct Wages ` 2,70,000 Direct Materials ` 3,30,000 Factory Overheads ` 2,25,000 Administrative Overheads ` 1,05,000 Sales Overheads ` 90,000 On account of intense competition following changes are estimated in the subsequent year: (a) Production and sales activity will be increased by one third. (b) Material rate will be lower by 25%. However, there will be increase in consumption by 20% due to quality difference. (c) Direct wages cost would be reduced by 20% due to automation. (d) Out of the above factory overheads, ` 45,000 are of fixed nature. The remaining factory expenses are variable in proportion to the number of units produced. (e) Total administrative overheads will be lower by 40%. (f) Sales overheads per unit would remain the same. (g) Sale price per unit would be lower by 20%. Prepare a statement of cost for both the years ending 31st March, 2012 and 31st March, 2013 showing maximum possible details of cost. Cost Sheet 153 Solution Swadeshi Electronics Ltd. Cost Sheet for the year ended 31st March, 2012 [Output: 15,000 Units] Particulars Total Cost per ` ` Unit ` Direct Materials 3,30,000 22 Direct Wages 2,70,000 18 Prime Cost 6,00,000 40 Add: Works/Factory Overheads: Fixed Overheads 45,000 3 Variable Overheads 1,80,000 12 Factory Overheads 2,25,000 15 Works/Factory Cost 8,25,000 55 Add: Office and Administration Overheads: Administrative Overheads 1,05,000 7 Cost of Production/Cost of Goods Sold 9,30,000 62 Add: Selling and Distribution Overheads Sales Overheads 90,000 6 Total Cost of Sales 10,20,000 68 Add: Profit 2,55,000 17 Sales Value 12,75,000 85 Estimated Cost Sheet for the year ending 31st March, 2013 [Output: 20,000 Units] Particulars Total Cost per Unit ` ` ` Direct Materials 3,96,000 19.80 Direct Wages 2,16,000 10.80 Prime Cost 6,12,000 30.60 Add: Works/Factory Overheads: Fixed Overheads 45,000 22.50 Variable Overheads 2,40,000 12.00 Factory Overheads 2,85,000 14.25 Works/Factory Cost 8,97,000 44.85 Add: Office and Administration Overheads: Administrative Overheads 63,000 3.15 Cost of Production/Cost of Goods Sold 9,60,000 48.00 154 Cost Accounting Add: Selling and Distribution Overheads Sales Overheads 1,20,000 6.00 Total Cost of Sales 10,80,000 54.00 Add: Profit 2,80,000 14.00 Sales Value 13,60,000 68.00 Illustration 4 [M.U., T.Y.B.Com., Modified] From the following data, prepare a cost sheet for the year 2010. Particulars ` Opening Stock of Raw Materials 3,00,000 Purchases 8,00,000 Closing Stock of Raw Materials 4,00,000 Carriage Outward 50,000 Wages Direct 7,00,000 Wages Indirect 1,00,000 Chargeable Expenses 2,00,000 Rent and Rates: Factory 40,000 Office 5,000 Indirect Materials 15,000 Drawing Office Salaries 10,000 Depreciation: Plant 5,000 Office Furniture 1,000 Salary: Office 25,000 Salesmen 20,000 W.I.P.: 1-1-2010 20,000 31-12-2010 10,000 Sale of by Product 10,000 Other Factory Expenses 57,000 Other Office Expenses 9,000 Managing Director's Remuneration 1,20,000 Other Selling Expenses 10,000 Art Work Charges 40,000 Stock of Finished goods: 1-1-2010 10,000 31-12-2010 50,000 Traveling Expenses of Salesmen 11,000 Carriage Inward 10,000 Sales 30,00,000 Advance Income Tax paid 1,50,000 Advertisement 20,000 M.D.’s remuneration to be allocated as ` 40,000 to factory, ` 20,000 to office and ` 60,000 to sales. Cost Sheet 155 Solution Cost Statement for the year ended 2010 Particulars ` ` Rew Materials Consumed: Opening Stock of Raw Materials 3,00,000 Add: Purchases 8,00,000 Add: Carnage Inward 10,000 Less: Closing Stock of Raw Materials 4,00,000 Raw Materials Consumed 7,10,000 Wages Direct 7,00,000 Chargeable Expenses 2,00,000 PRIME COST 16,10,000 Add: Works/Factory Overheads: Wages Indirect 1,00,000 Rent and Rates - Factory 40,000 Indirect Materials 15,000 Drawing Office Salaries 10,000 Depreciation - Plant 5,000 Other Factory Expenses 57,000 Managing Director’s Remuneration 40,000 Add: W.I.P. as on 1-9-2010 20,000 Less: W.I.P. as on 31-12-2010 10,000 Less: Sale of By-product 10,000 Works or Factory Overheads 2,67,000 WORKS/FACTORY COST 18,77,000 Add: Office and Administration Overheads: Rent and Rates - Office 5,000 Depreciation - Office Furniture 1,000 Salary-Office 25,000 Other Office Expenses 9,000 Managing Director’s Remuneration 20,000 Office and Administration Overheads 60,000 COST OF PRODUCTION 19,37,000 Add: Stockof Finished Goodsason1.1-2010 10,000 19,47,000 Less: Stock of Finished Goods as on 31-12-2010 50,000 156 Cost Accounting COST OF GOODS SOLD 18,97,000 Add: Selling and Distribution Overheads: Carriage Outward 50,000 Salary-Salesmen 20,000 Other Selling Expenses 10,000 Art Work Charges 40,000 Travelling Expenses of Salesmen 11,000 Advertisement 20,000 Managing Dieectir’s Remuneration 60,000 Selling and Distribution Overheads 2,11,000 TOTAL COST OF SALES 21,08,000 Add: Profit 8,92,000 Sales 30,00,000 Illustration 5 [M.U., T.Y.B.Com., Modified] Hindustan Machine Tools Ltd. furnishes for March, 2012 the following information for a department: Deluxe wrist watches manufactured 1,000 pieces. Cost and other data ` Opening stock Raw materials 4,50,000 Finished goods 3,30,000 (200 pieces) Closing stock Raw materials 5,00,000 Finished goods (300 pieces) ? Purchases of raw material 7,00,000 Direct labour 4,00,000 Indirect labour factory 1,00,000 Consumption of stores and spares 90,000 Sales 21,60,000 Other overheads Factory Office Sales depot ` ` ` Salary 1,00,000 2,00,000 1,50,000 Electricity 25,000 2,000 10,000 Stationery and Printing 10,000 25,000 20,000 Travelling expenses 3,000 10,000 50,000 Rent 5,000 5,000 5,000 Showroom and Exhibition expenses - - 10,000 Miscellaneous expenses 15,000 25,000 20,000 Cost Sheet 157 The stock of finished goods is valued at current month's cost of production. (a) You are required to prepare a cost sheet for the month of March, 2012 and ascertain the amount of profit. (b) What should be the selling price in order to earn additional profit on sales? Solution Cost Statement for the month of March, 2012 Particulars Units Total Total Cost Per ` ` Unit ` Raw Materials Consumed: Opening Stock of Raw Materials 4,50,000 450.00 Add: Purchase of Raw Materials 7,00,000 700.00 Less: Closing Stock of Raw Materials 5,00,000 500.00 Raw Materials Consumed 6,50,000 650.00 Direct Labour 4,00,000 400.00 PRIME COST 1,000 10,50,000 1,050.00 Add: Works/Factory Overheads: Indirect Labour Factory 1,00,000 100.00 Consumption of Stores and Spares 90,000 90.00 Salary 1,00,000 100.00 Electricity 25.000 25.00 Stationery and Printing 10,000 10.00 Travelling Expenses 3,000 3.00 Rent 5,000 5.00 Miscellaneous expenses 15,000 15.00 Works or Factory Overheads 1,000 3,48,000 348.00 WORKS/FACTORY COST 1,000 13,98,000 1,398.00 Add: Office and Administration Overheads: Salary 2,00,000 200.00 Electricity 2,000 2.00 Stationery and Printing 25.000 25.00 Travelling Expenses 10.000 10.00 Rent 5,000 5.00 Miscellaneous expenses 25,000 25.00 Office and Administration Overheads 1,000 2,67,000 267.00 COST OF PRODUCTION 1,000 16,65,000 1,665.00 Add: Opening Stock of Finished Goods 200 3,30,000 1,650.00 1,200 19,95,000 1,662.50 Less: Closing Stock of Finished Goods (Valued at Cost of Production) 300 4,99,500 1,665.00 COST OF GOODS SOLD 900 14,95,500 1661.66 158 Cost Accounting Add: Selling and Distribution Overheads: Salary 1,50,000 166.66 Electricity 10,000 11.11 Stationery and Printing 20,000 22.22 Travelling expenses 50,000 55.55 Rent 5,000 5.55 Show room and Exhibition expenses 10,000 11.11 Miscellaneous expenses 20,000 22.22 Selling and Distribution Overheads 900 2,65,000 294.44 TOTAL-COST OF SALES 900 17,60,500 1,956.11 Add: Profit 900 3,99,500 443.89 Sales 900 21,60,000 2400.00 Illustration 6 [M.U., B.Com., October 1995, Adapted] Following is the Profit and Loss Account for the year ended 31st March, 2012 of M/s. Cool and Comforts Ltd., manufacturers of Table Fans. They manufactured and sold during the year 2000 fans. Profit and Loss Account for the year ended 31st March, 2005 Dr. Cr. Particulars ` Particulars ` To Materials Consumed 1,20,000 By Sales 6,00,000 To Wages 1,80,000 To Manufacturing Expenses 75,000 To Gross Profit c/d 2,25,000 ` 6,00,000 ` 6,00,000 To Rent, Rates and Taxes 15,000 By Gross Profit b/d 2,25,000 To General Expenses 30,000 To Management Expenses 90,000 To Sales and Distribution Expenses 45,000 To Net Profit 45,000 ` 2,25,000 ` 2,25,000 Their estimates for the next year ending 31st March 2013 are as under: (a) The production and sales would increase to 3000 fans. (b) The prices of materials per fan would increase by 20% (c) The labour cost per fan would go up by 10% (d) The manufacturing expenses would remain in the same proportion to materials consumed and wages as in the previous year. (e) The selling and distribution expenses per fan would remain unchanged. (f) The other expenses would remain unaffected on account of increase in the production. Cost Sheet 159 Prepare a statement for the two years, 2011 -2012 and 2012-2013 showing cost and profit per fan and total cost and total profit, giving maximum possible break-up of cost. Solution M/s. Cool and Comforts Ltd. Cost Sheet for the year ended 31st March. 2012 [Output: 2,000 Fans] Particulars Total Cost per ` ` Unit (`) Materials Consumed 1,20,000 60.0 Wages 1.80.000 90.0 Prime Cost 3,00,000 150.0 Add: Works/Factory Overheads: Manufacturing Expenses 75,000 37.5 Works/Factory Cost 3,75,000 187.5 Add: Office and Administration Overheads: Rent, Rates and Taxes 15,000 7.5 General Expenses 30,000 15.0 Management Expenses 90,000 45.0 Total Office and Administration Overheads 1,35,000 67.5 Cost of Production/Cost of Goods Sold 5,10,000 255.0 Add: Selling and Distribution Overheads Selling and Distribution Expenses 45,000 22.5 Total Cost of Sales 5,55,000 277.5 Add: Profit 45,000 22.5 Sales Value 6,00,000 300.0 Estimated Cost Sheet for the year ending 31st March, 2006 [Output: 3,000 Fans] Particulars Total Cost per ` ` Unit (`) Materials Consumed 2,16,000 72.00 Wages 2.97,000 99.00 Prime Cost 5,13,000 171.00 Add: Works/Factory Overheads: Manufacturing Expenses 1,28,250 42.75 Works/Factory Cost 6,41,250 213.75 Add: Office and Administration Overheads: Rent, Rates and Taxes 15,000 5.00 General Expenses 30,000 10.00 Management Expenses 90,000 30.00 160 Cost Accounting Total Office and Administration Overheads 1,35,000 45.00 Cost of Production/Cost of Goods Sold 7,76,250 258.75 Add: Selling and Distribution Overheads Selling and Distrbution Expenses 67,500 22.50 Total Cost of Sales 8,43,750 281.25 Add: Profit 56,250 18.75 Sales Value 9,00,000 300.00 Illustration 7 [CA Modified] Dunkel Ltd. Started a factory in Navi Mumbai on 1st April, 2011. Following details are furnished about its activity during the year ended 31st March, 2012. Raw Material consumed - 40,000 units @ ` 7 per unit. Direct Wages: (a) Skilled worker ` 9 per unit. (b) Unskilled worker ` 6 per unit. Royalty (On raw material consumed) @ ` 3 per unit. Works overheads @ ` 8 per machine hour. Machine Hours Worked 25,000. Office Overheads at 1/3rd of works cost Sales Commission @ ` 4 per unit. Units produced 40,000 Stock of units at the end 4,000 units to be valued at cost of production per unit. Sale price is ` 60 per unit. Prepare Cost sheet showing the various elements of cost, bothin total and per unit. Solution Dunkel Ltd. Cost Sheet for the year ended 31st March, 2012 Particulars Units Total Cost per ` ` Unit (`) Raw Materials Consumed 40,000 2,80,000 7 Direct Wages: Skilled Workers Wages 3,60,000 9 Unskilled Workers Wages 2,40,000 6 Total Direct Wages 6,00,000 15 Cost Sheet 161 Direct Expenses: Royalty on Raw Material Consumed 1,20,000 3 Prime Cost 10,00,000 25 Add: Works/Factory Overheads: Works Overheads 8 × 25,000 2,00,000 5 Works/Factory Cost 12,00,000 30 Add: Office and Administration Overheads: Office Overheads 4,00,000 10 Cost of Production 40,000 16,00,000 40 Less: Closing Stock 4,000 1,60,000 40 Cost of Goods Sold 36,000 14,40,000 40 Add: Selling and Distribution Overheads Sales Commission 36,000 1,44,000 4 Total Cost of Sales 36,000 15,84,000 44 Add: Profit 36,000 5,76,000 16 Sales Value 36,000 21,60,000 60 Illustration 8 [CS Modified] Prepare a cost sheet showing the total and per tonne cost of paper manufactured by Times Paper Mills Ltd. For the month of March, 2012. There were 26 working days in the month. Also find the profit earned by the company. The details are as under: Direct Raw materials: Paper pulp 6,000 tons @ ` 900 per tonne. Direct labour: 280 Skilled workmen ` 250 per day 300 Semiskilled workmen ` 150 per day 470 Unskilled workmen ` 100 per day Direct expenses: Special equipment hire charges ` 12,000 per day Special dyes ` 250 per tonne of total raw material input Work overheads: Variable @ 50% of direct wages Fixed ` 2,70,000 p.m. Administration overheads @ 12% of works cost Selling and distribution overheads ` 80 per tonne sold. Opening stock of paper 500 tonnes valued @ ` 2,501.60 per ton Closing stock of paper 300 tonnes valued at cost of production. The paper is sold @ ` 3,000 per tonne. 162 Cost Accounting Solution Times Paper Mills Ltd. [Working Days: 26] Cost Sheet for the month of March, 2012 Particulars Tons Total Cost per ` ` Unit (`) Direct Raw Materials: Paper Pulp 6,000 54,00,000 900.00 Direct Labour: Skilled Workmen 280 × 250 × 26 18,20,000 303.33 Semiskilled Workmen 300 × 150 × 26 11,70,000 195.00 Unskilled Workmen 470 × 100 × 26 12,22,000 203.66 Direct Labour 42,12,000 702.00 Dieect Expenses: Special Equipments Hire Charges 12,000 × 26 3,12,000 52.00 Special Dyes 6,000 15,00,000 250.00 Direct Expenses 18,12,000 302.00 PRIME COST 6,000 1,14,24,000 1,904.00 Add: Works/Factory Overheads: Variable 21,06,000 351.00 Fixed 2,70,000 45.00 Works/Factory Overheads 23,76,000 396.00 Works or Factory Cost 6,000 1,38,00,000 2,300.00 Add: Office and Administration Overheads: Administration Overheads 16,56,000 276.00 Cost of Production 6,000 1,54,56,000 2,576.00 Add: Opening Stock of Paper 500 12,50,800 2,501.60 6,500 1,67,06,800 2,570.27 Less: Closing Stock of Paper 300 7,72,800 2,576.00 Cost of Goods Sold 6,200 1,59,34,000 2,655.66 Add: Selling and Distribution Overheads 6,200 4,96,000 80.00 Total Cost of Sales 6,200 1,64,30,000 2,650.00 Add: Profit 6,200 21,70,000 350.00 Sales Value 6,200 1,86,00,000 3,000.00 Cost Sheet 163 Illustration 9 The following particulars are extracted from the books of a company relating to commodity Aplha for the half year ending 30th June, 2012. ` Purchase of raw materials 1,30,000 Direct wages 1,00,000 Rent, rates, insurance and works on cost 45,000 Carriage inward 1,500 Stock on 1-1-2012 Raw materials 20,000 Finished products (1,600 tonnes) 17,600 Stock on 30-6-2012 Raw materials 25,000 Finished products (3,200 tonnes) 37,600 Work-in-progress on 1-1-2012 4,500 Work-in-progress on 30-6-2012 16,000 Factory supervision 10,000 Sales – Finished product 3,00,000 Advertising discount allowed and selling cost at Re.0.50 per tonne sold. 25,000 tonnes of commodity was sold during the period. You are required to ascertain: 1. Prime Cost 2. Factory Cost 3. Cost of Sales 4. Profit 5. No. of tonnes of the commodity sold. Solution Cost Sheet of Commodity Alpha for the period ending 30-6-2009 Particular ` ` Raw materials Opening stock 20,000 Add: Purchases 1,30,000 1,50,000 Less: Closing stock 25,000 1,25,000 Add: Carriage inwards Materials Consumed 1,500 1,26,500 164 Cost Accounting Direct wages 1,00,000 Prime cost 2,26,500 Rent, rates, insurance and works 45,000 On cost Cost of factory supervision 10,000 55,000 Add: Opening Work-in-progress 4,500 Less: Closing Work-in-progress 16,000 Factory Cost Add: Opening stock of finished goods (1,600 tonnes) 17,600 Less: Closing stock of finished goods (3,200 tonnes) 37,600 Cost of goods sold 2,50,000 Add: Advertising and selling cost @ Re. 0.50 per tones on 25,000 tonnes 12,500 Cost of sales 2,62,500 Profit 37,500 Sales 3,00,000 QUESTIONS FOR SELF-PRACTICE (I) Practical Questions (1) The following is an extract of the costing information for the year ended 31 March 2012: ` Sales 1,96,000 Purchase-raw material 60,000 Direct wages 60,000 Rent, Rates, insurance, & other works on cost 21,000 Carriages inwards 1,000 Opening stock – Raw material 10,000 Finished goods (200 tons) 12,000 Closing stock: Raw materials 11,000 Supervision 3,000 Advertising 4,000 Office overheads 30,000 Selling expenses 8,000 3,000 tons of the commodities were produced. The closing stock of finished goods is 400 tons. The same has to be valued at work cost. Prepare a detailed cost statement showing: Cost Sheet 165 (1) Cost of the output-total as well as per unit (2) Net profit for the year. [Ans.: (1) Total Cost ` 1,78,800 Cost Per Unit 63.86 (2) Net profit ` 17,200 Cost Per Unit 6.14] (2) From the following data, relating to the manufacturing of a standard product during September 2012 prepares a statement showing cost & profit per unit: ` Raw material used 1,20,000 Direct wages 72,000 Man hours worked 10,000 hours Man hours rate for recovering works overheads ` 10 per hour Office overheads 25% on work cost Selling overheads ` 1.50 per unit Unit produced 42,000; units sold 40,000 @ ` 25 per unit. [Ans.:(1) Total Cost ` 4,07620 Cost Per Unit 10.19 (2) Net profit ` 5,92,380 Cost Per Unit 14.81] (3) X Y & Z carry on business as engineers in partnership, sharing profits & losses equally, Z devotes to the business only so much time as he thinks fit. Y acts as works manager & X as office manager. The following figures for the month of march, 2010 are available: [MU, T.Y.B.Com., Modified] ` Purchases of materials 74,250 Works wages Direct 48,000 Indirect 6,000 Office salaries 14,085 Carriages inward 450 Carriages outward 42,000 Sales 2,40,000 Opening stock of Materials 26,250 Finished goods (600 units) 6,750 Work-in-progress 9,750 Travelling expenses (25% administrative: 75% sales) 1,800 Interest on capital (equally to X,Y,& Z) 4,500 Advertising 4,500 Power 1,575 Income tax 14,250 166 Cost Accounting Agents commission 6,750 Plant maintenance 5,490 Lighting (90% for factory, 10% for sale) 1,500 Discount received 450 Bad debts 750 Sundry expenses (Factory) 2,100 (Office) 3,900 Factory Buildings repairs 750 Partners salaries X 1,500 Y 1,800 Depreciation Plant 2,850 Factory 1,200 Building 600 Sale of Scrap On 31st March 2010 Materials on hand totaled ` 24,000 where as the work-in-progress was estimated as ` 8,500. 1800 units were produced out of which 650 remained unsold. Prepare cost sheet & show the profit earned. (4) In 2009 selling price was ` 10 per article & total sales were ` 1,00,000. In 2010, selling price was increased by 10%. Total sales realized ` 1,26,500. In 2009, materials cost was 40% of sales value. In 2010, Prices of raw material rose by 10%. In 2009, wages were ` 30,000. In 2010, the wages cost was ` 33,000. In 2009, other expenses were 10% of sales value. These expenses rose in 2010 by ` 1,500. Prepare cost statement for the years 2009 & 2010. Find out the net profit for 2009, & 2010. [Ans.:(1) Total Cost- 2009-` 80,000 Cost Per Unit 8.00 & 2010- ` 95,100 Cost Per Unit 8.27 (2) Net profit - 2009-` 20,000 Cost Per Unit 2.00 & 2010- ` 31,400 Cost Per Unit 2.73] (5) From the following information prepare a cost statement showing maximum possible break up of cost & total profit: [MU T.Y.B.Com., Modified] ` Sales for January 2010 30,00,000 Cost of goods sold 24,80,000 Administration expenses 1,80,000 Selling expenses 40,000 1.1.10 31.1.10 ` ` Raw material stock 3,20,000 4,00,000 Work-in-progress 3,20,000 4,80,000 Finished goods 4,20,000 3,40,000 Cost Sheet 167 Direct wages were 30% of prime cost Raw materials consumed were 50% of prime cost Direct expenses were 20% of prime cost Factory overheads were 20% of prime cost. [Ans.: (1) Total Cost ` 25,20,000 (2) Net profit ` 4,80,000] (6) The following particulars relating to the year 2008 are taken from the book & records of a chemical works manufacturing & selling a standardized mixture: [CA Modified] Kgs. Kgs. Stock in 1-1-2009 opening Raw Materials 2,000 2,000 Finished Mixtures 500 1,750 Factory Stores 7,250 Raw Materials 1,60,000 1,80,000 Purchase Factory Stores 24,250 Finished Mixtures 1,53,050 9,18,000 Sale Factory Scrap 8,170 Factory wages 1,78,650 Mixtures Power 30,400 Machinery depreciation 18,200 Salaries Factory 72,220 Office 37,220 Selling 41,500 Expenses Direct 18,500 Office 18,200 Selling 18,000 Interest on capital Factory 7,000 General 3,000 Advertising 1,40,000 Cash discount on sales 14,500 Bank Interest paid 1,250 Stock on 31-12-2009 Raw Materials 1,200 ? Finished Mixtures 450 ? Factory Stores 5,550 168 Cost Accounting The wastage in raw material is normal. The purchase price of raw materials remained unchanged through 2009. The stock of finished mixture at the end of the year is to be valued at factory cost. Raw materials are consumed on FIFO basis. From the above information you are required to prepare a cost statement shoeing the prime cost, works cost & total cost of the mixture produced during the year. [Ans.: Prime Cost- ` 3,77,800 Works Cost- ` 5,16,200 Total Cost- ` 16,89,797] (7) The following figures are extracted from the Trial Balance of Gogetter Co. on 30th September, 2012. [MU T.Y.B.Com Modified] Particulars ` Inventories Finished goods 80,000 Raw Materials 1,40,000 Work-in-progress 2,00,000 Office Appliances 17,400 Plant & Machinery 4,60,500 Buildings 2,00,000 Sales 7,68,000 Sales Return & Rebates 14,000 Materials Purchased 3,20,000 Freight incurred on Materials 16,000 Purchase Returns 4,800 Direct Labour 1,60,000 Indirect Labour 18,000 Factory Supervision 10,000 Repairs & Unkeep – factory 14,000 Heat, Light, & Power 65,000 Rates & Taxes 6,300 Miscellaneous Factory Expenses 18,700 Sales Commission 33,600 Sales Travelling 11,000 Sales Promotion 22,500 Distribution Dept. Salaries & Expense 18,000 Office Expenses 8,600 Interest on Borrowed Funds 2,000 Further details are available as follows: (i) Closing Inventories: Finished Goods 1,15,000 Raw Materials 1,80,000 Work in progress 1,92,000 Cost Sheet 169 (ii) Accrued Expenses On: Direct Labor 8,200 Indirect Labor 1,200 Interest on Borrowed Funds 2,000 (iii) Depreciation to be provided on: office Appliances 5%, plant & Machinery 10% Building 4% (iv) Distribution of the following costs: Heat, Light & power to Factory, Office & Distribution in the ratio 8:1:1. Rates & Taxes two-third to factory & one-third to office Depreciation on Building Factory, office & selling in the ratio 8:1:1 With the help of the above information you are required to prepare cost sheet for Gogetter Co. for the year ended 30th September, 2012. [Ans.: (1) Total Cost- ` 7,14,220 (2) Net profit - ` 39,780] (8) The accounts of a small manufacturer showed the following particulars for the year ending 31st March, 2010: ` Materials Used 75,000 Productivity wages 60,000 Factory Overheads 13,500 Office overheads 7,425 For the quarter to end on 30th June, 2010 it is estimated that the materials would cost ` 25,000 & wages ` 7,500. The factory overheads will bear the same production to the prime cost & the office overheads will bear the same production to the prime cost as in the previous year. Prepare an estimated cost sheet. Also ascertain what cost as in the previous year. Prepare an estimated cost sheet. Also ascertain what price should be charged if the manufacturer wants to earn 25% profit on selling price. [Ans.: Total Cost- March 2010 -` 1,55,925 & June 2010- ` 37,538 Profit- ` 12,512] (9) The following information is available from the books of a company producing luxury ceiling fans for the year ended 31-3-2010 Production & sales 1000 units. [MU T.Y.B.Com Modified] ` ` Direct materials 2,00,000 Administration expenses 60,000 Direct wages 1,50,000 Selling expenses 45,000 Factory expenses 1,37,500 Sales 7,30,000 The following estimates have been made for 2010-2011: (i) Production & sales will be 1,500 units. (ii) Materials prices per unit will increase by 25% but due to economy in consumption there will be saving of 12% with reference to the revised price. 170 Cost Accounting (iii) The wage rates per unit will increase by 20% (iv) Factory expenses ` 50, 000 are fixed. The remaining factory expenses will be in the same proportion to materials consumed & wages as in the previous year. (v) The total administration expenses will increase by 66-2/3% (vi) Selling expenses will be ` 90,000. (vii) The profit desires is 20% on sales. Prepare a cost statement maximum possible break-up of cost per unit & total cost, profit per unit & total profit for 2009-2010 & 2010-2011. [Ans.: (1) Total Cost- 2010- ` 5,92,500 Cost Per Unit 592.50 & 2011- ` 9,90,000 Cost Per Unit 660.00 (2) Net Profit - 2010- ` 1,37,500 Cost Per Unit 137.50 & 2011- ` 2,47,500 Cost Per Unit 165.00] (10) The following is the trading & profit & loss account of a manufacturing company for the quarter ended 30th June, 2009: ` ` To opening stock By Sale of finished goods 2,75,000 Raw materials 5,000 By Sale of factory scrap 5,000 Work-in-progress 10,000 By Income from Investments 10,000 Finished goods 25,000 40,000 By Closing stock To Purchase of raw Raw material 15,000 Materials 1,00,000 Work-in-progress 20,000 To Wages (75% direct & Finished goods 10,000 45,000 25% indirect) 60,000 To Factory expenses 20,000 To Administrative expense 15,000 To Selling & distribution exps. 30,000 To Interest 20,000 To Income tax 25,000 To Net Profit 25,000 3,35,000 3,35,000 Finished goods costing ` 5,000 were used for free samples and those costing ` 10,000 were donated to a charitable institution, however, no accounting entries have been passed for the same. Further no accounting entry has been passed for the material costing ` 5, 000 destroyed by fire while it was being worked in the factory. You are required to prepare a cost sheet. [Ans.: Total Cost- Rs.2,25,000 & Profit- Rs.50,000] Cost Sheet 171 (11) A company produced two knids of electric pumps XA and XB details of which are XA XB Pumps manufactured 25,000 12,000 Direct cost: ` 3,140 ` 2,650 Materials 9,400 5,700 Wages 2,100 1,410 Power, etc. 14,640 9,760 Total Other costs Factory supervision, etc. ` 3,600 Packing wages and expenses 400 Management and selling expenses 4,400 You are required to prepare a statement showing the cost of each kind of pump when ready for dispatch, taking the following into considerations. (i) Factory supervision to be charged in proportion to direct costs. (ii) Packing expenses to be apportioned in the ratio that direct costs plus factory supervision costs of XA bear to similar costs of XB. (iii) Management and selling expenses to be charged in production to the pups manufactured. [Ans.: Total Cost- XA- 20,013 XB- ` 12,788] (12) A manufacturer commenced production on 1st January, 2012 of a standard article in two grades A and B. Both are produced form the same raw material and are sold to wholesalers at a uniform price – Grade A at ` 150 per dozen and Grade B at ` 240 per dozen. Sale price are based on the following estimated figures: [CIMA London Modified] Cost per Article Grade A Grade B Direct material cost 1.50 3.00 Direct wages 5.00 7.00 Production overhead 2.50 3.50 Works cost 9.00 13.50 Selling and Distribution overhead 0.90 1.35 Total Cost 9.90 14.85 On making up accounts for year ended 31st December 2012, the following faits were ascertained: Cost of Material Used Grade A Grade B Direct wages 15,000 20,000 Product wages 38,250 76,500 Product overheads (Total) ` 68,125 Selling & Distribution overhead (Total) ` 32,700 172 Cost Accounting During the year sales amounted to ` 1,05,000 in respect of Grades A articles and ` 1,80,000 in respect of Grade B articles, and stock on hand at 31st Dec, 2009, valued at work cost as per his costing were ` 5,400 of Grade A and ` 13,500 of Grade B. From the information given above, you are required to prepare a statement of revised costing showing the cost per article sold during 2012. [Ans.: Total Cost- A- 83,160 B- ` 1,33,650] (13) The managing director of a small manufacturing concern consults you as to the minimum price at which he can sell the output of one of the departments of the company which is intended for mass production in future. The company’s records show the following particulate for this department for the past year: Production & Sales (100 Units) Works overheads 7,000 Materials 13,000 Office overheads 2,800 Direct labor 7,000 Selling overheads 3,200 Direct charges 1,000 Profit 5,000 You ascertain that 40% of the works overheads fluctuate directly with production and 70% of the selling overheads fluctuate with sales. It is anticipated that the department would produce 500 units per annum and that direct labour charges per unit will be reduced by 20%. While fixed selling overheads charges are expected to show an increase of 25% but otherwise no changes are anticipated. [Ans.: Actual Total Cost -` 39,000 Cost Per Unit 390.00 & Estimated ` 1,35,100 Cost Per Unit 270.00] (14) The cost of manufacturing 5,000 units of a commodity comprises – Materials 20,000 Fixed factory overhead 16,000 Direct labour 25,000 Variable factory overhead 4,000 Chargeable expenses 400 For manufacturing every 1,000 extra units of the commodity the cost of production increases as follows: Materials: Proportionately. Fixed factory overheads: ` 200 extra. Wages: 10% less than proportionately. Variable factory overheads 25% less than proportionately. Chargeable Expenses: No extra cost whatsoever. Calculate the estimate cost of producing 8,000 units of the commodity and show by how it would differ if a flat rate of factory overhead based on wages were charged. [Ans.: Actual Works Cost - ` 65,400 Cost Per Unit 13.08 & Estimated ` 89,800 Cost Per Unit 11.23] (15) Electronics Ltd., furnish the following information for 10,000 TV valves manufactured during the year 2009. [ICWA Modified] Cost Sheet 173 Materials 90,000 Clerical salaries and 33,500 Management expenses Direct Wages 60,000 Selling expenses 5,500 Power and consumable stores 12,000 Sale proceeds of scrap 2,000 Factory indirect wages 15,000 Plant repairs, maintenance 11,500 and depreciation Lighting of factory 5,500 Defective work (cost of rectification) 3,000 The net selling price was ` 31.60 per unit sold and all units were sold. As from 1st Jan 2010, the selling price was reduced to ` 31 per unit. It was estimated that production could be increased in 2010 by 50% due to spare capacity. Rates for materials and direct wages will increase by 10%. You are required to prepare: (a) Cost sheet for the year 2009 showing various elements of cost unit and (b) Estimated cost and profit statement for 2010. Assuming that 15,000 units will be produced and sold during the year and factory overheads will be recovered as a percentage of direct wages and office and selling expenses as percentage of works cost. [Ans.:(1) Total Cost- 2009- ` 2,34,000 Cost Per Unit 23.40 & 2010- ` 3,51,000 Cost Per Unit 23.40 (2) Net profit - 2009- ` 82,000 Cost Per Unit 8.20 & 2010- ` 1,14,000 Cost Per Unit 7.69] (16) American Sprayers Ltd., manufactured and sold 1,000 sprayers during the year ended 31st March, 2010. The summarized accounts are set out below: [CS Modified] Manufacturing, Trading and Profit and Loss Account for the year ended 31-3-10. ` ` To cost of materials 80,000 By Sales 4,00,000 To Direct wages 1,20,000 To manufacturing cost 50,000 To Gross profit 1,50,000 ` 4,00,000 ` 4,00,000 To management and staff Salaries 60,000 By Gross Profit 1,50,000 To Rent rates & Insurance 10,000 To
