Cost Sheet

The following are the costing records for the year 2016 of a manufacturer : Production 10000 units, Cost of Raw Materials Rs.200000, Labour Cost Rs120000. Factory Overheads Rs 80000 Office Overheads Rs.40000,  Selling Expenses Rs 10000  Rate of Profit 25% on the Selling Price. The manufacturer decided to produce 15000 units in 2017. It is estimated that the cost of raw materials will increase by 20% the labour cost will increase by 10%, 50% of the overhead charges are fixed and the other 50% are variable. The selling expenses per unit will be reduced by20%. The rate of  profit will remain the same. Prepare a Cost Statement for the year 2017 showing the total profit and selling price per unit.

Solution:
Production   10000 units
Cost of Raw Material                                                      200000/10000= 20
Cost of Labour                                                                  120000/10000=12
PRIME COST                                                                  320000
Factory Overheads                                                              80000 Fixed 40000 Variable 40000 i.e Rs 4
 WORKS COST                                                               400000
Office Overheads                                                              40000 -Rs 4
  Cost of Production                                                           440000
Selling Expenses                                                                 10000 =Rs1
cost of sales                                                                          450000/10000=45
Profit (25% of Cost)                                                           125000
Sales                                                                                       575000/10000=57.5

Now for 15000 units
Figures are as follows
Cost of Raw Material 15000*20=300000+20%=360000
Labour                             15000*12= 180000+10%=198000
Factory Overheads                    40000+ (15000*4)=100000
Office Overheads                      15000*4 =                     60000
Selling Expenses                        15000* .80p=               12000
Cost of Sales                                                                     730000
profit (25% of Sales)                                                       182500
Sales                                                                                     912500

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