Question 1
Sweet Industries is company engaged in manufacturing and selling of sugar with a monthly production capacity of 1,00,000 tonnes of finished sugar. During the month of February 2021 the company produced 1,00,000 tonnes of sugar but the company was able to sell only 95,000 tonnes during the month. As a cost and pricing manager of Sweet Ind you are requested by the management of Sweet Ind to prepare a cost sheet for the month February 2021. Also you are required to find out Prime Cost, Cost of Production, Cost of Goods Sold, Cost of Sales, Selling Price, and profit per tonne.
The following information is supplied to you from the books of account of the company for the month of February 2021
Stock of sugarcane raw material as on 01-02-2021 10,000 Tonnes at a value of Rs.10,00,000
Stock of sugarcane raw material as on 28-02-2021 20,000 Tonnes at a value of Rs.2,20,000
Work-in-process as on 01-02-2021 23,000 Tonnes at a value of Rs.4,83,000
Finished sugar as on 01-02-2021 2,000 Tonnes at a value of Rs.48,000
Purchases of sugarcane during the month February 2021 1.20,000 Tonnes at value of Rs.14,40,000
| Other Expenses incurred during the month are as follows | ||||||
| Inward Carriage | Rs. | 60,000 | ||||
| Direct wages | Rs. | 478,000 | ||||
| Special moulds used for production directly | Rs. | 50,000 | ||||
| Wages for foreman | Rs. | 30,000 | ||||
| Wages for store keeper | Rs. | 28,000 | ||||
| General Manager Salary | Rs. | 100,000 | ||||
| Electric Power | Rs. | 50,000 | ||||
| Stores and Spares | Rs. | 15,000 | ||||
| Chemicals and Consumables | Rs. | 9,000 | ||||
| Repairs & Maintenance factory | Rs. | 13,000 | ||||
| Factory insurance | Rs. | 10,000 | ||||
| Depreciation on Plant & Machinery | Rs. | 28,000 | ||||
| Upkeep of machinery and factory | Rs. | 8,000 | ||||
| Office Salaries | Rs. | 126,000 | ||||
| Rent, Rates and taxes | Rs. | 64,000 | ||||
| Office Lighting | Rs. | 7,000 | ||||
| Depreciation on Furniture | Rs. | 8,000 | ||||
| Salesmen Salaries | Rs. | 129,000 | ||||
| Salesmen Travelling & Commission | Rs. | 25,500 | ||||
| Advertisement | Rs. | 15,000 | ||||
| Warehouse Rent | Rs. | 12,000 | ||||
| Depreciation on delivery van | Rs. | 3,000 | ||||
| Dividends paid | Rs. | 26,000 | ||||
| Cash Discount | Rs. | 4,000 | ||||
Additional information
1 The Finished Sugar yield from raw material is only 80% of the raw materials consumed. The company could sell raw material scrap of 22,000 tonnes at Rs.16,000.
2 The Closing stock of Work in Progress is valued at the value obtained after adding the value of Opening Work in Progress.
3 The company General Manager spends 70% of his time to manage manufacturing activities, 20% of the time to manage administrative functions like stores, purchase, HR and Finance activities. He also devotes 10% time to manage sales and distribution activities
4 The company's pricing policy is fixing selling price at a profit of 20% profit on such selling price.
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