Chapter 1 COST SHEET

Q1. The Accounts of B Manufacturing Ltd. for the year ended 31.12.2008 show the following:

Particulars

Rupees

Stock of material on 1.1.2008
67,200
Materials Purchased
2,59,000
Drawing Office Salaries
9,100
General Office Salaries
17,640
Bad Debts Written Off
9,100
Traveller’s Salaries and Commission
10,780
Depreciation written off on office furniture
420
Rent, rates, taxes and insurance (factory)
11,900
Productive wages
1,76,400
General Expenses
4,760
Gas and Water
1.680
Travelling Expenses
2,940
Sales
6,45,540
Manager’s Salary (two-third factory, one-third office)
15,000
Depreciation written off on Plant, Machinery & Tools
9,100
Cash discount allowed
4,060
Repairs of Plant, Machinery & Tools
6,230
Carriage Outwards
6,020
Direct Expenses
10,010
Rent, Rates, Taxes and Insurance (Office)
2,800
Gas and Water (Office)
560
Stock of material on 31.12.2008
87,920
You are required to prepare a cost sheet showing Prime Cost, Factory Cost, Total Cost and Net Profit for the year ended 31.12.2008.

Q2. The following details have been obtained from cost records of Gattu Paints Ltd.

Particulars

Rupees

Stock of material on 1st September, 2008
75,000
Stock of material on 30th  September, 2008
91,000
Direct Wages
52,500
Indirect Wages
2,750
Sales
4,31,000
Work-in-progress on 1st September, 2008
28,000
Work-in-progress on 30th September, 2008
35,000
Purchase of Raw Materials
2,15,000
Factory rent, rates and power
15,500
Depreciation of Plant & Machinery
66,500
Expenses on purchases
54,500
Carriage outward
3,500
Advertising
3,500
Office rent and taxes
2,500
Travellers wages and commission
6,500
Stock of finished goods on 1st September, 2008
54,000
Stock of finished goods on 30th  September, 2008
31,000
Prepare a cost sheet giving maximum possible break-up of cost & profit.
Q3. The following particulars have been extracted from the books of M Manufacturing Co. Ltd. Kolkatta for the year ended 31st March, 2009

Particulars

Rupees

Stock of material on 31st March, 2008
47,000
Stock of material on 31st March, 2009
50,000
Materials Purchased
2,08,000
Drawing Office Salaries
9,600
Counting house Salaries
14,000
Carriage inwards
8,200
Carriage outwards
5,100
Cash discount allowed
3,400
Bad Debts Written Off
4,700
Repairs of plant, machinery & tools
10,600
Rent, rates, taxes and insurance (Factory)
3,000
Rent, Rates, Taxes and Insurance (Office)
1,000
Travelling Expenses
3,100
Traveller’s Salaries and Commission
8,400
Productive wages
1,40,000
Depreciation written off on Plant, Machinery & Tools
7,100
Depreciation written off on furniture
600
Directors fees
6,000
Gas and Water charges (Factory)
1,500
Gas and Water charges (Office)
300
General Expenses
5,000
Managers Salary
12,000
Out of 48 hours a week, the time devoted by the manager to the factory and office was on an average 40 hours and 8 hours respectively, throughout the accounting year.
Prepare a statement giving the following information:
a. Prime Cost                              b. Factory overheads as the percentage on production wages
c. Factory Cost                 d. General Overheads and percentage on factory cost
e. Total Cost

Q4. Prepare a cost sheet showing the cost per tonne of paper manufactured by Mansi Paper Mills in January, 2009 under the different elements of cost.
Direct Materials:
  i.     Paper Pulps 1,000 tons @ Rs 80 per ton
 ii.     Other miscellaneous materials  200 tons @ Rs 50 per ton
Direct Labour:
220 skilled men for 25 days @ Rs 6 per day
110 unskilled men for 25 days @ Rs 4 per day
Direct Expenses:
Special Equipment Hire Charges Rs 10,000
Special Dyes Rs 5,000
Works Overheads:
Variable @ 100 percent on Wages
Fixed @ 50 percent on Direct Wages
Administrative Overheads @ 10 percent on works cost
Selling & Distribution Overheads @ 20 percent on works cost
Finished paper manufactured / produced 1,000 tons
Sale of Waste Rs 2,000
Sales Rs 400 per ton

Q5. The following figures are extracted from the Trial Balance of Algetter Co. on 30.9.2008

Particulars

Rupees

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 and 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 and Upkeep – Factory
14,000
Heat, Light and 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 Department Salaries and Expenses
18,000
Office salaries and expenses
8,600
Interest on borrowed funds
2,000
Further details are available as follows:
  i.     Closing Inventories:
Finished Goods: Rs 1,15,000; Raw Materials: Rs 1,80,000; Work-in-progress: Rs 1,92,000
 ii.     Accrued Expenses on:
Direct Labour: Rs 8,200; Indirect Labour: Rs 1,200; Interest on borrowed funds: Rs 2,000
iii.     Depreciation to be provided on:
Office Appliances: 5 %; Plant & Machinery: 10 %; Buildings:  4%
iv.     Distribution of the following Costs:
Heat, Light and Power to Factory, Office and Selling in the ratio of 8:1:1
Rates and Taxes two-thirds to Factory and one third to Office
Depreciation on Buildings to Factory, Office and Selling in the ratio of 8:1:1
With the help of the above information, you are required to prepare a condensed Profit and Loss Statement of Algetter Co. for the year ended 30th September, 2008 along with supporting schedules of:
     i. Cost of Sales          ii. Selling & Distribution Expenses           iii Administration expenses

Q6. The Government of India has instituted the dual pricing system in the industry in which your Company operates. You are the Head of the Costing Division of Surya Textiles Co. Ltd. Your Company produces a standard type of cloth, 50% of which is procured by the Government at a price of Rs 4 per meter.
You are requested by the Managing director of your Company to suggest suitable price for the cloth to be sold in the open market. Production during 2008-2009 had been 20,00,000 meters of cloth. Relevant information is given below:

Particulars

Rupees

Cotton consumed
10,00,000
Direct Labour in Factory
10,00,000
Carriage Inwards
50,000
Indirect Labour in Factory
4,00,000
Salary of Works Director and other staff in the factory
2,50,000
Water, Power, Local Taxes (Factory)
5,00,000
Dyeing, Bleaching, etc.
10,00,000
Depreciation (Factory)
2,00,000
Excise and other Taxes
30,00,000
Miscellaneous Expenses (Factory)
1,00,000
Office Salaries
10,00,000
Salary of Managing Director
1,00,000
Depreciation of Machines (Office)
1,00,000
Miscellaneous Office Expenditure
1,00,000
Purchase of computer for office
20,00,000
Miscellaneous purchase of furniture and machines for office
5,00,000
Dividends paid
12,00,000
Directors fees
2,00,000
Advertising and publicity
10,00,000
Commission paid on sales
10,00,000
Commission paid to Foreign Buyers
1,00,000
Packing and forwarding (Sales)
2,00,000
Expenditure on Sales Depots.
4,00,000
Following further information is available:
a.     The Company expects a fair return of 20% of its paid-up capital, which is 1,00,00,000
b.     Marketing expenses outstanding are Rs 1,00,000
Suggest the open market price after preparing a cost Analysis in a columnar form.

Q7. From the following information relating to the manufacturer of a standard product during the month of September 2008, prepare a statement showing cost and profit per unit:
Raw Materials used
Rs 40,000
Direct Wages
Rs 24,000
Machine Hours Worked
9,500
Machine Hour Rate
Rs 4 per hour
Office Overheads
20% on works cost
Selling Overheads
Re 1 per unit
Units Produced
20,000
Units Sold
18,000 at Rs 10 per unit

Q8. The following particulars for 2008 are taken form the books of BERRY LTD., which manufactures and sells a particular brand of Mixtures.
Particulars

Litres

Rupees

Stock on January 1st 2008


      Raw Materials
2,000
200
      Finished Mixture
500
175
      Factory Stores

725

Purchases



      Raw Materials
1,60,000
18,000
      Factory Stores

2,425

Sales



      Finished Mixture
1,53,050
91,800
Scrap (Factory)

817
Factory Wages

17,805
Power

3,040
Machine Depreciation (Factory)

1,800

Salaries



     Factory

7,222
     Selling

4,150
     Office

3,772

Expenses



     Direct

1,850
     Selling

1,800
     Office

1,820

Interest on Capital



     Factory

700
     General

300
Advertising

1,400
Cash discounts on sales              

1,450
Bank interest paid

125
Stock on December 31st 2008


      Raw Materials
1,200
?
      Finished Mixture
450
?
      Factory Stores

555
The wastage in raw material is normal.
Finished mixture in stock at the end of the year is to be valued at Factory Cost. The purchase price of raw material remained unchanged throughout 2008. Raw material is used and finished mixture is sold on the “First-in-First Out” basis. From the above information you are required to prepare a Cost Statement of BEERY LTD. for 2008. Give working for the quantity of scrap (factory) sold and value of Raw Materials & Finished Mixture in stock on 31.12.2008.

Q9. The books and records of the Tunnel Manufacturing Company present the following data for the month of August 2008.
Direct Labour cost   Rs 16,000 (160% of Factory Overheads)
Cost of goods sold  Rs 56,000
Inventory accounts showed these opening and closing balances

August 1

August 31

Particulars

Rupees

Rupees

Raw Materials
8,000
8,600
Work-in-progress
8,000
12,000
Finished Goods
14,000
18,000
Selling Expenses

3,400

General & Administration Expenses


2,600
Purchase of Finished Goods

4,000
You are required to prepare a statement showing cost of goods manufactured and sold and profit earned. Sales were Rs 65,000.

Q10. Dolly Transistors Ltd. manufactures two kinds of transistors, viz Holly and Jolly. From the following particulars prepare statement showing cost & profit per transistor for each of the two brands.

Particulars

Holly

Jolly

Materials

Rs 1,40,000

Rs 96,000

Wages
Rs 1,80,000
Rs 1,20,000
Number of transistors manufactured and sold during the year end 31st March, 2009
4,000
2,400
Sales price per transistor
Rs 175
Rs 200
Factory overheads are 100% on wages and the office overheads are 20% of works cost. Selling and Distribution overheads are Rs 10 per transistor.
Q11. In 2007 when selling price was Rs 10 per article, total sales were Rs 1,00,000. In 2008 selling price was increased by 10% and total sales realised Rs 1,26,500.
In 2007, Materials cost 40% of sales value. In 2008 prices of raw materials rose by 10%. In 2007, wages were Rs 30,000. In 2008, the cost was Rs 33,000. In 2007, other expenses were 10% of sales value. These expenses rose in 2008 by the sum of Rs 1,500.
Prepare Cost Statement for the year 2007 and 2008 and find out the net profit for 2007 and 2008.

Q12. From the following information, prepare a cost statement, showing cost per article and total cost. 10,000 units were manufactured.
Particulars

Rupees

Stock of raw material (opening)
90,000
Stock of raw material (closing)
30,000
Purchases
60,000
Wages (productive)
51,000
Factory rent, rates and insurance
5,000
Depreciation on Machinery
500
Repairs to machinery
2,000
Factory Heating and Lighting
800
Works Administration Expenses
4,000
Office Administration Expenses
3,000
Salaries to Director and Managers
3,000
Office rent and taxes
1,200
Postage and Telephone
300
Printing and Stationery
100
Legal Expenses
500

Q13. From the following particulars you are required to prepare statement showing the cost of Materials Consumed, Prime Cost, Works Cost, Total Cost, the percentage of Works on Cost to Productive Wages and the percentage of General on Cost to Works Cost.
Particulars

Rupees

Stock of Finished Goods on 1.1.2008
72,800
Stock of Raw Materials on 1.1.2008
33,280
Purchases of Raw Materials
7,59,200
Productive Wages
5,16,880
Sale of Finished Goods
15,39,200
Stock of Finished Goods on 31.12.2008
78,000
Stock of Raw Materials on 31.12.2008
35,360
Works overhead charges
1,29,220
Office and General Expenses
70,161
The Company is about to send a tender for a large plant. The costing department estimates that the material required would cost Rs 53,000 and the wages to workmen for making the plant would cost Rs 31,200. The tender is to be made at a net profit of 20 percent on selling price. Show what the amount of the tender would be, if based on the above percentages.

Q14. In a factory two types of articles are manufactured viz No.1 and No.2. From the following particulars, prepare a statement of cost showing total cost of each variety and ascertain the total profit. There is no opening or closing stock.
Particulars

No.1 (Rs)

No.2 (Rs)

Materials

30,000

50,000

Labour
60,000
70,000
Works on cost is charged at 40% of Works Cost and Office on Cost at 20% on Total Cost. No.1 article sold during are 180 at Rs 1,200 each & No.2 article sold are 200 at Rs 1,500 each.

Q15. A factory produces uniform type of articles and has a capacity of 3,000 units per week. The following information shows the different elements of cost for 3 consecutive weeks when the output has changed from week to week.

Units
Produced

Direct
 Materials

Direct
Labour
Factory Overheads
(partly variable & partly fixed)

Rupees
Rupees
Rupees
800
3,200
1,200
5,600
1,000
4,000
1,500
6,400
1,600
6,400
2,400
8,800
The factory has received an order for 2,400 units upon the selling price of which it wants a profit of 25%. Find out what price per unit it should quote.

Q16. A factory can manufacture 10,000 units every month. The following data is furnished to you for the quarter ended 31st December, 2008.

Materials



Rs 5 per unit
Labour Cost


Rs 4 per unit
Direct Expenses


Rs 2 per unit
Months
October
November
December
Production in units
6,000
8,000
7,000
Factory overheads in Rupees
8,000
9,000
8,500
A commission agent introduced a prospective customer who wants to place an order for 10,000 units every month. You are asked to quote your price after considering the following.
a.     Administration overhead is 10% of works cost.
b.     Sales & distribution overheads is 12.50% of cost of production.
c.     The commission agent is to be paid Re 1 per unit as his agency remuneration.
d.     The factory wants a profit of 20% on sales price.

Q17. The following is a summary of the trading results of a company selling electrical appliances for the year ended 31st December, 2008 during which 80,000 units were sold.
Particulars

Rs (Lacs)

Rs (Lacs)

Sales

 

96

Costs:


Materials

36

Direct Labour
15

Indirect Labour
6

Other Costs
18
75
Profit

21
Considering the following, prepare a summary of the expected results for the following year:
i.       The selling price is to be reduced by Rs 7.50 per unit.
ii.      Sales volume is expected to increase by 40%.
iii.    Suppliers have agreed to give a discount of 5% on all purchase of materials.
iv.    Direct workmen are to be paid an incentive bonus of 2.50% in order to simulate production. Indirect labour is not expected to increase during the following year.
v.     Other cost vary directly with production except to the extent of Rs 3 lacs which is considered ‘fixed’ and an additional expense of Rs 1 lac will arise due to rent in respect of an extension to the factory.
vi.    You are to assume that there is no stock or work-in-progress as at 31st December.

Q18. A factory can produce 60,000 units p.a. at its optimum (100%) capacity. The estimated costs of production are as under:
Direct Material Rs 3 per unit and Direct Labour Rs 2 per unit
Indirect Expenses
Fixed Rs 1,50,000 per annum; Variable Rs 5 per unit and semi-variable Rs 50,000 per annum upto 50% capacity and an extra expense of Rs 10,000 per annum for every 25% increase incapacity or part thereof.
The factory produces only against orders and not for own stock
If the production programme of the factory is as indicated below, and the management desires to ensure a profit of Rs 1,00,000 for the year, workout the average selling price at which each unit should be quoted:
                First 3 months of the year                 50% capacity
Remaining 9 months                          80% capacity
Ignore selling, distribution and administration overheads

Q19. A company makes two distinct types of vehicles A and B. The total expense during the period is by the books for assemble of 600 of A and 800 of B are as under:
Particulars

Rupees

Material
1,98,000
Wages
12,000
Stores Overheads
19,800
Running expense of machine
4,400
Depreciation
2,200
Labour amenities
1,500
Work General Expenses
30,000
Administration and Selling Expenses
26,800

Other Information

A : B

Material Cost ratio per unit
1 : 2
Wages Cost ratio per unit
2 : 3
Machine utilisation ratio per unit
1 : 2
Calculate the cost of each vehicle giving reasons for the basis of apportionment adopted by you.

Q20. American Sprayers Ltd. manufactured and sold 1,000 sprayers during the year ended 31st March, 2009. The summarised accounts are set out below:
Manufacturing, Trading and Profit and Loss Account
 for the year ended 31st March, 2009
Particulars

Rupees

Particulars

Rupees

To Cost of Material
80,000
By Sales
4,00,000
To Direct Wages
1,20,000


To Manufacturing Cost
50,000


To Gross Profit
1,50,000


Total
4,00,000
Total
4,00,000
To Management & Staff Salaries
60,000
By Gross profit b/f
1,50,000
To Rent, Rates & Insurance
10,000


To Selling Expenses
30,000


To General Expenses
20,000


To Net Profit
30,000


Total
1,50,000
Total
1,50,000
For the year ending 31st March, 2010, it is estimated that:
a.               Output of the sprayers will be 1,200 sprayers.
b.               Price of material will rise by 20% on the previous year’s level.
c.               Wages per unit will rise by 5%.
d.               Manufacturing cost will rise in proportion to the combined cost of material and wages.
e.               Other expenses will remain unaffected by the rise in output.
f.                Selling expenses per unit will remain unchanged.
Prepare a cost statement showing the price at which the Sprayer should be marked so as to show a profit of 10% on the selling price.

Q21. The following information is available from the records of a company making two types of electric ovens i.e. Deluxe type and Economy type
Particulars

Rupees

Materials Consumed
20,00,000
Direct Wages
12,00,000
Factory Overheads
10,00,000
Total
42,00,000
Other Information:
i.       Material cost per unit in the Deluxe type was twice as much as in the Economy type.
ii.      Direct wages per unit in the Economy type were 50% of the Direct wages per unit in the Deluxe type.
iii.    Factory overheads are the same per unit both in the Deluxe type and the Economy type.
iv.    Administrative overheads are to be taken at 120% of Direct Wages both in Deluxe type and Economy type.
v.     Selling overheads are to be taken at Rs 20 per unit sold in Deluxe type and Economy type.
vi.    Production during the year was 7,500 Deluxe and 5,000 Economy and all the units produced were sold.
vii.   Profit charged is 25% of selling price in Deluxe type and 20% of selling price in Economy type.
Prepare a cost statement with maximum possible break-up of cost per unit and total cost both for Deluxe and Economy type.

Q22. M/s Bata Shoe Co. manufactures two types of Shoes A and B. Production cost for the year ended 31st March, 2009 were:
Particulars

Rupees

Direct Materials
15,00,000
Direct Wages
8,40,000
Production Overheads
3,60,000
Total
27,00,000
There was no work-in-progress at the beginning or at the end of the year. It is ascertained that:
i.       Direct Material in Type A shoe consists twice as much as that in Type B shoes.
ii.      Direct wages in Type B shoes were 60% of those for Type A shoes.
iii.    Production overheads were the same per pair of A and B Type.
iv.    Administrative overheads for each Type was 150% of Direct Wages.
v.     Production during the year were
          Type A                 40,000 pairs of which                   36,000 were sold
          Type B                 1,20,000 pairs of which      1,00,000 were sold
vi.    Selling cost was Rs 1.50 per pair.
vii.   Selling price was Rs 44 for A Type and Rs 28 per pair for B Type.

Q23. The cost structure of an article, the selling price of which is Rs 45,000 is as follows:
             Direct Materials                                  50%
             Direct Labour                                                20%
             Overheads                                                    30%
An increase of 15% in the cost of materials and of 25% in the cost of labour is anticipated. These increased costs in relation to the present selling price would cause 25% decrease in the amount of present profit per article.
You are required:
i.                 to prepare a statement of profit per article at present, and
ii.                the revised selling price to produce the same percentage of profit to sales as before.

Q24. Anurag Electricals Ltd. manufactured and sold 1,000 Electric Irons during the year ended 31st December, 2008. Following were the expenses for the manufacture of 1,000 Electric Irons.

Particulars

Rupees

Materials
80,000
Direct Wages
1,20,000
Manufacturing Costs
50,000
Selling Expenses
40,000
Other Overheads Expenses
90,000
For the year ending 31st December, 2009, it was estimated that:
i.            Output and sales will be 1,500 Electric Irons.
ii.           Cost of material will rise by 25% per unit.
iii.         Wages per unit will decrease by 10%.
iv.         Manufacturing cost will rise in proportion to the combined cost of materials and wages.
v.          Selling expenses per unit will remain unchanged.
vi.         Other overheads will increase by Rs 60,000.
Prepare a cost statement showing the price at which the Electric Irons should be marked so as to have a profit of 20% on selling price. Working should form part of the answer.

Q25. Mr. X manufactures Stools, Chairs and Tables. Materials and wages costs are separated as follows:

 

Stools
Chairs
Tables
Particulars
Rupees
Rupees
Rupees

Materials (per unit)

36
60
440
Wages (per unit)
48
40
120
The total factory cost in the month of January 2009 was Rs 60,000. You are required to determine the factory cost of each type of furniture after assuming that one table is equivalent to 4 stools and two chairs are equivalent to one table for the purpose of allocation of factory on Cost. The production in the month of January was:
Stools 600;              Chairs          300;              Tables          60

Q26. M/s Rim-Jim Co. Ltd. gives you the following information about the cost structure of the product manufactured and sold by the company and requests you to prepare a cost sheet from the same. The cost per unit is also to be worked out.
i.       During the year 2008-09 the company has manufactured and sold 10,000 units of the product. The selling price being Rs 100 per unit.
ii.      The company has no financial expenses or losses.
iii.    The net profit ratio is 20% of sales.
iv.    The cost of production is equal to 75% of sales.
v.     The total of prime cost and works cost is equal to the cost of sales, the works cost being 62.50% and the balance being prime cost.
vi.    Prime cost is composed of 50% materials, 40% labour charges, 10% other direct expenses.

Q27. The following information is available from the books of a company manufacturing Luxury Ceiling Fans. Production and sales during the year ending 31st March, 2009 was 1,000 units.

Particulars

Rupees

Direct Materials
2,00,000
Direct Wages
1,50,000
Factory Expenses
1,37,500
Administration Expenses
60,000
Selling Expenses
45,000
Sales
7,30,000
The following estimates have been made for the year 2009-10:
i.            Production and sales will be 1,500 units.
ii.           Material price per unit will increase by 25% but due to economy in consumption the cost per unit will reduce by 12%.
iii.         The wages rates per unit will increase by 20%.
iv.         Factory expenses of Rs 50,000 are fixed. The remaining factory expenses will be in the same proportion to materials consumed and wages a in the previous year.
v.          The total administration expenses will increase by 66⅔%.
vi.         Selling expenses will be Rs 90,000.
vii.        The profit desired is 20% on sales
Prepare a cost statement showing maximum possible break-up of cost per unit and total cost for 2008-2009 and 2098-2010, profit per unit and total profit for the years 2008-2009 and 2009-2010.

Q28. In respect of a factory, the following have been obtained for the year 2008.

Particulars

Rupees

Cost of Materials
6,00,000
Wages of Labour
5,00,000
Factory Overheads
3,00,000
Administration Charges (Total)
3,36,000
Selling Charges
2,24,000
Distribution Charges
1,40,000
Profit
4,20,000
A work order has been executed in 2009 and the following expenses have been incurred

Particulars

Rupees

Material
8,000
Wages of Labour
5,000
Assuming that in 2009 the rate of factory overhead has gone up by 20%, distribution charges have gone down by 10% and selling & administrative charges have each gone up by 12.50%, at what price should the product be sold, so as to earn the same rate of profit on the selling price as in 2008.
Factory Overhead is based on direct Labour and Administration, Selling and Distribution Overhead on Factory Cost.

Q29. The cost of manufacturing 5,000 units of a commodity comprises:

Particulars

Rupees

Materials
20,000
Wages
25,000
Chargeable Expenses
400
Fixed Factory Overheads
16,000
Variable Factory Overheads
4,000
For manufacturing every 1,000 extra units of the commodity the cost of production increases as follows:

Particulars

Rupees

Materials
Proportionately
Wages
10% less than proportionately
Chargeable Expenses
No extra cost whatsoever
Fixed Factory Overheads
Rs 2,000 extra
Variable Factory Overheads
25% less than proportionately
Calculate the estimated cost of producing 8,000 units of the commodity and by how much it would differ if a flat rate of factory overheads based on wages were charged.