Page 15 - DCOM206_COST_ACCOUNTING_II

Cost Accounting – II

Notes Problem 3:
The following cost data pertaining to the year 2005-2006 are collected from the books of Prakash
Power Company Limited. Prepare an operating cost sheet showing the cost of generation of
power per unit of Kwh.
Total units generated 15,00,000 units
Operating labour ` 16,500

Plant supervision ` 5,250
Lubricants & supplies ` 10,500
Repairs and maintenance ` 21,000
Administrative overheads ` 9,000
Capital cost ` 1,50,000

Coal consumed per kwh. For the year is 1.5 lbs. and cost of coal delivered to the power station
is ` 33.06 per metric tonne. Depreciation rate chargeable is 4% per annum and interest on capital
is to be taken as at 7%.
Solution:
Statement of Operating Cost of Prakash Power Company Limited for the Year 2005-2006
Total Units Generated: 15,00,000
Particulars of Expenses Amount (`)
(A) Fixed Charges :
Plant supervision 5,250
Administrative overheads 9,000
Depreciation (4% on ` 1,50,000) 6,000
Interest on capital (7% on ` 1,50,000) 10,500
Total 30,750
(B) Variable Charges :
Coal used 33,735 (1)
Lubricants & supplies 10,500
Repairs and maintenance 21,000
Operating labour 16,500
Total 81,735
(C) Total Cost of Generation (A +B) 1,12,485
(D) Cost of Generation of per unit of kwh.(1,12,485 ÷ 15,00,000) 0.075 paise

Working note:
(1) Cost of one tonne (2,205 lbs) = ` 33.06
For 1 kwh the coal consumption is 1.5 lbs for 15,00,000 kwh the coal consumption is
= 1.5 × 15,00,000 = 22,50,000 lbs
Cost of 22,50,000 kwh = ` 33.06 × 22,50,000 ÷ 2,205

= ` 33,735
Problem 4:
Find out the cost per unit of electricity generated in the power house located in the Eagle
Engineering Works for the month of November, 2007 with reference to the following data

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