Page 16 - DCOM206_COST_ACCOUNTING_II

Unit 1: Service Costing

extracted from the account books of the eagle engineering works. The operating cost sheet Notes
should be drawn up in the appropriate from:
Fuel: Coal 1,200 tons @ ` 11 per ton.

Coke 500 tons @ ` 15 per ton.
Handling charges of the fuel 50 p. per ton
Ash removal charges – 160 tons @ 25 p. per ton
Cost of water pumped from the river – 160 thousand gallons
@ 37.5 paise per thousand gallons
Lubricating oil – 50 gallons @ ` 4 per gallon

(a) Sale of ash: 280 tons @ 25 p. per ton.
(b) Cost of steam supplied to the manufacturing shops:
30,000 lb @ ` 10 per 1,000 lb.
Salaries and operating staff in the power house:
1 Foreman @ ` 400 per month

2 Astt. foremen @ ` 125 per month.
4 Mechanics @ ` 75 per month
1 Coolie @ ` 2.50 per day for 30 days
Depreciation Capital Cost Rate of Depreciation
Boiler ` 20,000 6%
Generator and other

Electrical Equipments ` 1,20,000 4%
Building ` 12,000 1%
25% of monthly total technical supervision charges amounting to ` 3,940.
Total gross units generated: 97,000 units

Loss during the month due to leakage in course of generation and due to defective
equipments = 1,000 units.
Solution:
Operating Cost Sheet of Eagle Engineering Works for the Month of November, 2007
Units Generated: 97,000

Particulars of Expenses Amount (`)
Fuel :
Coal : 1,200 tons @ ` 11 per ton 13,200
Coke : 500 tons @ ` 15 per ton 7,500
Handling Charges of the fuel : 850
@ 50 Paise per ton (1,200 + 500 x 0.50)
Ash removal charges : 160 tons 40
@ 25 Paise per ton (160 × 0.25)
Cost of Water Pumped : (1,60,000 × 0.375 ÷ 1,000) 60
Lubricating oil : 50 gallons @ ` 4 per ton (50 × 4) 200
Contd...
Depreciation on :
Boiler : (20,000 × 6 ÷ 100 = 1,200 × 1 ÷ 12) 100
Building ( 12,000 × 1 ÷ 100 = 120 × 1 ÷ 12) 10
21,960
LOVELY PROFESSIONAL UNIVERSITY 11
Less: Credit on account of :
(a) Sale of Ash: 280 tons @ 25 Paise per ton (280 × 0.25) 70.00
(b) Steam to manufacturing shops :
(30,000 lbs ÷ ` 10 per 1,000 lb.) 300.00 370
21,590
Cost of Steam produced :
Salaries and wages of operating staff
1 Foreman @ ` 400 p.m. 400
2 Asst. Foreman (2 × 125) 250
4 Mechanies ( 4 × 75) 300
1 Coolie @ ` 2.50 per day for 30 days (2.50 × 20) 75 1,025
Technical supervision charges : ( 3,940 × 25 ÷ 100 ) 985
Depreciation on Generator and other Electrical equipment : 400
(1,20,000 × 4 ÷ 100 = 4,480 × 1 ÷ 12)
Total Cost of Electricity Generated 24,000
Units generated : (Gross) 97,000
Less : Leakage units 1,000
Net units generated 96,000
Cost of per unit of electricity : (24,000 / 96,000 = ` 0.25) 0.25 Paise