Page 45 - DCOM206_COST_ACCOUNTING_II

Particulars Amount – ` Particulars Amount – `
To direct materials 5,000 By sales 1,20,000 units 12, 000
Cost Accounting – II
To direct wages 3, 000 By closing stock WIP 240
Finished goods 4800 units 320
To factory overheads 1,600
Notes To gross profit 2,960
Total 12,560 Total 12,560
To administrative overheads 700 By gross profit 2,960
To S & D overheads 960 By dividends 100
To legal charges 10 By interest 20
To preliminary expenses written off 40
To bad debts 80
To net profit 1,290
Total 3,080 Total 3,080

Statement Showing Cost and Profits as per Cost Records

Particulars Amount `
Direct material 56,00,000
Direct wages 30,00,000
Prime Cost [Direct material + Direct wages] 86,00,000
Factory overheads: 20% on prime cost 17,20,000
1,03,20,000
Less: Closing Work-in-progress 2,40,000

Reconciliation of Cost and Financial Accounts

Particulars Amount `
Works cost – 1,24,000 units 1,00,80,000
Administration overheads [` 6 per unit × 124000 units] 7,44,000
Cost of production 1,08,24,000
Less: Finished stock [4000 units × ` 87.29 *] 3,49,160
Cost of goods sold 1,04,74,840
Selling and distribution expenses [` 8 × 1,20,000 units] 9,60,000
Cost of sales 1,14,34,840
Sales 1,20,00,000
Profit 5,65,160

* ` 1,08,24,000/1,24,000 units = ` 87.29
Reconciliation Statement

Particulars Amount ` Amount `
Profit as per cost accounts 5,65,160
Add: Excess expenses charged in cost accounts
 Material 6,00,000
 Factory overheads 1,20,000
 Administrative overheads 44,000
Income not recorded in cost accounts
 Dividend 1,00,000
 Interest received 20,000
 Total 8,84,000
Total 14,49,160 Contd...
Less: Expenses not recorded in cost accounts
 Legal charges 10,000
40  Preliminary expenses written off 40,000
LOVELY PROFESSIONAL UNIVERSITY
 Bad debts 80,000
 Total 1,30,000
Less: Overvaluation of closing stock in cost records 29,160
Total 1,59,160 1,59,160
Profits as per financial accounts 12,90,000