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Cost and Management Accounting
Notes Selling Overheads = Salesman’s Salary + Travelling Expenses + Carriage Outward +
Advertising + Warehouse Charges
= 10,500 + 1,000 + 750 + 3,500 + 1,000
= ` 16,750
Hence, Cost of Sales = 5,83,000 + 16,750
= ` 5,99,750
Figure 2.4
Cost of Sales
Selling Overheads Cost of Production
Salesman salary
Carriage outward
Salesmen commission
Travelling expenses
Advertising
Free samples
Warehousing
Delivery charges
The last but most important stage in the unit costing is determining the selling price of the
commodities. The selling price of the commodities is fixed by way of adding both the cost of
sales and profit margin out of the product sales.
Sales = Cost of Sales + Margin of Profi t
Example: In the example continued, if we add the profit that can be earned to be ` 48,900.
Calculate the product sales expected.
Solution:
Sales = Cost of Sales + Margin of Profi t
= 5,99,750 (from the previous example) + 48,900
= ` 6,48,650
Under the unit costing, the selling price of the product can be determined through the statement
form.
Example: Calculate the prime cost, factory cost, cost of production cost of sales and profi t
form the following particulars:
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