Sdathn Ripsryd@r@ea@pis - Unit) : - Solution
Sdathn Ripsryd@r@ea@pis - Unit) : - Solution
Sdathn Ripsryd@r@ea@pis - Unit) : - Solution
ffimffiion *r sdathn*ripsryd@r@eA@pis
Prepare the Cost Sheet with as many details as possible and ascertain the Selling Price per unit of the product.
1. Direct Materials - 12.5o/o ol Selling Price, 4. Administration 0H - 50o/o of Production Cost,
2. DIrect labour - 17.5o/o of Selling Price, 5. Profit (Rs.750 per unit) - 15olo of Sales.
3. Production Overheads - 1/3nc ol Prime Cost,
Solution: Note: It is given that Administration OH = 50o/o of Production Cost, i.e. 50% of Cost of Production.
We know that Cost of Production = FactoU Cost + AOH. Hence, if AOH = 50o/o of Cost of Production, the
balance 50o/o should be Factory Cost. Therefore, Factory Cost to AOH will be 500/o : 50o/o or I : 1.
Direct Materials
Direct Labour
FACTORYCOST
Administration Overheads
COST OF PRODUCTION
COST OF SALES
Profit
Note: Percentage Column is first filled up with given data. Then Profit amount (given) is written in amount column. The
other amounts are then calculated on proportionate basis, since Profit = Rs.750 = l5o/o of Sales.
From the following particulars, prepare a Cost Statement showing the component of Total Cost and the Profit for the year
ended 31st December.
Pailiculars 0n la Januarv 0n 31* December
Stock of Raw Materials 4,oo,ooo 5,00,000
Stock of Finished Goods 60,000 1,50,000
Stock of Work-ln-Proqress 1,5o,ooo 1,00,000
1.19
Students'Handbook on Cost Accounting and Financial Management
Solution:
1. Statement of Factory OH: Rs. 2. Statement of Administration OH: Rs.
Works Manager's Salary 3,00,000 Salary - ffice Staff 2,00,000
Salary - Factory Employees 3,00,000 Gerieral Expenses 3,20,000
Factory Rent & Insurance 72,500 Bank Charoes 5,000
Power Expenses 95,000 Total 5,25,000
Other Production Expenses 4,20,000 3. Statement of Sellins & Dist. OH: Rs.
Loose tools written off 10.000 Salary - Salesmen 1,00,000
Total 11,97,500 Sellino Exoenses 92.500
Total 1,9e500
from Cost Sheet: The following items are excluded from the Cost Sheet for the reason
Item Rs. Reasons for exclusion
Bad Debts written off 15,000 Reoresents Loss / Inefficiency in Credit Grantins and Collection.
Debenture Interest 50,000 Financial Item / Exoense.
Dividend Paid 10,000 Aporopriation of Profits.
Income-Tax Provision 5,000 Profit-based outflow.
Goodwill written off 1.00,000 Policv based / Comoanv-soecific transfer entrv in accounting system.
Sales Tax paid 1,60,000 Collection and Remittance on behalf of Government. No revenue or cost is
involved to the business entity.
Transfer to M/c Replacement Fund 1.00.000 In the nature of Aporooriation of Profits.
Interest on Loan 75,000 Financial Item / Expense.
Discount Allowed 27,000 Policy based / Company+pecific transaction.
Note: Profit as per Cost Sheet represents Profit before Interest and Taxation, i.e. PBIT.
1.20
Basic Cost Concepts
The loss is fully covered by insurance. The lnsurance Company wants to know the historical cost of the inventories as a
basis for negotiating a settlement, although the settlement is actually to be based on replacement cost, not historical cost.
You are required to compute the following items as on 31st October - (1) Finished Goods lnventory, (2) Work in Process
lnventory, and (3) Direct Materials lnventory.
ffitffiffifu6ftEIWeExH;;ri...i,.,,.M92adapted
COIIPREHENSIVE LTD the information -
1. From Financial Records: Rs.Ofl)s 2. From lnventorv Records: Rs.000s Rs.000s
Pailiculars Partlculars of Stock As at 31st Dec As at lst Jan
Sales for the year 75,00 Raw Miterlals 10,60 8,00
Dlrect Labour 17,50 Flnlshed Goods 19,00 17,60
Management Erpenses 2,W WIP (50'/. complete) 14,50 10,50
Sellino Exoenses 3,50
L.2L
Students'Handbook on Cost Accounting and Financial Management
lll!,ffiorr.$rlFlg$ffiff
Bright Shoe Polish Company manufactures Black and Brown Polish in one standard size of tin retailing at Rs.12.fl1 and
Rs.13.30 inlormation is to vou -
Particulars Openinq Stock Closino Stock Sales
Black Polish 2,400 tins 5,400 tins 72dX!tlns
Brown Polish 8,fl10 tins 3,000 tins 30,0fi) tlns
L.22
Cost Details:
Dlrect Materials: Direct Wages Rs.2,04,000
The Opening Stock of Black and Brown Polish was valued at its Production Cost. The Cost of Raw Materials for Brown Polish
is 107. high6r thanthat for Black, but there is no difference in the cost of tins. Direct Wages for Brown Polish are 8% higher
than thos6 of BIack polish and Production OH are considered to vary with Direct Wages. Administration and Selling 0H is
absorbed at a uniform rate per tin ol polish sold.
/
Prepare a statement to show the Cost and Profit per tin of polish.
Solution:
Note: In this question, Total Costs are given and product-urise analysis is required to be made, Hence, the ratios for
appoftionment oh various types of costs should be determined first. The workings are given below'
Material Usage rate p.u. 100p/o 110o/o Material Usage rate (equal) 100o/o 100o/o
So, Material Cost (QtW x Rate) 300o/o lt0o/o So, Material Cost (Qtty x Rate) 300o/o 100o/o
Hence, Ratio of Polish Cost apportionment = 3O : 11 Hence, Ratio of Tins Cost apportionment = 3 : 1
5. Recognition of AOH & SOH: Conventionally, Administration and Sellitg are regarded as distinct functions. However, in
this queiion, they are given together and o<preCsed as cost per unit sold. Hence, Finished Goods are valued at the Factory
Cost, i.e. without including AOH. Here, AOH is based on units sold (not units produced).
6. of Stocks
Type Opening Stock Value = Qth/ x Rate Closing Stock Value = QttY x Rate
Black 2,400x 8.60 = 20,@0 5,400x8.60= 46,440
Brown 8,000x9.24=73,920 3,000x9.24= 27,720
kandClosingStockisdeterminedonlyafterpreparingtheCostSheetuptoFactory
Cost stage (WN 8). Rlso, Selling OH should not be included in Inventory Valuation, hence, for Stock Valuation
purposes, only Factory Cost is considered.
7. Administration and Se[ing OH: Since these are absorbed at a uniform rate per unit sold, they should be apportioned
in the ratio of units sold, i.e. 72,000: 30,000 i.e. 12 : 5.
t.23
Students'Handbook on Cost Accounting and Financial Management
8. Based on the above workinqs, the Cost Sheet can be prepared as under:
Pafticulars Total Black Polish Brown Polish
Production & Sales OuantiW 75,000 & 72,000 2s.000 & 30.000
p.u Total p.u Total
Direct Materials Polish (in 30 : 11) 2,46,000 2.40 1,80,000 2.64 55,000
Tins (in3:1) 1,20,000 1.20 90,000 1.20 30,000
Direct Waqes (in 25 : 9) 2.04.000 2.00 1.50.000 2.L6 54,000
PRIME COST 5,70,000 s.60 4,20,000 6.00 1,50,000
Add: Production OH (1500/o of Waqes) 3,06.000 3.00 2.25.000 3.24 81,000
Factory Cost of Production 8,76,000 8.60 6,45,000 9.24 2,31,000
Add: Ooeninq Stock of Finished Goods 94,560 8.60 20.ffio 9.24 73.920
9,70,560 8.60 6,65,640 9.24 3,04,920
Less: Closino Stock of Finished Goods (74.160], 8.60 G6,440]- 9.24 (27.720\
COST OF GOODS SOLD 8,96,400 8.60 6,19,200 9.24 2,77,200
Add: . Administrative & SOH (in 12 : 5) 1.02.000 1.00 72,000 1.00 30,000
COST OF SALES 9,98,400 9.60 6,91,200 t0.24 3,07,200
Add: Profit 2,M,600 2.40 L.72.AOO 3.06 91,800
SALES 12,63.000 12.00 8.64.000 13.30 3.99.000
lllustration 6: Preparation of Cost Sheet- Product-wise CGt Analysis and Apportiorurcat ' !t*
SK Engineering Company Limited manufactures two types of auto bearings - Type 'XD' and Type'XE'. The Company's records
show the lollowinq oarticulars for those )r the month of Mav -
Particulars Direct Materials Direct Labour Production Overheads Office Overheads
Amount in Rs. 38.10.000 20,10,000 6,03.000 6.42.300
There was no Work-in-Progress at the beginning or at the end of the month. !t was ascertained that -
o Direct Material Cost per bearing for Type 'XD'was 160% of those for Type'XE'.
r Direct Labour Cost per bearing for Type 'XE' was 40o/o ol those for Type 'XD'.
o Production 0H were absorbed based on Direct Labour Cost and Otfice 0H were absorbed on the basis of Fac-tory Cost.
o Selling and Distribution Overheads were Rs.2 per bearing sold for each type.
o Stock ol Finished Bearings on 1st May was 15,000 bearings at Rs.l5 of Type 'XD'and 20,000 bearings at Rs.8 ol Type 'XE'.
o Production during May was 2,70,000 bearings of Type 'XD' and 3,30,000 bearings of Type 'XE'. Out of May's output, 25,000
bearings of Type 'XD' and 40,000 bearings of Type 'XE' remained in stock on 31st May which was valued at cost of production.
3. POH.Appoftionment: Relationship between POH & Wages = Rs.6,03,000 + Rs.20,10,000 = 30o/o ol Direct Wages.
So, POH are taken at 300/o of Direct Wages, or alternatively apportioned in the same ratio as Direct Wages, i.e.27O z L32.
t.24
Basic Cost Concepts
Vinayak Ltd is planning to submit a tender lor a new job that requires Materials costing Rs.20,000 and Labour Rs.l2,000. For
estimation of OH, the Company furnishes the following data in respect of the previous year -
Materials Consumed = Rs.2,91,200, Wages Paid = Rs.l,98,800, Works OH = Rs.43,736, AOH = Rs.35,524.
What should be quotation for the new iob if the Gompany desires a profit ol25oh on Total Cost? (Absorb POH based on Dhect
Labour and AOH based on Works Gost).
1.25
ffi'#fi il . '.:' , . : li i!14i':;iti;:i*;i;i! 0tr
A C6iipanv manutactuiii iiilid,i,"wtrtitr irelolo ai ns.1,600 per unit. The total cost is composed ol lor Direct Materials,
30%
4617olor Direct Wages and 30o/o for Overheads. An increase in material price by 30% and !n w19e rates by 10% is expected in
the forthcoming yeiar, as a result ol which the profit at current selling price may decrease by y'/: d the
present prolit per unit.
you are requircl-to prepare a statement showing current and futureprofit at present Selling Price. What should be the Selling
Price to maintain the present rate of profit?
Let Present Cost be Rs.C and Profit be Rs.P. The breakup of Materials, trboq-q-qH
Particularc ExisUng Proposed
Working Rs. Working Rs.
Direct Materials 0.3c 362 0.3C +30o/o = 0.39C 47t
Direct Wages 0,4c 484 0.4C+ l0o/o=0.44C 532
Overheads 0.3c 362 Same as existing = 0.30C 362
TOTAL COST c 1,208 1.130C 1,365
235
Add: Profit P 392 P Less 40olo = 0.60P
1.600 1,600 1,600 1.500
SELLING PRICE
I{ote: Amount Column is filled up after the following computations'
ThereforeC=640+0.53=Rs.lr2OS.SubstitutinginEquationl,wehave,P=1,600-1,208=Rs.392
Present Percentage of Profit to cost = Rs.392 + Rs.1,208 = 32.45o/o on Cost.
New Cost = 1.13C = 1.13 x 1208 = Rs.1,365
Hence, New Selling Price = New Cost + Profit Margin = Rs.1,365 + 32.45o/o thereon = Rs.tr808.
L.26
Basic Cost Concepts
Product A: Factory Cost + AOH = Total Cost. Product B: Factory Cost + AOH = TotalCost.
So, (34,000 + 15,000 x) + (34,000 + 15,000 x) y = 48,000 so, (40,000 + 25,000 x) + (40,000 + 25,000 x) y = 60,000
By taking (34,000 + 15,000x) as common factor, we have By taking (40,000 + 25,000x) as common factor, we have
+ 15.000 x) (1+ v) = 48.000............Equation 1
Dividing Equation 1 by Equation 2 [to eliminate / cancel (1+y)] and further simpliffing, we have,
(34,000 +15,000 x) _ (34 + 15x) _ _48 _ 4
(40,000 +25,000 x) (40 + 25x) 50 5
On cross multiplication, we have (34 + 15x) 5 = (40 + 25x) 4. This means 170 + 75x= 160 + 100x.
On solving, -25x = -10. So, x = t0125 = 0.4.
Answer: (a) Factory OH = 40o/o on Direct Labour, and (b) Office OH = 20o/o on Factory Cost.
Solution: Let the Production OH be xolo on Direct Wages and Administration OH be yo/o on Works Cost. The Cost Sheet of
Job 101 and Job 102 are as under -
Particu!ars Iob 1Ol Iob 1O2 Iob 103
Working
- Rs, Workinq Rs. Rs.
Direct Materials 54,000 54,000 37,500 37,500 24,000
Direct Waqes 42.000 42.OOO 30,000 30.000 20.000
Prime Cost 96,000 95,000 67,500 57,500 44,000
Add: Production OH 42.000x 25,200 30.000x 18.000 600/o on DL= 12,000
Factoqy Cost 95,000 + 42,000x 1,2L,200 67,500 + 30,000 x 85,500 56,000
Add: Admin OH (96.000 + 42.000x) v 30.300 (67,500 + 30,000 x) y 2t.375 25o/o on WC=14,000
Tota! cost (Note 2) 1,51,500 1,51,500 (I{ote 2) 1,06,875 1,06,875 70,000
Add: Profit (Note 2) 15.150 15,150 (Itote 2) 2L.375 21.375 (Note 3) 10.000
Sellino Price (oiven) 1,66,650 1,56,650 (qiven) 1,28,250 1.28.250 8O,OOO
Note:
1. Initially "Working" Column is filled up. After determining x and y as per Simultaneous Equatlons below, the amounts
columns of lob 101 and Job 102 are filled up. Finally, using the percentage relationships, Job 103 column is filled up.
2. Costs and Profits for Job 101 and Job 102 are
Job 101 Job 102
We know that Cost
+ Profit = Sales We know that Cost+ Profit = Sales
in terms of percentage, L00o/o + l0o/o = 110o/o in terms of percentage, t0oo/o + 20o/o = L2Oo/o
i
If SP = 1.65.650. Cost = 1.56.650 110o/o = 1,51,500 *
If SP = 1.28.250, Cost = L,28,250 L20o/o = 1,06,875
3. -
For Job 103 Profit is 12.5olo on Sales. So, Cost is 100o/o 12.5o/o = 87.5o/o. Since this Cost is Rs.70,000 (as derived in
Cost Sheet above), Profit = 12.5o/o + 87.5o/o on Cost of Rs.70,000 = Rs.10,000.
r.27
Students'Handbook on Cost Accounting and Financial Management
Simultaneous Equations:
In the above question, SOH is not given. Hence, Factory Cost + AOH = Total Cost.
The Total Cost as derived above (for Job 101 and Job 102) is equated with Cost determined using x and y.
Job 101: Factory Cost + AOH = Total Cost, Job 102: Factory Cost + AOH = Total Cost.
so, (96,000 + 42,000 x) + (96,000 + 42,000 x)y = 1,51,500 So, (67,500 + 30,000x) + (57,500 + 30,000 x) y = 1,06,875
By taking (96,000 + 42,000 x) as common factor, we have By taking (67,500+ 30,000x) as common factor, we have
+ 42,000 x) (1+ y) = 1,51,500............Equation 1 67,500 + 30,000 x) (1+ y) = 1,06,875............Equation 2
Dividing Equation 1 by Equation 2 [to eliminate / cancel (1+y)] and fufther simplifying, we have,
(96,000 + 42,000 x) (96 +
_ 42x)
_ 1,51,500
242.4
(67,500 + 30,000 x) (67.5 + 30x) 1,06,875 L7t.0
Hence, Production OH = 600/o on Direct Labour and Administration OH = 25o/o on Factory Cost.
JK Limited worked at 600/o capacity for the first 3 months during the year 2008, but it is expected to work at 90o/o capacity for the
remaining nine months.
The Selling Price per unit was Rs.44 during the first 3 months.
Calculate what Selling Price per unit should be fixed for the remaining nine months to yield a total profit of Rs.15,62,5fi1 for the
whole year.
1.28
Basic Cost Concepts
Semi-Variable Overheads Rs.60,000 per annum al7loh capacity, which increases by Rs.4,000 per annum for every 5olo increase
in capacity utilisation for the year as a whole.
The capacig utilisation lor the next year is estimated al7lo/o for three months, 80% lor six months and 90o/o for the remaining
part of the year. ll the Gompany is planning to have a profit ol20Yo on the Selling Price, calculate the Selling Price per unit.
Solution:
1. of Semi Variable OH: Note: Production per month = 1,50,000 + 12 = 12,5QQ units
Pafticularc First 3 months Next 5 months Last 3 months
(a) Capacity 75o/o 80o/o 90o/o
(b) No. of additional 5olo Nil 75o/o to 80o/o = 5olo once 75o/o to 90o/o = 15o/o = 5olo three times
(c) Semi Variable Costs Rs.60,000 p.a. x3lL2 Rs.(60,000 + 4,000) p.a. x x3/L2 =
Rs.(60,000 + 4,000x 3) p.a.
= Rs.15r00O 6112 = Rs.32,000 Rs.18,000
Note: In the above calculation, it is presumed that Semi-Variable OH arise uniformly during the year. Alternatively, the
following treatments are also permissible for Semi-Variable OH -
o Since 90o/o is reached at some time during the year (i.e. during the last three months), the average SVOH for the entire
y€Etr = 9oolo Capacity = Rs.60,000 + Rs.4,000 x 3 = Rs.72,000.
o Average Capacity Utilisation during the entire year = [See 2(b) below] 1,21,875 units * 1,50,000 units = 81.25olo.
Hence, SVOH for the entire y€?r = Rs.60,000 + Rs.4,000 x 2 times 5olo = Rs.68,000.
1.29
Students' Handbook on Cost Accounting and Financial Management
Solution:
1. of Semi Variable OH: Note: month = 60,000 + 12 = 5,000 units.
Pafticularc Firct 3 months Next 9 months Tota!
(a) CapaciU 50o/o 80o/o
(b) No. of additional 20olo Nil 500/o to 800/o = 20olo two times
(c) Semi Variable Costs Rs.3,00,000 p.a. x3l12 = 1Rs.3,00,000 + (Rs.60,000 x 2)l p.a. x9112
Rs.75,OOO = Rs.3r15r00o Rs.3,9O,OOO
Note: In the above calculation, it is presumed that Semi-Variable OH arise uniformly during the year. Alternatively, the
following treatments are also permissible for Semi-Variable OH -
. Since 80o/o is reached at some time during the year (i.e. during the last nine months), the average SVOH for the entire
y€dr = 80o/o Capacity = Rs.3,00,000 + Rs.60,000 x 2 times = Rs.4,20,000,
. Average Capacity Utilisation during the entire year = [See 2(b) below] 43,500 units + 60,000 units = 72.5o/o. Hence,
SVOH for the entire y€or = Rs.3,00,000 + Rs.60,00C x 2 times = Rs.4,20,000.
fl*$ffi:
A incurred the last
Pafticulars Rs. Rs.
Direct Material Consumed 12,00,000
Manufacturing Wages 7,00,000
ManufacturingOverhead: Fixed 3,60,000
Variable 2.50.000 6,10,000
Total 25.10.000
!n the next year, the following changes are expected in production and cost o! production -
o Production wil! increase due to recruitment of 600/o mole workers in the factory.
o Overall Efliciency wil! decline by 10% on account of recruitment of new workers.
. There will be an increase ol201o in Fixed Overhead and 60% in Variable Overhead.
o The cost of Direct Material will be decreased by 60lo
Ascertain the Cost of Production and Selling Price for the next year.
Solution:
1. Direct Material Cost = (Rs.12,00,000 + 600lo due to Output Increase) Less 60lo Price Decrease
= (Rs.12,00,000 + Rs.7,20,000) x 94o/o = Rs.1&O+800.
2. Direct Labour Cost = (Rs,7,00,000 + 600/o due to Output Increase) + l0o/o increase due to Efficiency Fall
= (Rs.7,00,000 + Rs.4,20,000) x 110o/o = Rs.12r32r000.
Note: Since Efficiency declines, workers now take 10o/o mor€ time to compete the output. So, Labour Cost increases by 100/o.
1.30
Basic Cost Concepts
The Revenue Earnings lrom each line of business before expenses are as follows -
Sale of Cars - 3% of Sales Value, Sale of Insurance - 20o/o of Sales Value, Sale ol Finance '21o ol Sales Value.
Note: For a Dealer in Cars, Insurance Policies and Loans, the entire sales value of the products / seruices do not constitute
its Income. Only the Commission Portion thereof (called Revenue Eamings in this question), constitutes Dealer's Income.
1.31
Students'Handbook on Cost Accounting and Financial Management
1.32
Basic Cost Concepts
Solution:
1. ComDutataon of Desined Sales Value 2. ComDutation of Sale Price Der Ton
Particularc Rs. Let Price of Good Output be Rs.P per ton.
Cost of Materials 36,oo,ooo (a) o/o of Output 90% Good 10o/o Defective
Less: ScrapRealisation 60,000 (b) Quantity of Output 360 tons 40 tons
Net Cost of Materials 35,40,000 (c) Price per ton P P Less 10o/o = 0.9P
Add: Rollino Charoes 6.20.000 (d) Total Sales Value (b X c) 360P 36P
Total Cost 41,60,000 (e) Total Sales Value = 396 P = Rs.46,80,000
Add: Profit (12.5olo on Cost) 5,20,000 So, Normal Sales Price per ton = P = 46,80,000 + 396 = Rs.11,818.18
Desired Sales Value 46.80.000 So. Sales Price of Defectives = 0.9 x P = 0.9 x 11.818.18 = Rs.10,535.35
With the above data, prepare a condensed Profit and Loss Statement of Gogetter Company for the year ended 3CItt September
along with suppoiling schedules of - (1) Cost of Sales, (2) Selling and Distribution Expenses, and (3) Administration Expenses
Solution:
I.
1. Schedule of Sellanq and Distribution 2. Schedule of Administrative
Particularc Rs. Pafticularc Rs.
Sales Commission 33,600 Office Salaries and Expenses 8,600
Sales Travelling 11,000 Depreciation of Office Appliances 870
Sales Promotion 22,500 Depreciation of Buildings 800
Distribution Department - Salaries & Expenses 18,000 Heat, Light and Power 6,500
Heat, Light and Power 6,500 Rates and Taxes 2,100
Deoreciation of Buildinos 800 Total 18,870
Total 92,400
1.33
3
3. of cost of sales
Patticulars Rs. Rs.
Opening Stock of Raw Materials 1,40,000
Add: Materialpurchased 3,20,000
Add: Freight on Material 16,000
Less: Purchase Returns (4.800) 3,31,200
4,71,200
Less: Closinq Stock of Raw Materials 1.80.000
Direct Materials Consumed 2,9L,2OO
Add: Direct Labour 1.68.000
Prime Cost 4F9,2OO
Add: Factory Overheads
Indirect Labour 19,200
Factory Supervision 10,000
Repairs and Factory UPkeeP 14,000
Heat, Light and Power 52,000
Rates and Taxes 4,200
Miscellaneous Factory ExPenses 18,700
Depreciation on Plant 46,050
Depreciation on Buildinqs 6,400 1.70.550
Gross Works Cost 6,29,750
Add: Ooenino Stock of Work-in-Process 2. 00.000
8,29,750
Less: Closinq Stock of Work-in-Process 1.92.000
Works Cost 6,37,750
Add: Administrative Expenses (WN 2) 18,870
Cost of Production 6,56,620
Add: Ooenino Stock of Finished Goods 80,000
Cost of Goods available for sale 7,36,620
[.ess: Closino Stock of Finished Goods 1-15.000
Cost of Goods Sold 6,2Lr620
Add: Sellinq and Distribution Expenses (WN 1) 92,400
Cost of Sales 7,L4,O20
The following cost relationships are found to exist in Heramba Ltd. Draw up the Product Cost Sheet if unit profit is Rs.1,000.
-
1. Direct Material 12.5o/o of Selling Price, 2. Direct Labour 17.5o/o of Selling Price, 3. POH - 50o/o of Prime Cost,
-
4. Administration O.H - 40o/o of Works Cost, 5. Profit is 20o/o of Cost of Sales'
tulooshik tootings is engagid in the manufacture of special tools as per customers' requirements. Their accounts for the
previous year show the following information.