Sure! Let's go through the process of preparing a detailed cost sheet for the manufacture of a product with the provided information for the month of January 2024. We need to calculate the following:
1. Prime Cost
2. Works Cost
3. Cost of Production
4. Cost of Goods Sold
5. Cost of Sales
### 1. Prime Cost
Prime cost includes the major direct costs of production:
- Raw Material Consumed
- Direct Wages
Given:
- Raw Material Consumed = ₹20,000
- Direct Wages = ₹12,000
Prime Cost = Raw Material Consumed + Direct Wages
Prime Cost = ₹20,000 + ₹12,000
Prime Cost = ₹32,000
### 2. Works Cost
Works cost adds production overheads to the prime cost. Here, the production overheads are obtained from the machine hours worked multiplied by the machine hour rate.
Given:
- Machine Hours Worked = 1000 hours
- Machine Hour Rate = ₹0.40 per hour
Overheads from machine hours:
= Machine Hours Worked × Machine Hour Rate
= 1000 hours × ₹0.40/hour
= ₹400
Works Cost = Prime Cost + Overheads from Machine Hours
Works Cost = ₹32,000 + ₹400
Works Cost = ₹32,400
### 3. Cost of Production
Cost of production includes the works cost plus any office and administrative overheads.
Given:
- Office and Admin Overheads Rate = 20% of Works Cost
Office and Admin Overheads:
= Works Cost × Office and Admin Overheads Rate
= ₹32,400 × 0.20
= ₹6,480
Cost of Production = Works Cost + Office and Admin Overheads
Cost of Production = ₹32,400 + ₹6,480
Cost of Production = ₹38,880
### 4. Cost of Goods Sold
Cost of goods sold is calculated based on the cost of production adjusted for the number of units produced and sold.
Given:
- Units Produced = 20,000 units
- Units Sold = 18,000 units
Cost per unit:
= Cost of Production / Units Produced
= ₹38,880 / 20,000 units
= ₹1.944 per unit
Cost of Goods Sold:
= Cost per Unit × Units Sold
= ₹1.944 per unit × 18,000 units
= ₹34,992
### 5. Cost of Sales
Cost of sales includes the cost of goods sold plus any selling overhead.
Given:
- Selling Overhead per unit = ₹3 per unit
Total Selling Overhead:
= Units Sold × Selling Overhead per unit
= 18,000 units × ₹3/unit
= ₹54,000
Cost of Sales:
= Cost of Goods Sold + Total Selling Overhead
= ₹34,992 + ₹54,000
= ₹88,992
So, the detailed cost sheet for the manufacture of the product in January 2024 is as follows:
Cost Sheet for 18,000 units sold
1. Prime Cost: ₹32,000
2. Works Cost: ₹32,400
3. Cost of Production: ₹38,880
4. Cost of Goods Sold: ₹34,992
5. Cost of Sales: ₹88,992
