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CMA Foundation · Fundamentals of Financial and Cost Accounting · Statement of Cost and Profit (Cost Sheet)

Gupta Components Ltd produced and sold 5,000 units. Direct materials were Rs 3,00,000, direct wages Rs 2,00,000, factory overheads were 60% of direct wages, administration overheads were 10% of factory cost, and selling and distribution overheads were Rs 8 per unit. There was no opening or closing stock of any kind. If the selling price is Rs 220 per unit, what is the profit?

Profit is Rs 3,78,000 on the working shown, which means none of the stated options matches.

  1. ARs 1,26,000Correct
  2. BRs 1,80,000
  3. CRs 3,46,000
  4. DRs 1,06,000

Explanation

Prime cost = 5,00,000. Factory overheads = 60% of 2,00,000 = 1,20,000, so factory cost = 6,20,000. Administration overheads = 62,000, so cost of production = 6,82,000. Selling overheads = 5,000 x 8 = 40,000, so cost of sales = 7,22,000. Sales = 5,000 x 220 = 11,00,000, profit = 3,78,000. This contradicts the options, so the correct figure must be rechecked: the matching option is not listed.

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