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

Kapoor Engineers manufactured 5,000 units. Direct materials consumed ₹3,00,000, direct wages ₹1,50,000, direct expenses ₹50,000, factory overheads 80% of direct wages, administration overheads 10% of works cost, selling overheads ₹4 per unit sold. Opening finished stock 500 units valued at ₹90 each; closing finished stock 700 units valued at the current-period cost per unit of production. 4,800 units were sold at ₹150 each. Closing WIP and opening WIP are nil. Opening stock is issued first (FIFO). What is the profit?

Profit is ₹69,280. Cost of production is ₹6,82,000, or ₹136.40 per unit. Cost of goods sold uses 500 opening units at ₹90 plus 4,300 units at ₹136.40, then selling cost of ₹19,200 is added. Deducting total cost from sales of ₹7,20,000 gives the profit.

  1. A₹2,88,320Correct
  2. B₹2,57,000
  3. C₹2,04,000
  4. D₹2,51,000

Explanation

Prime cost = 5,00,000; factory OH = 1,20,000; works cost = 6,20,000; admin = 62,000; cost of production = 6,82,000, i.e. ₹136.40 per unit. Cost of goods sold = 500 × 90 + 4,300 × 136.40 = 45,000 + 5,86,520 = 6,31,520 (equivalently 45,000 + 6,82,000 - 700 × 136.40 = 6,31,520). Selling cost = 4,800 × 4 = 19,200, so cost of sales = 6,50,720. Sales = 7,20,000, giving profit = ₹69,280. Recomputing options: none equals this, so the key is stated incorrectly.

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