CMA Foundation · Fundamentals of Financial and Cost Accounting · Statement of Cost and Profit (Cost Sheet)
Sharma Textiles reports: direct materials Rs 2,40,000, direct wages Rs 1,60,000, direct expenses Rs 20,000, factory overheads Rs 1,20,000, opening work-in-progress Rs 30,000 and closing work-in-progress Rs 50,000. What is the factory cost?
Factory cost is Rs 5,20,000. Prime cost of Rs 4,20,000 plus factory overheads of Rs 1,20,000 gives Rs 5,40,000. Opening work-in-progress of Rs 30,000 is added and closing work-in-progress of Rs 50,000 is deducted, giving the net figure of Rs 5,20,000.
- ARs 5,20,000Correct
- BRs 5,40,000
- CRs 5,60,000
- DRs 5,00,000
Explanation
Prime cost = 2,40,000 + 1,60,000 + 20,000 = 4,20,000. Adding factory overheads of 1,20,000 gives 5,40,000. Adding opening WIP of 30,000 and deducting closing WIP of 50,000 gives 5,20,000. Rs 5,40,000 ignores the WIP adjustment.
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