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Particulars Total Cost Direct material cost Paper Pulp 500 tones $ 52 per ton 26,000
Particulars Total Cost Direct material cost Paper Pulp 500 tones $ 52 per ton 26,000.00 Other Material 100 tones @ $ 30 per ton 3,000.00 Direct material consumed 29,000.00 Direct labour cost Skilled (80x3x25) 6,000.00 Unskilled C 40 x2x 25) 2,000.00 Direct Expenses Special equipment 2,500.00 Special dyes 1,500.00 Prime Cost 41,000.00 Works overhead Variable 100% in direct wages 8,000.00 Fixed 60% of direct wages 4,800.00 Less: Sale of scrap -1,800.00 Works cost 52,000.00 Administrative overhead 10% of works cost 5,200.00 Cost of Production 57,200.00 Selling and Distribution overhead: 20% on works cost 10,400.00 Cost of Sales 67,600.00
Expert Solution
Assumptions & Working Notes of Cost Sheet:
1. All labour is considered as directly related to Prime cost which means directly related to manufacturing of Paper.
2. Variable as well as fixed overhead are taken as a % of Direct wages proportion.
Variable OH = 100% of Direct Wages = 100% of 8000 = 8000
Fixed OH = 60% of Direct Wages = 60% of 8000 = 4800
3. Sale of scrap is deducted from prime cost.
4. Administrative Overhead = 10% of Works Cost = 10% of 52000 = 5200.
5. Selling & Distribution Overhead = 20% of Works Cost = 20% of 52000 = 10400.
6. Selling & Distribution OH is taken as a % of Works Cost. Normally it relates to Sale only but here is taken assumption as a % of Works Cost.
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