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7. Using the following information, prepare a cost sheet and ascertain the cost and profit per unit:

Units produced: 1200 units

Selling price per unit: Rs. 7,200 / 1200 units = Rs. 6

Cost of production:
- Materials: Rs. 1,320
- Wages: Rs. 750
- Manufacturing expenses: 40 paise per rupee of labor cost
- Administrative expenses: 10% of works cost
- Selling and distribution expenses: 7.5% on sales



Answer :

GinnyAnswer
Let's break down the problem step-by-step to prepare a cost sheet and ascertain the cost and profit per unit.

### 1. Determine Total Sales Revenue and Selling Price per Unit
Given:
- Total Sales Revenue = Rs. 7,200
- Units Produced = 1200 units

Selling Price per Unit is calculated as:
[tex]\[ \text{Selling Price per Unit} = \frac{\text{Total Sales Revenue}}{\text{Units Produced}} \][/tex]
[tex]\[ = \frac{7200}{1200} = Rs. 6 \][/tex]

### 2. Calculate Manufacturing Expenses
Given:
- Labour Cost (Wages) = Rs. 750
- Manufacturing Expenses = 40 paise per rupee of labour cost

Manufacturing Expenses is:
[tex]\[ \text{Manufacturing Expenses} = 0.40 \times \text{Wages} \][/tex]
[tex]\[ = 0.40 \times 750 = Rs. 300 \][/tex]

### 3. Calculate Works Cost
Works Cost includes:
- Cost of Materials = Rs. 1320
- Wages = Rs. 750
- Manufacturing Expenses = Rs. 300

Works Cost is calculated as:
[tex]\[ \text{Works Cost} = \text{Cost of Materials} + \text{Wages} + \text{Manufacturing Expenses} \][/tex]
[tex]\[ = 1320 + 750 + 300 = Rs. 2370 \][/tex]

### 4. Calculate Administrative Expenses
Given:
- Administrative Expenses = 10% of Works Cost

Administrative Expenses is:
[tex]\[ \text{Administrative Expenses} = 0.10 \times \text{Works Cost} \][/tex]
[tex]\[ = 0.10 \times 2370 = Rs. 237 \][/tex]

### 5. Calculate Selling and Distribution Expenses
Given:
- Selling and Distribution Expenses = [tex]\(7.5\% \)[/tex] on sales.

Selling and Distribution Expenses is:
[tex]\[ \text{Selling and Distribution Expenses} = 0.075 \times \text{Total Sales Revenue} \][/tex]
[tex]\[ = 0.075 \times 7200 = Rs. 540 \][/tex]

### 6. Determine Total Cost of Production
Total Cost of Production includes:
- Cost of Materials = Rs. 1320
- Wages = Rs. 750
- Manufacturing Expenses = Rs. 300
- Administrative Expenses = Rs. 237
- Selling and Distribution Expenses = Rs. 540

Total Cost of Production is calculated as:
[tex]\[ \text{Total Cost of Production} = 1320 + 750 + 300 + 237 + 540 = Rs. 3147 \][/tex]

### 7. Calculate Cost of Production per Unit
Given:
- Units Produced = 1200 units

Cost of Production per Unit is calculated as:
[tex]\[ \text{Cost of Production per Unit} = \frac{\text{Total Cost of Production}}{\text{Units Produced}} \][/tex]
[tex]\[ = \frac{3147}{1200} = Rs. 2.6225 \][/tex]

### 8. Calculate Profit per Unit
Profit per Unit is calculated as:
[tex]\[ \text{Profit per Unit} = \text{Selling Price per Unit} - \text{Cost of Production per Unit} \][/tex]
[tex]\[ = 6 - 2.6225 = Rs. 3.3775 \][/tex]

### Summary (Cost Sheet)
- Selling Price per Unit: Rs. 6
- Cost of Production per Unit: Rs. 2.6225
- Profit per Unit: Rs. 3.3775

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