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From cost of production to cost of sales

Exercise and reference answers

Unit
Rs
Start
Item
Cost of production
Value
800000
Steps
  1. Operation
    add
    Item
    Add: Opening finished goods
    Value
    60000
  2. Operation
    sub
    Item
    Less: Closing finished goods
    Value
    90000
  3. Operation
    add
    Item
    Add: Administrative overhead
    Value
    45000
  4. Operation
    add
    Item
    Add: Selling overhead
    Value
    30000
  5. Operation
    add
    Item
    Add: Distribution overhead
    Value
    25000
Other choices
  1. Explanation
    Direct material was absorbed long before this, inside prime cost
    Item
    Add: Direct material
    Value
    220000
Instructions
Tap the line that comes next. Watch how each adjustment moves the total.
Result
Cost of Sales

Explanation

_Source: ICAI Cost and Management Accounting Ch6 'Cost Sheet', sections 6.3.3 and 6.3.4_
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