Question

From the following cost information, prepare a cost sheet presenting the total cost and cost per unit of electricity generated.

Hint:

Always apportion steam cost based on actual usage for accurate unit cost.

Answer 1

Step 1: Calculate expenses for generation of steam used for power.
Total cost for steam generation:
Coal cost: ₹ 10,000
Water cost: ₹ 150
Wages for coal handling: ₹ 750
Repair for boiler: ₹ 350
Lubricating oil: ₹ 50
Depreciation (Boiler): ₹ 850
Supervisory labour: ₹ 400
Total cost for steam generation: ₹ 12,550
Proportion of steam used for power generation:
10,000 lbs out of 15,000 lbs = 10,000 / 15,000 = 2/3
So, cost of steam used for power = 2/3 × ₹ 12,550 = ₹ 8,366.67
Step 2: Add expenses incurred in the power house.
Wages (operator): ₹ 1,000
Depreciation (generator): ₹ 900
Repairs: ₹ 500
Supervision charges: ₹ 500
Total power house expenses: ₹ 2,900
Step 3: Find total cost of power generation.
Cost of steam used for power: ₹ 8,366.67
Add: Power house expenses: ₹ 2,900
Total cost: ₹ 11,266.67
Step 4: Calculate cost per unit of electricity generated.
Total units generated = 500 units
Cost per unit = Total cost / Units generated
= ₹ 11,266.67 / 500 = ₹ 22.53 per unit
Cost Sheet
\[ \begin{array}{|l|r|} \hline \text{Particulars} & \text{Amount (₹)}
\hline \text{Coal cost} & 10,000
\text{Water cost} & 150
\text{Wages for coal handling} & 750
\text{Repair for boiler} & 350
\text{Lubricating oil} & 50
\text{Depreciation (Boiler)} & 850
\text{Supervisory labour} & 400
\hline \text{Total cost for steam generation} & 12,550
\text{Less: Cost not used (5,000 lbs)} & (4,183.33)
\hline \text{Cost of steam used for power} & 8,366.67
\hline \text{Add: Wages (operator)} & 1,000
\text{Depreciation (generator)} & 900
\text{Repairs} & 500
\text{Supervision charges} & 500
\hline \text{Total Cost of Power Generated} & 11,266.67
\hline \text{Units generated} & 500 units
\hline \text{Cost per unit of electricity} & 22.53
\hline \end{array} \]
So, the total cost of generating 500 units of electricity is ₹ 11,266.67 and the cost per unit is ₹ 22.53.