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