Mgt402 Cost and Management Accounting Short Questions Vuabid

Cost & Management Accounting (Mgt-402) Assignment-1

Fall Semester 2006

Question:

GOGO Manufacturing Company provides the following information on June 30, 2006. Particulars Amount

(Rs) Sales for the year 2,50,000Raw material inventory, July 1, 2005 10,000Finished goods inventory, July 1, 2005 10,000Purchases 1,50,000Direct labor 20,000Power, heat and light 2,500Indirect material consumed 2,500Administrative expenses 4,000Depreciation of plant 3,000Selling expenses 5,000Indirect labor Costs 2,000Other manufacturing expenses 1,000Work in process, July 1, 2005 10,000Work in process, June 30, 2006 20,000Raw materials inventory, June 30, 2006 20,000Finished goods inventory, June 30, 2006 20,000

Factory over heads are 50% of Direct Labour Costs

Required: 1. Prepare cost of goods sold statement (Adjustment of over

or under applied FOH charge to entire production) & Income statement. (10)

2. Calculate gross margin & markup ratio. (5)

Q1. S.P Johns Corporation is a manufacturing concern. Following is the receipts & issues record for the month of January, 2006.

Date Receipts Issues

Jan 1 Opening Balance 100@ 40Jan 8 200 units @ Rs. 45/unitJan 11 150 units

Jan 13 Inventory lost 50 units

Jan 16 50 units @ Rs. 60/unitJan 18 100 units @ Rs. 70/unit

Jan 20 150 units

Required: Find the value of ending inventory by preparing Material Ledger card under Perpetual and Periodic inventory system


Fall Semester 2006

based on the above information using each of the following methods:

FIFO Method. Marks (05) Weighted Average cost Method. Marks (05)

Q2. The Hedge Corporation manufactures only one product: planks. The single raw material used in making planks is the dint. For each plank manufactured 12 dints are required. Assume that company manufactured 150,000 planks per year, that demand for planks is perfectly stead throughout the year, that it cost Rs. 200 each time dints are ordered, and that carrying cost is Rs. 8 per dint per year.

a) Determine the economic order quantity of dints. Marks (2)

b) What is the total inventory cost for Hedge (total carrying cost plus total ordering cost)? Marks (3)

Q3. Wage rate per hour Rs. 1.50 Time allowed for the job 16 hours Time taken 12 hours.

Required: Find out effective “rate of earnings under Rowan & Halsey-Weir premium plan” Marks (2.5 x 2)

Question:The information relating Kareem Corporation is as follow regarding FOH:

Estimated Cost

Fixed FOH cost Rs. 80,000 Variable FOH cost 1,00,000 Activity Level 20,000 Direct Labor hours

Actual Cost Fixed FOH cost Rs. 80,000 Variable FOH cost 1,20,000 Activity Level 25,000 Direct Labor hours

Calculate:

1. Over & under applied FOH. 2. Budgeted Variance. 3. Volume variance.


Fall Semester 2006

Show all necessary workings. QuestionJV Company began its operations on January 1, 19A and produces one product that sells for Rs 7. Normal capacity is 100,000 units per year, with 100,000 units produced and 80,000 units sold in 19A. Manufacturing costs and marketing and administrative expenses were as follows: Fixed Costs Variable CostsMaterials ---------- Rs 1.50 per unit producedDirect labor ---------- 1.00 per unit producedFactory overhead Rs 150,000 0.50 per unit produced Marketing & admin expenses 80,000 0.50 per unit sold

Required:1) Determine the 19A operating income, using direct / marginal costing and absorption costing.

Following data relates to the AB Public High School which is currently running in loss. Costs incurred during the first month operations are as follow:

Cost Nature of Cost Amount (Rs)Electricity bill

80% Variable 24,500

Telephone bill70% Variable 5,330

Gas bill 90% Variable 1,200

Teaching staff salary 100% Fixed 55,000

Non teaching staff salary 10% Variable 12,500

Rent of school 100% Fixed 50,000


Fall Semester 2006

building

Maintenance of furniture

100% Variable 2,000

Stationary70% Variable 3,220

Printing100% Variable 4,500

Advertisement80% Variable 7,000

Library expenses100% Variable 5,500

Other expenses50% Variable 6,300

Total Expenses

155 students took admission and fee per student is Rs. 800 (155 x 800)

Net Loss

1,77,050

1,24,000

53,050

a. Break-even point where firms Revenue = Cost. Comment whether the cost of Rs. 1, 77,050 will consider as a breakeven point?

b. Find the Break even point in number of students?

c. Find the Break even in Rupees?

d. Find the number of students that are required to earn a profit of Rs 25,000?

e. Find out margin of safety ratio?

The following information was taken from the books and records Ali Manufacturing for the year ended 31st December, 2006.

UnitsCost (Rs.)


Fall Semester 2006

Sales during the year 8,000 ?Opening Inventories: Work in process - -Finished goods 1,800 ?Closing Inventories: Work in process 100 ?Finished goods 2,000 ?Manufacturing Cost: Direct Material 30,000Direct Labor 20,000Factory Overhead 16,000

The foreman has submitted the following cost estimate for the closing work in process Inventory:

Direct material cost Rs. 2,700Direct Labor cost Rs. 1,000

The company’s past experience showed that factory overhead cost tends to fluctuate closely in proportion to direct labor cost.

Required:

1. Determine the number of units that were manufactured during the year (1.5)

2. complete the foreman’s estimate of the cost of work in process (1.5)

3. Prepare a manufacturing statement for the year (3.5)4. Determine the cost of each unit manufactured during the year (1.5)5. Assume that the first cost recorded in the Finished goods account

is the first costs to be credited to the account. Determine the ending Inventory of Finished goods and the Cost of Goods Sold. (2)


Fall Semester 2006

QUESTION

The cost department of the Alpha Corporation prepared the following data and costs for the year 19----:

Inventories:

January 01 (Rs.)

December 31

(Rs.)Finished Goods

48,600 ?

Work in 81,500 42,350


Fall Semester 2006

processMaterials 34,200 49,300

Depreciation ------factory equipment

Rs. 21,350

Interest earned 6,300

Finished Goods Inventory: January 1, 300 units; December 420 units, all from current year’s production

Sales during 19------: 3,880 units at Rs. 220 per unit.

Materials Purchased Rs. 364,000Direct Labour 162,500Indirect labour 83,400Freight in 8,600Miscellaneous factory overhead

47,900

Purchased discount 5,200

Required:(1)The unit cost of the finished goods inventory, December 31(2)The total cost of the finished goods inventory, December 31(3)The cost of goods sold(4)The gross profit total and the gross profit per unit(5) Question# 01:

(Marks: 10)(6)(7) Following is the receipts & issues record of Imran &

Company for the month of November, 2006.

(8)Date Receipts Issues

November 07 200 units @ Rs. 150/unit

--

November 09 -- 75 unitsNovember 13 150 units @ Rs.

100/unit--


--

November 18 -- 250 units


Fall Semester 2006

November 20 100 unitsNovember 22 300 units @

Rs.125/unitNovember 24 -- 300 unitsNovember 27 200 units @ Rs.

150/unit--

November 30 -- 125 units(9)(10) Required: (11)(12) Calculate the Value of closing stock by using Weighted

Average Method of stock valuation.(13)

(14)(15) Question # 02

(Marks: 05)

(16) The ABC Company provides the following information:(17)(18) Estimated requirements for next year: 2400 units(19) Per unit Cost: Rs. 1.50(20) Ordering Cost (per order): Rs. 20(21) Carrying Cost: 10%


Fall Semester 2006


Fall Semester 2006

The cost department of the Alpha Corporation prepared the following data and costs for the year 19----:

Inventories:

January 01 (Rs.)

December 31

(Rs.)Finished Goods

48,600 ?

Work in process

81,500 42,350

Materials 34,200 49,300

Depreciation ------factory equipment

Rs. 21,350

Interest earned 6,300

Finished Goods Inventory: January 1, 300 units; December 420 units, all from current year’s production

Sales during 19------: 3,880 units at Rs. 220 per unit.


Fall Semester 2006

Materials Purchased Rs. 364,000Direct Labour 162,500Indirect labour 83,400Freight in 8,600Miscellaneous factory overhead

47,900

Purchased discount 5,200

Required:(1)The unit cost of the finished goods inventory, December 31(2)The total cost of the finished goods inventory, December 31(3)The cost of goods soldThe gross profit total and the gross profit per

Following is the receipts & issues record of Imran & Company for the month of November, 2006.

Date Receipts IssuesNovember 07 200 units @ Rs.

150/unit--

November 09 -- 75 unitsNovember 13 150 units @ Rs.

100/unit--


--

November 18 -- 250 unitsNovember 20 100 unitsNovember 22 300 units @

Rs.125/unitNovember 24 -- 300 unitsNovember 27 200 units @ Rs.

150/unit--

November 30 -- 125 units

Required:

Calculate the Value of closing stock by using Weighted Average Method of stock valuation.

Question # 02 (Marks: 05)

The ABC Company provides the following information:


Fall Semester 2006

Estimated requirements for next year: 2400 unitsPer unit Cost: Rs. 1.50Ordering Cost (per order): Rs. 20Carrying Cost: 10%

From the above information you are required to calculate:(a)Economic Order Quantity(b)Prove your answer


Fall Semester 2006


Fall Semester 2006

The following information was taken from the books and records of the Zahid Textile Mill for the year ended December, 2006.

Particulars Units Cost (Rs.)Sales during the year 5,000 ?Opening inventories:Work in processFinished goods

-1,500

-12,150

Closing inventories:Work in processFinished Goods

1002,000

??

Manufacturing costs:Direct material costDirect labor costFactory overhead cost

25,00015,000 5,000

The foreman has submitted the following cost estimate for the closing work in process inventory:

Direct material cost (Rs.) 800Direct labor cost (Rs.) 1,000Factory Overhead Cost (Rs.) 2,133

Required:


Fall Semester 2006

Calculate the value of Sales in Rupees from the data given above if Gross Profit is 45% of Cost of Goods Sold.

Complete the given Material Ledger cards prepared under LIFO & FIFO according to the transactions given below:

The following transactions are to be used in costing inventory on November, 2006.

Nov 1 Balance on hand 500 gallons @ Rs.20 per gallonNov 2 Received 1,200 gallons @ Rs.21 per gallonNov3 Issued 600 gallonsNov 5 Received 1,000 gallons @ Rs.19 per gallonNov 7 Returned to vendor 200 gallons received on Nov 5Nov 9 30 gallons deteriorated in quality and transferred to obsolete stockNov 10 Issued 900 gallonsNov 14 Received 600 gallons @ Rs.20 per gallonNov 18 Issued 800 gallonsNov 22 Issued 400 gallonsNov 26 Received 1,500 gallons @ Rs.18 per gallonNov 28 100 gallons were returned from the factory to the store roomNov 29 Issued 700 gallonsNov 30 Excess material is found in stock 80 gallons. It was ascertained that this excess resulted due to wrong measure.

Question 01

Kabul Company produces only one product. Normal capacity is 20,000 units per year and the units’ sales price is Rs. 50. Relevant cost is:

ParticularsVariable cost per unit (Rs.)

Fixed Cost (Rs.)

Material 10 -Labor 12 -FOH 5 15,000Marketing Expense 3 5,000

Administrative Expense - 6,000

Compute:

1. The break even point in units of products2. The break even point in rupees of sales


Fall Semester 2006

3. The number of units of product that must be produces and sold to achieve a profit of Rs. 10,000

(Marks: 3+2+5)Question 02:

Following information relates to a manufacturing company:Selling price Rs. 20 per unit Units produced 30,000Units sold 20,000Variable cost Direct material Rs. 5 per unit Direct labor Rs. 3 per unit F.O.H Rs. 1 per unitSelling & Administrative Expenses Rs. 2 per unitFixed cost F.O.H Rs 120,000Selling & Administrative Expenses Rs. 15,000

You are required to show the profit statements for the month under:(a) Absorption Costing(b) Marginal Costing

United Company seeks assistance in developing cash and other budget information for May, June and July. On April 30, the company had cash of Rs. 5,500, Accounts Receivable of Rs. 437,000, Inventories of Rs. 309,400 and Accounts payables of Rs. 133,055. The budget is to be based on the following assumptions:

Purchases:

a. Fifty four percent of all Purchases of Material and a like percentage of marketing, general and administrative expenses are paid in the month Purchases, while the reminder paid in the following month.

b. Each month’s units of ending material inventory are equal to 130% of next month’s production requirement.

c. The cost of each unit of inventory is Rs. 20.d. Wages and salaries earned each month by employees total Rs.

38,000.e. Marketing, General and Administrative expenses (of which

Rs.2,000 is depreciation) are equal to 15% of the current month’s sales.

Sales:


Fall Semester 2006

a. Each month’s Sales are billed on the last day of the month.b. Customers are allowed a 3% discount if payment is made within

10 days after the billing date. Receivables are recorded at Gross Selling Price.

c. 60% of the billings are collected within the discount period; 25% by the end of the month; 9% by the end of second month and 6% prove uncollectible.

Actual and projected materials (in units) needed foe production:

March………….11, 800 June………… 11,400April …………. 12,100 July ………… 12,000May …………… 11,900 August……….12,200

Actual and projected Sales (in Rs.) are as follows:

March ………….354,000 June ……….342,000April …………... 363,000 July ………. 360,000May ……………. 357,000 August ……366,000

Accrued payroll (in Rs.) at the end of each month is as follows:

March …………. 3,100 June ……… 3,400April …………....2,900 July ………… 3,000May ……………. 3,300 August...….. 2,800

REQUIRED:

1. Budgeted cash disbursement during June (Marks: 10)2. Budgeted cash collection during May (Marks: 5)3. Budgeted units of inventory to be purchased during July (Marks:

5)

XYZ manufacturing company submits the following information on June 30, 2005.

Particulars Rs. Sales for the year 480,000Raw material inventory, July 1,2004 25,000Finished goods inventory, July 1,2004 60,000Purchases 100,000Direct labor 65,000


Fall Semester 2006

Power, heat and light 2,500Indirect material purchased and consumed 4,500Administrative expenses 21,000Depreciation of plant 14,000Selling expenses 25,000Depreciation of building 7,000Bad debts 1,500Indirect labor 3,000Other manufacturing expenses 10,000Work in process, July 1,2004 22,000Work in process, June 30,2005 15,000Raw materials inventory, June 30,2005 21,000Finished goods inventory, June 30,2005 66,000

Calculate:1. Cost of raw-material consumed2. Prime cost3. Conversion Cost4. Total factory cost5. Cost of goods manufactured

Following estimates relate to the material XY-9:

Annual requirement of XY-9 12,000 Units

Variable cost to place an order Rs. 10Unit Cost of XY-9 Rs. 4.80Carrying Cost 5%

Required:

a) Calculate EOQ from the data given aboveb) Calculate after how many days an order shall be placed

(Marks: 5)

Question 02:

Consumption forecast of two materials A and B is as follows:

Maximum daily consumption

600 Units

Average daily consumption 500 Units


Fall Semester 2006

Minimum daily consumption

400 Units

A BLead Time 4-8 days 3-5 daysLead Time to get urgent supplies 3 days 1 day

EOQ5000 units

3000 units

Calculate for each of the materials:

a) Order Level b) Minimum level c) Maximum level d) Danger level

Following figures are presented to you by Toseef manufacturing Company:

Items

Budgeted Figures for operations

During 2006

Actual Figures for operations during January

2006 Dept A Dept ADirect materials (Rs )

2,400,000 250,000

Direct Labor (Rs.) 1,200,000 105,000Factory overhead (Rs.)

1,800,000 9,500

Direct labor hours 100,000 28,000Machine hours 360,000 -

Required: Calculate predetermined factory overhead absorption rates for the departments using five different bases. (Present your answer by enlisting the rates in descending order of approximate frequency of their use).

(Marks: 05)

Question 02

From the following data calculate the over/under absorption and show how the transactions would be recorded in the production overhead account.


Fall Semester 2006

Absorption rate = Rs.8.00 per direct labor hour Number of direct labor hours = 1,200 Production overhead incurred = Rs. 6,900

The Imran Manufacturing Company produces a single product which passes through three departments A, B and C. The data related to the production for the month of June, 2006 is as under:

Cost Incurred by DepartmentsDepartments

A B C(Rs.) (Rs.) (Rs.)

Material Cost 10,000 - -Labor Cost 9,000 3,625 2,320Factory Over Head Cost 4,500 2,175 1,740Units Started in Process 1,000 - -Units received from preceding department - 800 700Units transferred to next department 800 700 -Units transferred to finished goods store room - - 500Units still in Process Material 100%, Conversion Cost 75% 200 - -Conversion cost 25% completed - 100 -Conversion cost 40% completed - - 200

Required:

Prepare the Cost of production report for the month of June, 2006 for Department A.

Note:

Please format the statement correctly. The allocation of the marks will be as follows:

Statement Head 1Quantity Schedule 2Cost charged to the department (Total Cost and Unit Cost) 4Cost accounted for as follows 5Additional computation 3

Total 15


Fall Semester 2006

90 units of a product are sold for Rs. 100 per unit. Variable cost relating to production and selling is Rs. 75 per unit and fixed cost is Rs. 2,250.

Required: Prepare Income Statement and analyze under each of the following conditions:

o Management decides to increase its sales by 10 units o Management decides to increase its sales price by 10%o Management decides to decrease its sales price by 10%o Management decides to decrease its sales price by 10% and

expects an increase in sales volume by 50%.

United Company seeks assistance in developing cash and other budget information for May, June and July. On April 30, the company had cash of Rs. 5,500, Accounts Receivable of Rs. 437,000, Inventories of Rs. 309,400 and Accounts payables of Rs. 133,055. The budget is to be based on the following assumptions:

Purchases:

f. Fifty four percent of all Purchases of Material and a like percentage of marketing, general and administrative expenses are paid in the month Purchases, while the reminder paid in the following month.

g. Each month’s units of ending material inventory are equal to 130% of next month’s production requirement.

h. The cost of each unit of inventory is Rs. 20.i. Wages and salaries earned each month by employees total Rs.

38,000.j. Marketing, General and Administrative expenses (of which

Rs.2,000 is depreciation) are equal to 15% of the current month’s sales.

Sales:

d. Each month’s Sales are billed on the last day of the month.e. Customers are allowed a 3% discount if payment is made within

10 days after the billing date. Receivables are recorded at Gross Selling Price.

f. 60% of the billings are collected within the discount period; 25% by the end of the month; 9% by the end of second month and 6% prove uncollectible.


Fall Semester 2006

Actual and projected materials (in units) needed foe production:

March………….11, 800 June………… 11,400April ………… 12,100 July ………… 12,000May …………… 11,900 August……….12,200

Actual and projected Sales (in Rs.) are as follows:

March ………….354,000 June ……….342,000April …………... 363,000 July ………. 360,000May ……………. 357,000 August ……366,000

Accrued payroll (in Rs.) at the end of each month is as follows:

March …………. 3,100 June ……… 3,400April …………....2,900 July ………… 3,000May ……………. 3,300 August...….. 2,800

REQUIRED:

4. Budgeted cash disbursement during June (Marks: 10)5. Budgeted cash collection during May (Marks: 5)6. Budgeted units of inventory to be purchased during July (Marks:

5)

Mgt402 Cost and Management Accounting Short Questions Vuabid

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