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# MGT 402 Cost & Management Accounting GDB # 1 SOLUTION Spring 2011 By ADNAN

Question:

Mr. Hassan deals in chair manufacturing. He got an order to manufacture 3000 chairs of a specific design for a school lab. It requires a cutter costing Rs.50, 000 to design the chair that is useless after completing this order. Wood used for this order is of Rs.200, 000, nails costing Rs.60, 000, furniture polish costing Rs.90, 000 and miscellaneous factory overhead charges Rs.25,000. Labor charges are Rs.50 per chair. He has appointed a supervisor at Rs.10,000 per month only for the completion of this order. (Time required to complete the order is 2 months).

Calculate the following for the whole order:

1. Prime cost
2. Total factory cost

Note:

• Read the instructions mentioned in announcement carefully before attempting it.
• Use the following format to answer:

Prime cost: 460000

Total factory cost: 595000

Working:

 Particular Amount Direct Material 2,00,000 Direct Labour 1,50,000 Other Direct EXP. Cutter Costing Nails Costing 50,000 60,000 1,10,000 Prime Cost 4,60,000 Polish Costing 90,000 Supervisor Salary 20,000 Factory overhead charges 25,000 Total Factory Cost 5,95,000

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### Replies to This Discussion

One more idea solution of MGT402 GDB

Mgt 402

GDB No. 1 Idea Solution

Prime cost: 50,000 + 200,000 + 60,000 + 90,000 + (50x3000) 150,000 + 20,000 = 570,000

Total factory cost: 570,000+25000 = 595,000

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