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A Mega Thread Of Mgt 402 Cost & Management Accounting Final Term more than 20 Papers of All Years +Long Solve question+Quizzes

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Question No 60

Zamzam manufactured 700 washing machines to fill an order by incurring:

 

Direct material                                      Rs. 250,000

Direct labor cost                                           300,000

F.O.H (40% of labor cost)                           120,000

Total production cost                                   670,000

 

Some of the work was found defective, to make good such loss, following cost was incurred:

 

Rework cost on defective work

Material                                                          Rs.12,000

Labor                                                                   45,000

F.O.H (40% of Labor cost)                              18,000

 

Required: Pass accounting entries to record the cost incurred along with the adjusting entry for re-work cost, treating the loss as Normal.

 

Date

Description

DR

CR

1.

WIP A/C

        Material

         Payroll

        FOH applied (40% of Labore)

568,000

 

 

 

250,000

300,000

18000

2.

FOH – Control A/C

         Material

         Payroll

         FOH  applied       

75000

 

12000

45000

18000

3.

Finished Goods A/C

                  WIP A/C

568000

 

568000

Cost per unit 568000/700= Rs.  811.42 per units

 

 

Question No 59

 

Production component

Rates

Per unit Rate

Direct material

2.5 lbs @ Rs. 4.00

Rs. 10.00

Direct Labor

.5 hr @ Rs. 16.00

Rs.  8.00

VOH

.5 hr @  Rs. 4.00

Rs.  2.00

Fixed FOH

Rs. 40,000

Rs.  2.50

Actual Output

16,000 units

 

Variable S&A

Rs. 6.00 per unit

 

Fixed S&A

Rs. 60,000

 

Selling price

Rs. 40

 

 

 

Required: What do the income statements look like under Absorption costing approaches if actual   sales equal 16,000 units?

 

 

Question No 58

Classify the following expenses as Financial or Administrative expense by filling the appropriate boxes?

 

Expenses

Nature of expense

Salaries of employee

Administrative expense

Interest paid on debts

Financial Expense

Utility Bills

Financial Expense

Depreciation of office equipment

Administrative expense

Interest paid on debentures

Financial Expense

 

Question NO 57

Hussain Corporation annually produces 10,000 units of assembly part number 206. An outside supplier has offered to manufacture the part at Rs. 9 per unit. If Hussain Corporation decides to buy the part, they will be able to rent the existing area for Rs. 8,000 per year. Listed below are Hussain’s total costs to produce part 206:

 

 

Rs.

Total (Rs.)

Direct material

2.50

25,000

Direct Labor

4.00

40,000

Variable overhead

2.25

22,500

Fixed Overhead

0.75

7,500

Total

9.50

95,000

 

Assuming that no additional costs are incurred in purchasing the part, what should be the opportunity cost for Hussain Corporation if it will buy? Support your answer with computations.

 

Question No 56

 

ICI Ltd manufactured three joint products, W, X, Z in a common process. The cost and production data for March is as follows:

 

Rs.

Opening stock

40,000

Direct material input

80,000

Conversion cost

100,000

Closing stock

20,000

 

                  Out put and sales were as follows:

 

Products

Production units

sales units

sales price per unit

W

                  20,000

15,000

4

X

                  20,000

15,000

6

Z

40,000

50,000

3

 

Required:

Costs are apportioned between joint products on market value basis, (Sales value of the units produced)?

 

Question No 55

Why business pay financial charges and give examples of financial charges?

 

 

Question nO 54

The Gulzar lodge had sales of Rs.4, 500,000. The fixed expense was Rs. 1,200,000 and the variable expense totaled Rs.1, 800,000. Calculate the contribution margin ratio?

Contribution margin = Sales less variable costs of sales

2700000                      =  4500000 -1800000

Contribution Margin / Sales = Contribution Margin Ratio

2700,000 / 4500,000                   =  0.6 %

 

Question No 53

Differentiate between Incremental cost and Avoidable cost.

 

Incremental Cost

Avoidable cost

An incremental cost can be defined as a cost which is specifically incurred by following a course of action and which is avoidable if such action is not taken. Incremental costs are relevant costs because they are directly affected by the decision (i.e. they will be incurred if the Cost & Management decision goes ahead and they will not incurred if the decision is scrapped).

One of the situations in which it is necessary to identify the avoidable costs is in deciding whether or not to discontinue a product. The only costs which would be saved are the avoidable costs which are usually the variable costs and sometimes some specific costs.

 paper of the mc120201802

Question NO 53

Ahmed Trading Company has the following information about Soap, the only product it sells. The selling price for each unit is Rs 150. the variable cost per unit is Rs 45. and the total fixed cost for the firm is Rs. 90,000. The Company has budgeted sales of Rs. 370,000 for the next period. Calculate Margin of safety in Rs.

 

Contribution to sales ratio =

Contribution margin Sales = 105 / 150 = 0.7

Break-even sales in Rupees = Fixed cost / C/S Ratio = 90,000 / 0.7 = Rs. 128571.42

 Budgeted sales – Break-even sales = Margin of safety

 370,000- 128571.42                        =  241428.58

 

Question NO 54

Product "A" has a contribution of Rs. 8 per unit; a contribution margin ratio is 50% and requires 4 machine hours to produce. Product "B" has a contribution of Rs. 12 per unit; a contribution margin ratio is 40% and requires 5 machine hours to produce. If the constraint is machine hours to produce, then which one of the both product a company should produce and sell? Support your answer with suitable workings.

 

 

 

Question NO 55

Quantum Leap Inc. is trying to prepare a purchases budget for next month. Consider the given the following information.

Estimated sales

250 units

Estimated beginning inventory

22 units

Estimated ending inventory

15 units

Estimated cost per unit

Rs. 450

 

How much will the company have to spend for merchandise purchases next month?    

 

 

 

Question NO 56

A controller is interested in an analysis of the fixed cost and variable costs of electricity as related to direct labour hours. The following data has been accumulated:

 

Month                                        Electricity cost               Direct Labour hours

November                                    Rs 1548                            297

December                                    Rs. 1667                           350

January                                        Rs. 1405                           241

February                                      Rs. 1534                           280

March                                           Rs. 1600                           274

April                                              Rs. 1600                           266

May                                               Rs. 1613                           285

June                                             Rs. 1635                           301

 

Required: Using High and Low point’s method, Find the amount of fixed overhead and the variable cost ratio?

 

 

 

 

 

Question NO 57

 

ICI Ltd manufactured three joint products, W, X, Z in a common process. The cost and production data for March is as follows:

 

Rs.

Opening stock

40,000

Direct material input

80,000

Conversion cost

100,000

Closing stock

20,000

 

                  Out put and sales were as follows:

 

Products

Production units

sales units

sales price per unit

W

                  20,000

15,000

4

X

                  20,000

15,000

6

Z

40,000

50,000

3

 

Required:

Costs are apportioned between joint products on market value basis, (Sales value of the units produced)?

 

 

Rs.

Opening stock

40,000

Direct material input

80,000

Conversion cost

100,000

 

220,000

Closing stock

20,000

 

200,000

  Product A       15000x4= 60,000

               X       15000x6 = 90,000

               Z        50000x3= 150,000

                        Total      =  300,0000

300,000/200,000= 100,000

 

Question NO 58

Being a cost accountant of a company, what problems or limitations can you face while designing a traditional budget?

Problems

Programmes and activities involving wasteful expenditure are not identified, resulting in avoidable financial and other costs.

Inefficiencies of a prior year are carried forward in determining subsequent years’ levels of performance.

Managers are not encouraged to identify and evaluate alternate means of accomplishing the same objective.

Decision-making is irrational in the absence of rigorous analysis of all proposed costs and benefits.

Key problems and decision areas are not highlighted. Thus, no priorities are established throughout the organization.

Managers tend to inflate their budget requests resulting in more demand for funds than their availability these results in recycling the entire budgeting process.

 

Question NO 59

Cost of material consumed under FIFO, Average Cost            and LIFO costing method is Rs. 3,420, Rs. 3,465, and Rs. 3,545. Conversion Cost is Rs. 16,500. 1,000 units of the product were manufactured out of which 800 @ Rs. 30 units sold. There were no beginning and ending inventories of work in process and finished goods.

Required: Calculate per Net profit under FIFO, Average Cost and LIFO costing methods.

Note: Show complete working

 

 

 

 

Question NO 60

Liberty Pizzas delivers their product to the housing societies near Gulberg. The company's annual fixed costs are Rs. 400,000. The sales price of a normal size pizza is Rs. 100 and the cost to make and deliver each pizza is Rs. 60.

You are required to calculate the following:

1)     Break even sales per unit.

2)     How many Pizzas the company must be sold in order to earn a profit of Rs. 650,000

Fixed Cost = 40,000

Sales PRICE  = 100

Variable cost = 60

Break-even sales in units = Fixed cost / Contribution margin per unit

                                    = 40,000 / 40  = 1000 units

 

Pizza to sold 650000/1000 = 650 pizza

 

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