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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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Mgt 402

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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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