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Cost & Management Accounting (MGT-402) Assignment No. 01 Due Date: 9th April 2012 -- 12th April 2012

Cost & Management Accounting (MGT-402)
Assignment No. 01
Due Date: 9th April 2012 -- 12th April 2012 Marks: 20
¡§Cost of Goods Sold¡¨
Hypothetical Tools Manufacturing Limited (HTML) - an ISO certified company located nearby
Modern Village is engaged in manufacturing and marketing of small agriculture implements. The
company is operating with 100 people including 75 factory workers and 15 office workers
supported by supporting staff of 6 people. The company¡¦s core management evolves around Mr.
Marketer; Mr. Producer; and Mr. Financer, who are accountable to Mr. Big ¡V CEO of HTML.
Mr. Producer is responsible for the overall manufacturing activities of the company. Operating
cycle of the company spans over a single quarter and therefore, the company enjoys 4 operating
cycles each year. For valuing Raw Material and Finished Goods inventories, the company uses
FIFO costing; while Work-in-Process inventories are valued at Weighted Average. The company
uses job order costing for determining per unit manufacturing cost. At the start of the production,
Factory Overhead (FOH) is predetermined on some logical basis and charged to the job
During the 1st Quarter of Year 20X1, the company has received an order of producing 40,000
units of one of its famous brand ¡V Auto Sprinkle. Mr. Producer in consultation with Mr. Marketer
has gathered the following cost data related to this order:
a) This product requires three different types of raw materials - Material-Alpha, material-Beta
and material-Gamma. The process is started with 40,000 units of Material-Alpha, which includes
5,000 units @ Rs. 0.30 each at the time of starting the process. After completing 50% of the
process, 14,000 units of material-Beta including beginning inventory of 4,000 units @ Rs. 0.25
each are added to the process. When the process reaches to the level of 80%, there is a need to put
material-Gamma into the process for completing the product. At this stage, 11,000 units of
material-Gamma including 3,000 units @ Rs. 0.40 available in the opening stock are added
b) During the quarter, following quantities of all materials were also purchased:
Alpha - 35,000 Units @ Rs. 0.35 each, Beta - 10,000 Units @ Rs. 0.30 each, and Gamma - 8,000
Units @ Rs. 0.60 each.
c) At the end of the quarter, store ledger cards show units in the quantities of 4,000, 6,000 and
5,000 of material- Alpha, Beta, and Gamma respectively.
d) To complete these 40,000 units during the quarter, all the factory workers worked for 6 hours
a day for 5 days-week throughout the quarter at Rs. 1.65 per man hour worked.
e) For charging overheads to this order, the company estimated FOH cost equal to 20% of the
total manufacturing cost.
f) During the period, organization incurred 5% of sales value as selling expenses.
Some other overhead costs incurred by the organization are given as below:
Office (Rs.)
Indirect Labor 2,800 -----
Supervision 3,000 -----
Supplies 1,400 800
Repairs & Maintenance 900 400
Depreciation 1,000 350
Utilities 740 310
Insurance 560 280
Delivery expenses ----- 2,460
At the end of the quarter, 38,500 units were sold at an average price of Rs. 2.25 per unit.
„h Compute the following as to per unit :
Manufacturing Cost (10 marks)
Period Cost (2 marks)
Gross Profit (2 marks)
Net Profit (2 marks)
„h Compute and adjust Under/Over applied FOH by using ¡§Net Profit¡¨ method.
(4 marks)
Please read the following instructions carefully before preparing the assignment solution:
„h All Supporting Formulas and calculations are required as they carry marks.
Only in the case of Assignment, 24 hours extra / grace period after the due date is
usually available to overcome uploading difficulties which may be faced by the students
on last date. This extra time should only be used to meet the emergencies and above
mentioned due dates should always be treated as final to avoid any inconvenience.
Important Instructions:
Please read the following instructions carefully before attempting the assignment solution.
„h Make sure that you upload the solution file before the due date. No assignment
will be accepted through e-mail once the solution has been uploaded by the
Formatting guidelines:
„h Use the font style ¡§Times New Roman¡¨/ ¡§Arial¡¨ and font size ¡§12¡¨.
„h It is advised to compose your document in MS-Word 2003.
„h Use black and blue font colors only.
Solution guidelines:
„h Every student will work individually and has to write in the form of an analytical
„h Give the answer according to question.
„h For acquiring the relevant knowledge don¡¦t rely only on handouts but watch the
video lectures and use other reference books also.
Rules for Marking
Please note that your assignment will not be graded or graded as Zero (0) if:
„h It has been submitted after due date
„h The file you uploaded does not open or is corrupt
„h It is in any format other than .doc (MS. Word)
It is cheated or copied from other students, internet, books, journals etc¡K
Important Note for those courses where calculations and graphs are
„h Calculate to the point where calculation is being required. NO need to write irrelevant
material or extra interpretation.
„h Draw diagrams by yourself. Do NOT copy from any source. NO need to write irrelevant

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Replies to This Discussion

You know how to get manufacturing cost as it comes to be 77,625! :(

MGT402 Assignment#1 Complete Solution 

see the attached file please


How manufacturing cost comes to be 77,625 as we calculated FOH as 15,525 from manufacturing cost later.

My dear sir

kindly arrange the solution of assignment of IT 430 last date is 16th of this month i am wory please help and guid me accordingly

MGT402 Assignment#01 Solution Spring 2012


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