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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:

 

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



Read more: MGT 402 Cost & Management Accounting GDB # 1 SOLUTION - Virtual... https://vustudents.ning.com/group/vudubai/forum/topics/mgt-402-cost...

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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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