MGT402 Cost & Management Accounting Solved Exercises ( Chapter No 05, 06, 08 & 11)
Inventory Turnover Ratio:
The formula for inventory turnover:
The formula for average inventory:
Tags:
Following is the information pertaining to the production cost of Revolving Chair Company for
the year ending on March 31 2006;
Direct material consumed 440,000
Direct labor 290,000
Indirect labor 46,000
Light and power 4,260
Depreciation 4,700
Repairs to machinery 5,800
Other factory expenses 29,000
Work in process inventory; April 1, 2005 41,200
Finished goods inventory; April 1, 2005 34,300
Work in process inventory; March 31, 2006 42,500
Finished goods inventory; March 31, 2006 31,500
During the year 18,000 units were completed.
Factory overhead cost is applied @ 30% of the direct labor cost.
Required:
1. Cost of goods manufactured statement
2. Cost of goods sold statement identifying at normal and at actual
3. Cost per unit
4. Amount of over or under applied factory overhead cost
Solution
1) cost of goods manufactured:
Direct material consumed 440,000
add Direct labor 290,000
add direct F.O.H cost (see note 1) 89760
total factory cost 819760
add Work in process inventory; April 1, 2005 41,200
cost of goods to be manufactured 860960
less Work in process inventory; March 31, 2006 42,500
cost of goods manufactured 818460
2. Cost of goods sold statement identifying at normal and at actual
Direct material consumed 440,000
add Direct labor 290,000
add applied factory overhead cost (see note 2) 87000
total factory cost 817000
add Work in process inventory; April 1, 2005 41,200
cost of goods to be manufactured at normal 858200
less Work in process inventory; March 31, 2006 42,500
cost of goods manufactured at normal 815700
add Finished goods inventory; April 1, 2005 34,300
cost of goods available for sale at normal 850000
less Finished goods inventory; March 31, 2006 31,500
cost of goods sold at normal 818500
add under applied (see note 3) 2760
cost of goods sold at actual 821260
3. Cost per unit:
cost per unit=cost of goods manufactured / number of units manufactured
=818460/18000
Cost per unit = 45.47
4. Amount of over or under applied factory overhead cost
applied factory overhead cost 87000
actual factory overhead cost 89760
under applied 2760
Working notes
Note 1 actual direct F.O.H cost :
Indirect labor 46,000
Add Light and power 4,260
Depreciation 4700
Repairs to machinery 5,800
Other factory expenses 29,000
actual direct F.O.H cost 89760
note 2
applied factory overhead cost:
Factory overhead cost is applied @ 30% of the direct labor cost
=290000@30%
= 87000
note 3
under applied :
applied factory overhead cost 87000
actual factory overhead cost 89760
under applied 2760
Q.2
Raw |
Usage per unit of |
Re-order |
Price |
Delivery Period
|
Re-order level kg, |
||
material |
Product |
Quantity |
Per kg. |
|
|
|
|
|
kg. |
kg. |
|
Min |
Avg |
Max |
|
A |
10 |
10,000 |
0.1 |
1 |
2 |
3 |
8,000 |
B |
4 |
5,000 |
0.3 |
3 |
4 |
5 |
4,750 |
C |
6 |
10,000 |
0.15 |
2 |
3 |
4 |
2,000 |
(d) Danger stock level of A
The following figures have been extracted from a trader's records in respect of wages and salaries
for July. Rupees
(i) Wages and salaries (gross) 6,300
(ii) Income tax 1,600
(iii) Employees' pension contributions 600
(iv) Employer's pension contributions 700
1 What is the total amount the trader will have to pay for wages and salaries for July?
A 4,100
B 4,800
C 6,300
D 7,000
2 What is the net pay received by employees?
A 4,100
B 4,200
C 4,800
D 5,600
Net salary = Gross salary - income tax - employees' pension contributions
3 Which of the following does not appear on a payslip?
A. Gross weekly wage for the employee
B. Tax paid to date by the employee in the tax year
C. Deductions paid by the employee
D. Details of the employee's expected pension.
4 Which is the most convenient way for a large employer to pay salaries electronically?
A. BACS
B. Bank transfer
C. By cash
D. By cheque.
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