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# solved conversion cost

2006

Question # 1

Calculate Prime cost and conversion cost from the data given below:

Stock levels                         O/S (Rs.)                                C/S (Rs.)

Raw material                       150,000                                   115,000

Work in process                   50,000                                    55,000

Finished goods                  120,000                                  100,000

o       Purchase of raw material during the period Rs. 100,000

o       Transportation charges of items purchased Rs. 5,000

o       Paid to labour Rs. 100,000.

o       Other production costs(FOH) Rs. 80,000

Question # 2

Calculate working capital from the data given below:

Cash                                                  300,000

Marketable securities                    200,000

Accounts receivables                   500,000

Inventories                                       900,000

Good will                                          200,000

Accounts payables                                    500,000

Notes payables                               700,000

Accruals                                           200,000

Solution

Ans 1:

A- Value of Prime Cost

A&B CO.

Cost Sold Statement

For the year ended_________

 Particulars Amount                                                    (Rs.) Amount                                                       (Rs.) Raw material: Opening stock 1,50,000 Add Purchases 1,00,000 Add Transportation charges 5000 1,05,000 Cost of material to be used 2,55,000 Less Closing stock 1,15,000 Cost of material consumed 1,40,000 Conversion cost: Add Direct labor cost 1,00,000 Prime cost 2,40,000

B- Value of Conversion Cost

Labor Cost                             Rs. 1, 00,000

Rs. 1, 80,000

Ans: 2

The Formula of working capita is:

Current Assets – Current Liabilities

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