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Course:
Cost & Management Accounting
Internal
Assignment Applicable for December 2023 Examination
Assignment
Marks: 30
Q1.
The following details have been extracted from Sam Ltd.’s books of accounts for
the year ending March 31, 2023. The manager of the company is shared and
divides his time between the factory and the office in the ratio of 20:80.
You
are required to compute:
(a)
prime cost,
(b)
factory overhead,
(c)
factory cost,
(d)
over head and
(e)
cost of sale.
(10
Marks)
|
Stock
of Materials: Opening 2,82,000.00 |
|
Stock
of Materials: Closing 3,00,000.00 |
|
Materials
Purchased during the year 12,48,000.00 |
|
Direct
Wages 3,57,600.00 |
|
Indirect
Wages 24,000.00 |
|
Salaries
for Administrative Staff 60,000.00 |
|
Freights:
Inwards 48,000.00 |
|
Freights:
Outwards 30,000.00 |
|
Cash
Discount Allowed 21,000.00 |
|
Bad
Debts W/Off 28,200.00 |
|
Repairs
to Plant and Machinery 63,600.00 |
|
Rent,
Rates and Taxes of Factory 18,000.00 |
|
Rent,
Rates and Taxes of Office 9,600.00 |
|
Travelling
Expenses 18,600.00 |
|
Salesmen's
salaries and commission 50,400.00 |
|
Depreciation
W/Off: Plant and Machinery 42,600.00 |
|
Depreciation
W/Off: Furniture 3,600.00 |
|
Director's
fees 36,000.00 |
|
Electricity
Charges: Factory 72,000.00 |
|
Fuel
Charges: Boiler 96,000.00 |
|
General
Charges 37,200.00 |
|
Manager's
Salary 72,000.00 |
Answer:
(a)
Prime Cost: Prime cost includes the direct costs of production, which are
materials, direct wages, and direct expenses.
Prime Cost = Materials + Direct Wages Prime Cost = 12,48,000.00 +
3,57,600.00 Prime Cost = 16,05,600.00
(b)
Factory Overhead: Factory overhead includes all the indirect costs related to
production that occur within the factory. This includes indirect wages, rent,
rates, taxes of the factory, repairs to plant and machinery, depreciation of
plant and machinery, electricity charges for the factory, and fuel charges for
the boiler.
Q2.
You are required to compute the labor turnover using different methods of labor
turnover measurement from the following information provided for Manas Ltd. for
the month of December 2022. Total workers in the beginning of the month were
3800, whereas at the end of the month were 4200. During the month, 50 workers
left the firm on account of their own problems while 80 workers were
discharged. 560 workers were engaged during the month in various departments.
But out of them, only 60 were appointed. (10 Marks)
Answer: Labor turnover, or
employee turnover, is a measure of the rate at which employees leave a company
and need to be replaced. There are different methods to calculate labor
turnover. Let's compute labor turnover for Manas Ltd. using various methods:
1. Separation Method:
Labor Turnover = (Number of
Q3.
A product sells at Rs. 3 per unit. The company uses a first-in-out actual
costing system. A new fixed manufacturing overhead allocation rate is computed
each year by dividing the actual fixed manufacturing overhead cost by the
actual production. The following data is available for the first two years:
|
Description |
Year
1 |
Year
2 |
|
Sales (Units) |
1500 |
1800 |
|
Production (Units) |
2100 |
1500 |
|
Cost (Rs.) |
||
|
Variable Manufacturing |
1050 |
750 |
|
Fixed Manufacturing |
1050 |
1050 |
|
Variable Marketing and Administration |
1500 |
1800 |
|
Fixed Marketing and Administration |
600 |
600 |
Prepare
Income Statement for each year based on:
a.
Absorption Costing (5 Marks)
Answer:
Income Statement - Year 1 (Absorption Costing):
|
Particulars |
Year 1 (Rs.) |
|
Sales |
4,500 |
|
Cost of Goods Sold (COGS) |
b.
Variable Costing (5 Marks)
Answer:
Income Statement - Year
1 (Variable Costing):
|
Particulars |
Year 1 (Rs.) |
|
Sales |
4,500 |
|
Variable Expenses |
|
|
- Variable Manufacturing |
1,050 |
|
- Variable Marketing & Admin |
1,500 |
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