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Suggested Answers
Certificate in Accounting and Finance Autumn 2014
Ans.1
Ababeel Foods
Cooking department production and cost for June 2014
Opening WIP
Material
Labour
Overheads (20,000*1.2)
Weight loss:
Opening WIP
Input for the month
Transferred to finishing department
Closing WIP
Total loss
Weight loss
(450,000-440,000)
Rejection loss (balancing)
7,700
11,550
693
(W.1)
(W.1)
(W.2)
(W.2)
(W.2)
2,300
1,450
3,750
362,000
65,000
450,000
829
88,328
13,244
103,094
Opening WIP
Cost added
Normal rejection valued @ Rs. 60 per kg
Total cost
Abnormal
loss
(Balancing)
30,000
420,000
450,000
(362,000)
(65,000)
23,000
10,000
13,000
23,000
(450,000-65,000)2%
(450,000-65,000)3%
(W.1)
(W.1)
103,094
450,000
Rs. in
'000'
Kg.
7,700
11,550
19,250
2,300
1,450
3,750
Material
cost
1,288*2.2
20,000*2.2
11,550*60
(A)
(A1,000)(B)
Conv.
Total
cost
cost
Rs. in '000'
6,260
2,834
9,094
50,000 44,000
94,000
(693)
(693)
55,567 46,834 102,401
129.0
Rupees
115.0
Equivalent kg.
Finished goods
Closing WIP (100% to material and 65% to conv.)
Total abnormal loss (100% to material and 80% to conv.)
Total equivalent quantity and cost
(B)
Material
Conv.
362,000
65,000
3,750
430,750
362,000
42,250
3,000
407,250
244.0
Total cost
(Rs. in
000)
88,328
13,244
829
102,401
Page 1 of 6
Ans.2
(a)
Sales
Variable cost of sales
Contribution margin
Fixed cost
Net profit
(b)
(125+25), 150*1.3*0.95
(150*80%), 120*90%*1.3)
(12520%), 25+5+ (40*15%)
Break-even sales
Margin of safety
Ans.3
Current
Proposed
Rs. in million
150.00
185.25
(120.00)
(140.40)
30.00
44.85
(25.00)
(36.00)
5.00
8.85
148.70
36.55
(185.2544.85)36
(185.25-148.7)
Omega Limited
Net present value of the project
Year 0
Land
(40.00)
Factory building
(10.00)
Plant installation
Loan
Working capital
Sales (10% growth)
Cost of goods sold
(8% growth)
Royalty (3% of sales)
Interest on loan
Net cash flows
(50.00)
PV factor at 12%
1.00
Present value
(50.00)
Net present value of the project
W.1
2
3
4
5
Cash inflows/(outflows) Rs. in million
(20.00)
(100.00)
50.00
(15.00)
300.00
330.00
363.00
399.30
W.1
(195.00)
(210.60) (227.45)
(245.64)
(9.00)
(9.90)
(10.89)
(11.98)
(85.00)
96.00
109.50
124.66
141.68
0.89
0.80
0.71
0.64
0.57
(75.65)
76.80
77.75
79.78
80.76
6
70.00
15.00
10.00
(50.00)
15.00
439.23
(265.30)
(13.18)
220.75
0.51
112.58
302.02
(30080%90%)
(3050%)5
(10090%)5
Rs. in million
216.00
(3.00)
(18.00)
195.00
Page 2 of 6
Ans.4
(a)
(b)
(c)
(a)
Rupees
17,000,000
820,000
600,000
18,420,000
Favorable/
(Adverse)
(650,000)
(600,000)
Overhead variances
1
Overhead spending variance
Standard variable overheads for actual hours
Standard fixed overheads
Total standard overheads
Total Actual overheads
2
Ans.5
100,000*170
130,000*90 (W-1)
11,700,000
2,560,000
14,260,000
15,500,000
(1,240,000)
(450,000)
(100,000)
40,000
W-1: Fixed and variable overheads rate per direct labour hour
Standard total overheads rate per labour hour
137.5/1.25
Standard fixed overhead rate per labour hour
2,560,000/128,000
Standard variable overhead rate per labour hour
Rs.
110.00
20.00
90.00
Page 3 of 6
Ans.5
(b)
Alpha Limited
Production/import plan to maximise AL's profit
Capacity utilisation
(B)
(C)
Product-A
240,000
Product-B
225,000
Product-C
270,000
30,000
12,000
42,000
25,000
10,000
35,000
22,500
4,000
26,500
Rupees in million
Variable Cost of production:
Direct material
Direct labour
overheads
Total cost
(D)
F (DB)
48.00
45.00
33.00
126.00
31.25
40.00
25.00
96.25
40.50
56.25
29.25
126.00
4,200.00
Rupees
3,850.00
5,600.00
Rupees in million
Cost of imports:
Existing cost of imported finished goods:
Bulk discount offered
Discounted price of imported goods
(F)
G (FB) Rs.
(F-G)
Production Plan:
Machine hours per unit
H (AB)
Loss per machine hour on imports
Rs.
Production priority to save loss on imports
Production from available hours of 735,000 in
sequence of the above priority:
Product-A
Units demand
Hrs. utilized (42,0008)
Product-B
Units demand
Hrs. utilized (35,0009)
Product-C
Units from remaining hrs.
Remaining hrs, [735-336-315]
Import plan:
Product-C:
Demand exceeding production
Total units
(26,500-7,000)
68.40
15%
58.14
47.00
10%
42.30
26.88
12%
23.65
4,845.00
Rupees
4,230.00
5,912.00
(645.00)
(380.00)
(312.50)
8.00
(80.63)
1st.
9.00
(42.22)
2nd.
12.00
(26.04)
3rd.
42,000
336,000
35,000
315,000
7,000
84,000
42,000
35,000
19,500
26,500
Page 4 of 6
Ans.6
Particulars
Debit
Credit
Rs. in '000
10,000
31,000
41,000
5,000
8,000
1,250
2,000
3,250
750
13,000
3,250
4,000
30,000
500
750
31,250
30,000
30,000
20,000
20,000
Page 5 of 6
Ans.7 (a)
(i)
Incremental cost
(ii)
(b)
Salman Limited
Allocation of overheads and overheads absorption rate
Allocation
basis
Direct labour
Direct material
Indirect labour
Indirect materials
Factory rent
Power
Depreciation
Floor area
Kilowatt hrs.
Machine hrs.
Total
1,340
1,515
3,500
Allocation basis
Machine/D. labour hours
Overhead absorption rate per hour
Rs.
PD-A
1,900
900
670
758
1,925
6,153
PD-B
Rs. in 000
600
1,100
536
568
1,225
4,029
178
211
12
1
6,555
386
134
25
1
4,576
Machine
hrs.
D. labour
hrs.
19,250
340.52
30,400
150.53
SD-1
SD-2
50
150
67
47
280
594
20
55
67
142
70
354
(594)
39
(39)
0
-
30
(384)
2
(2)
-
80038
(THE END)
Page 6 of 6