Categories >> Business Management >> Finance

Business Administr ation Interview Question s

Que stion What are accounting Principles? Question Submitted By :: Nandu I also faced this Question!! R a n k Answer Posted By

Marketin g Sales Interview Question s

Re: What are accounting Principles? Ans Maintaining the Basic wer Accounting Books, ex. Daybook, bank #1 book, purchase sales account and vouchers. regular invertory process 42 4 Ye s 535 No 2 Karthik

Finance Interview Question s

Human Resource s Interview Question s

Is This Answer Correct ?

Re: What are accounting Principles? Ans there are 3 types of 4 wer accounting principals # 2 1. personnel accoumt:debit the receiver and credit the giver, 2. real account:- debit what comes in and credit what goes out. 3. nominal account:Sirisha

Personne l Manage ment Interview Question s Hotel Manage

Interview Question s

Industrial Manage ment Interview Question s

Other Finance Interview Questions

Question Infrastruc ture Manage maintain the secrecy of the To ment affairs of a customer is obligatory Interview the part of the bank, but on Question sometime it may not be s considered essential. Discuss. what is the meaning of portfolio IT management? what comes under Manage portfolio management ment Interview impact of sub prime mortgage Question crises to indian economy and in s particular reference to banking industry Non Hi My name is Jay, I am 2007 Technical batch passout engineering Interview student.I have been working in a Question very good software s organisation(CMM level 5) since last one year. One month before I have taken an admission to Business PGDBA in FINANCE(Post Manage Graduation Diploma in Business ment Administration) in Welingkar AllOther Institute, Mumbai.Course duration Interview is of 2 year. I want to know Question s

Asked Answe @ rs







Question.XYZ ltd an IT company is not an MNC based in the USA.When the ABC ltd scans XYZ ltd company's financial statements it shows profit (no fraud or infringement was made in accounts of XYZ ltd). how far is this course wld be beneficial to a candidate of commerce background (BBA graduate and an MBA in Finance) Also. The Germany company wants takeover the USA company. as it is very expensive). (without the certification of Oracle. ABC ltd an IT company is an MNC based in Germany. Looking for a suggestion on the same.But the finance department of ABC ltd says the XYZ ltd financial statements show various losses. the opportunities lying CapitalIQ 4 HSBC 10 1 . while it has made profit? am about to enroll for Oracle Apps Financial with Iapps in pune.specifically that how exactly this new degree will b benificial for my carier growth. Can I change my line of job from s/w to Finance ? How exactly shall I proceed so as to get the optimum benifit of PGDBA degree? what is called re-capitalization Case.Cite four reasons why XYZ ltd shows loss. Also.

What is Dividend Yield Ratio? What is the difference between debt and equity? is there any course conducted for nse intra trading and what are the basic technical analyis for nifty?i alos want to know how to learn the charts in nse? differetiate capital reserve and JPMorga n-Chase UBS ABNAMRO Deloitte 22 6 7 1 4 8 14 7 2 4 9 1 1 . What is ROI? Types of ratios? wht r they what is the difference between savings bank account and current bankink account? what is E.ahead int his field.F.i m intersted to banking Fertilizer sector. Thanks What is Investment? nikkie stock exchange belongs to Religare which country what is the maximum number of directors in public limited company why is forex market and gold market are in inverse action? hi.T. Give the name of any company who is famous for this type of service.i am mba finance student in 3 Nagarjun rd which post i will get in s campus to i prepare for ainterview.

com :: :: throughput costing Hide links within definitionsShow links within definitions .reserve capital For more Finance Interview Questions Click Here Copyright Policy | Terms of Service | Help | Site Map 1 | Articles | Site Map | Contact Us | Site Map | Copyright © 2009 KalAajKal. All Rights Reserved. ALLInterview.

workers are usually welleducated engineers or technicians employeed on permanent basis. This would reduce the incentive to over produce to cut down cost per unit. It is very suitable for those companies where labor and overheads are fixed costs.In fact all annual accounts are prepared on this basis to facilitate inter-company comparison or calculation of industrial ratios. In present high tech. Generally. a few engineers operate the plant. direct labour has disappeared. . In such company. variable and throughput costing are alternative productcosting methods. integrated. Under absorption or full cost method.Definition Method of costing a product where only the unit-level direct costs are assigned to the product. Variable costing covers only variable costs while all fixed costs are treated as period costs. An airline can take passengers much below the normal fare when it observes that some seats are empty for want of booking or cancellation or no-show passengers. the only throughput costs (raw material costs) vary with the change in production. all manufacturing costs are treated as product costs. principle-based approach. this method is used in inventory valuation and is acceptable to tax authorities. being committed. is irrelevant for most decisions. Hence. • It is a dynamic. The difference is treatment of certain cost elements. It is also called super-variable costing. • It provide managers with decision support information for optimization of resources. THROUGHPUT COSTING Throughput costing treats all costs as period expenses except for direct materials. Main features are: • It helps incremental analysis for meeting special orders when there is an excess capacity. This type is more suitable for operational decisions as fixed cost. SUMMARY Absorption. Assemblyline and continuous processes that are highly automated are most likely to meet this criterion. In financial accounting. environment.

you can sign in Top of Form Username Email Password Retype I read and understood HubPages' terms of use.Basic Cost Concepts MANAGERIAL ACCOUNTING: Managerial Accounting . Bottom of Form If you are not a member. the company image or standing is not affected which is certainly reflected by annual reports prepared after taking into account industrial norms and GAAP. VOTE UPVOTE DOWNSHAREPRINTFLAG Was this Hub .Cost Volume Profit Analysis Top of Form Managerial-Acco Bottom of Form close Sign in to share this Hub If you are already a member. you can sign up ...? • • • • Useful Funny Awesome Beautiful MANAGERIAL ACCOUNTING: Managerial Accounting .The only common feature among the various methods is the focus or stress on providing information for decision-making. Since some techniques are used only internally.

creativeone59 .Institute of Cost and Works Accountants ( of India) ICMAP . CIMA & ICWA are professional bodies in different countries but for the same purpose i.Chartered Institute of Management Accountants ICWA . professional development for cost and management accountants. The acronyms stand for: CIMA .e. creativeone59 9 months ago Thanks for a very informative hub.Top of Form Username/ email Password Remember me Forgot username or password? Bottom of Form Comments Trsmd 9 months ago what's the difference between CIMA & ICWA ? hafeezrm 9 months ago Thanks for your query. Godpeed.Institute of Cost & Management Accountsnt of Pakistan.

kpmgaccountingfirm. On the basis cost:benefit analysis. RUFI SHAHZADA Accounting firm 6 months ago More good informations thanks for helping me out.. Always a pleasure to see information that is useful. Truly you are a great source of . Costings are defined so well. I would advise you to complete ICMAP and then go for a 'fast track' route into CIMA’s strategic level examinations. hafeezrm 9 months ago Thanks Creativeone59 for your constant encouragement. I want to ask you one thing that if I want to opt between the two CIMA or ICMA.Rufi Shahzada 9 months ago Dear Sir. Rufi Shahzada 9 months ago Yes Sir! Thanks a lot for your guidance. being in your own home town. thanks again http://www. What should I select ? RUFI SHAHZADA hafeezrm 9 months ago You mean CIMA and ICMAP? Well while CIMA is much better. Regards. ICMAP is much less costly.. Thanks for adding and refreshing knowledge constantly. leading to CIMA membership.

I am very impressed by your deep knowledge and your ability to explain these tricky issues.Athar 5 months ago Sir. Could you please explain more about the advantages of variable costing system? Thank you in advance for your assistance! Kind regards Top of Form Submit a Comment 5073943 Members and Guests Sign in or sign up and post using a hubpages account.php?uid=2327702058&t Luisa 7 weeks ago Dear I have found an interesting disussion which may be of interest to you.What about IMA-USA CMA Program.facebook. I am MBA myself. Name: URL: optional . Is it better than CIMA /ICMAP CMA? hafeezrm 5 months ago Dear Athar. I have no idea about IMA-USA. Please go to the following link: http://www.

but URLs will be hyperlinked • Comments are not for promoting your hubs or other sites Bottom of Form 88 hafeezrm From Karachi. Pakistan 257 Followers 88 Hubs Joined 18 months ago Read more hubs by hafeezrm .Comment: Post Comment • No HTML is allowed in comments.

Follow hafeezrm Subscribe to hafeezrm's RSS feed ASK A QUESTION Ask hafeezrm to publish a Hub answering your question. you can sign up Top of Form Username/ email . Bottom of Form If you are not a member. you can sign in Top of Form ask:sidebar:lightb Username Email Password Retype I read and understood HubPages' terms of use. ask! close Sign up to submit your question "" If you are already a member.

Cost Volume Profit Analysis by hafeezrm • Managerial Accounting . by hafeezrm • Managerial Accounting .Job Costing by hafeezrm .Password Remember me Forgot username or password? Bottom of Form RELATED HUBS • Analysis of Financial Statements – Income Statement by hafeezrm • Analysis of profitability by hafeezrm • Managerial Accounting ..Investment Centers & Transfer..

K. Is This Important: What Does it Meanposted by AdsenseStrategies financial structure REPLIES 48 15 33 Rate: News containing the term 'throughput costing' This content can be found on the following page: .An Overview by hafeezrm HOME SCHOOLING AND LIFE EXPERIENCE EDUCATION FORUM TOPIC What is the best decision you've made in your lifeposted by finsofts How to memorize anything within a short periodposted by Narain. Someone once said "Know Thyself".• Managerial Accounting .D.

com/definition/ Close Thanks for your feedback. ..businessdictionary..html Top of Form Submit Search for another term Bottom of Form Enter your email address to get our free Term of the Day newsletter! Top of Form termpages Privacy Policy Tools Bottom of Form Copy and paste this HTML in your website to link to this page <a href="http://w w w .http://www.businessdictionary. Top of Form Select language.

. Manufacturing. .. & Technology Nearby Terms through passenger through rate throughput throughput agreement throughput contract throughput costing throughput time throwaway thumbnail image tick ticker symbol Popular 'Accounting & Auditing' Terms accounting payment terms financial management accounting concepts letter of credit (L/C) marginal benefit asset .. in the subjects Accounting & Auditing Industries. Bottom of Form throughput costing is..powered by Please select a language.

As such. ensuring efficiency where it matters as well as the overall effectiveness of the whole organization. including overheads) to products and services sold or provided by an enterprise. Throughput Accounting[2] is neither cost accounting nor costing because it is cash focused and does not allocate all costs (variable and fixed expenses. TA is a relatively new management accounting approach based largely on the identification of factors that limit an organization from reaching its goal and is proposed by Eliyahu M.g. whether the constraint is internal or external to the organization. Considering the laws of variation. unlike cost accounting that primarily focuses on 'cutting costs' and reducing expenses to make a profit. Throughput Accounting is a management accounting technique used as the performance measures in the Theory of Constraints (TOC)[3] . and comprehensive management accounting approach that provides managers with decision support information for enterprise optimization. Goldratt [1] as an alternative to cost accounting. principle-based. Throughput Accounting is thus part of the management accountants' toolkit. It is an internal reporting tool. Throughput Accounting is the only management accounting methodology that considers constraints as factors limiting the performance of organizations. Conceptually. are allocated to products and services which are deducted from sales to determine Throughput. integrated. only costs that vary totally with units of output (see definition of T below for TVC) e. Outside or external parties to a business depend on . Throughput Accounting primarily focuses on generating more throughput. however. Management accounting is an organization's internal set of techniques and methods used to maximize shareholder wealth. It is the business intelligence used for maximizing profits.revenue fixed cost pro forma invoice Search volume for throughput costing Throughput Accounting (TA) is a dynamic. raw materials. Throughput Accounting seeks to increase the velocity or speed at which throughput (see definition of T below) is generated by products and services with respect to an organization's constraint.

" "rightsizing. today. labor was the largest fraction of product cost. but they have not agreed on a replacement of their own and there is enormous inertia in the installed base of people trained to work with existing practices.S. and many "downsizing. emphasizes the role of the constraint. under current conditions. However. many managers are still evaluated on their labor efficiencies." and other labor reduction campaigns are based on them. (referred to as the Archemedian constraint) in decision making. Contents [hide] • • • • • 1 History 2 The concepts of Throughput Accounting 3 Relevance 4 References 5 Category [edit] History When cost accounting was developed in the 1890's. Throughput Accounting improves profit performance with better management decisions by using measurements that more closely reflect the effect of decisions on three critical monetary variables (throughput. concentrated on how efficiently managers used labor since it was their most important variable resource. Goldratt argues that. from management practice. therefore. their cost is fixed rather than variable. Securities and Exchange Commission (SEC) and other local and international regulatory agencies and bodies. Now. Many cost and financial accountants agree with Goldratt's critique. labor efficiencies lead to decisions that harm rather than help organizations. workers who come to work on Monday morning almost always work 40 hours or more. Constraints accounting. removes standard cost accounting's reliance on efficiencies in general. [4]. which is a development in the Throughput Accounting field.accounting reports prepared by financial (public) accountants who apply Generally Accepted Accounting Principles(GAAP) issued by the Financial Accounting Standards Board (FASB) and enforced by the U. however. therefore. and operating expense — defined below). investment (AKA inventory). Workers often did not know how many hours they would work in a week when they reported on Monday morning because timekeeping systems were rudimentary. Cost accountants. [edit] The concepts of Throughput Accounting . and labor efficiency in particular. Throughput Accounting.

Goldratt's alternative begins with the idea that each organization has a goal and that better decisions increase its value. • Throughput (T) is the rate at which the system produces "goal units. T=Sales less TVC and NP=T less OE. throughput is net sales (S) less totally variable cost (TVC). Throughput Accounting uses three measures of income and expense: The chart illustrates a typical throughput structure of income (sales) and expenses (TVC and OE).TVC). to increase profit now and in the future. Throughput Accounting also pays particular attention to the concept of 'bottleneck' (referred to as constraint in the Theory of Constraints) in the manufacturing or servicing processes. Throughput Accounting applies to not-for-profit organizations too. Note that T only exists when there is a sale . generally the cost of the raw materials (T = S . but they have to develop a goal that makes sense in their individual cases." When the goal units are money [5] (in forprofit businesses). The goal for a profit maximizing firm is easily stated.

Will the proposed change: 1. ("Throughput" is sometimes referred to as "throughput contribution" and has similarities to the concept of "contribution" in marginal costing which is sales revenues less "variable" costs . Reduce investment (inventory) (money that cannot be used)? How? Reduce operating expense? How? The answers to these questions determine the effect of proposed changes on system wide measurements: 1. and other assets and liabilities. OE includes maintenance. OE is all expenses except the cost of the raw materials.) • Investment (I) is the money tied up in the system. Producing materials that sit in a warehouse does not form part of throughput but rather investment. utilities. This is money associated with inventory.of the product or service. . 3. Return on investment (ROI) = net profit / investment = NP/I TA Productivity = throughput / operating expense = T/OE 4." For physical products. taxes and payroll. machinery. Organizations that wish to increase their attainment of The Goal should therefore require managers to test proposed decisions against three questions. In earlier Theory of Constraints (TOC) documentation." Note that TOC recommends inventory be valued strictly on totally variable cost associated with creating the inventory." The preferred term is now only "investment."variable" being defined according to the marginal costing philosophy. rent. the "I" was interchanged between "inventory" and "investment. Net profit (NP) = throughput . Increase throughput? How? • 2. Operating expense (OE) is the money the system spends in generating "goal units. buildings. Investment turns (IT) = throughput / investment = T/I These relationships between financial ratios as illustrated by Goldratt are very similar to a set of relationships defined by DuPont and General Motors financial executive Donaldson Brown about 1920.operating expense = T-OE 2. Brown did not advocate changes in management accounting methods. not with additional cost allocations from overhead. 3. but instead used the ratios to evaluate traditional financial accounting data." Categories: Management accounting Personal tools . ^ Eliyahu M. ^ Eli Schragenheim and H William Dettmer Manufacturing at Warp Speed . See cost accounting for practical examples and a detailed description of the evolution of Throughput businesses that are internally constrained. [edit] Relevance One of the most important aspects of Throughput Accounting is the relevance of the information it produces. in strategy. ^ Eliyahu M. 2.Management Dynamics . 5. 3. ^ Eric Noreen .Throughput Accounting [6] is an important development in modern accounting that allows managers to understand the contribution of constrained resources to the overall profitability of the enterprise.wikipedia.The Haystack Syndrome (pp 19) ISBN 0-88427-089-0. Goldratt .Throughput Accounting . 7. 4.ISBN 978-0884271161. Drum Buffer Rope (DBR) .ISBN 978-0471-25109-5. Throughput Accounting reports what currently happens in business functions such as operations.ISBN 1-57444-293-7 [edit] Category Retrieved from "http://en.Theory of Constraints and its Implications for Management Accounting . Goldratt . ^ John A. [edit] References 1. Goldratt and Jeff Cox .The Goal . ^ Eliyahu M. etc.Throughput Accounting .ISBN 0-620-21256X.ISBN 0-471-67231-9. ^ Thomas Corbett .in businesses that are externally constrained particularly where the lack of customer orders denotes a market constraint. ^ Steven Bragg .Critical Chain . 8. distribution and marketing.ISBN 0-62033597-1. Simplified Drum Buffer Rope (S-DBR) [8] . It does not rely solely on GAAP's financial accounting reports that still need to be verified by external auditors and is thus relevant to current decisions made by management that affect the business now and in the future.ISBN 088427-158-7. Throughput Accounting is used in critical chain project management (CCPM) [7]. Caspari and Pamela Caspari . planning and tactics.

• • New features Log in / create account Namespaces • Article Discussion Variants Views • Read • • • Edit View history Actions Search Top of Form Special:Search Search Bottom of Form Navigation • Main page • • • • Contents Featured content Current events Random article Interaction • About Wikipedia • • • • • Community portal Recent changes Contact Wikipedia Donate to Wikipedia Help Toolbox • What links here .

. additional terms may apply. and revenues and expenses. See Terms of Use for details. • • • • • • • Financial accounting Hide links within definitionsShow links within definitions Definition Field of accounting that treats money as a means of measuring economic performance instead of (as in cost accounting) as a factor of production. Financial accounting gathers and summarizes . It encompasses the entire system of monitoring and control of money as it flows in and out of the firm as assets and liabilities. Wikipedia® is a registered trademark of the Wikimedia Foundation. Inc. Contact us Privacy policy About Wikipedia Disclaimers • This page was last modified on 28 May 2010 at 00:20. a non-profit organization.• • • • • Related changes Upload file Special pages Permanent link Cite this page Print/export • Create a book • • Download as PDF Printable version Text is available under the Creative Commons AttributionShareAlike License.

and lenders) management accounting generates monthly or weekly reports for the firm's internal audiences such as department managers and the chief executive officer. Unlike financial accounting (which produces annual reports mainly for external stakeholders such as creditors. outstanding debts. lenders. and other statistics. state of accounts payable and accounts receivable. variance analysis. and may also include trend charts. and other stakeholders. suppliers. tax authorities. Also called managerial accounting. investors. and a continuous monitoring and adjustment of performance against them. amount of orders in data to prepare financial reports such as balance sheet and income statement for the firm's management. Also called incremental costing budgetary control Hide links within definitionsShow links within definitions DefinitionMethodical control of an organization's operations through establishment of standards and targets regarding income and expenditure. Rate: . marginal costing Hide links within definitionsShow links within definitions Definition Decision making approach in which marginal costs are used as the basis for choosing which product to make or which process to use. investors. Rate: management accounting Hide links within definitionsShow links within definitions Definition Process of preparing management accounts that provide accurate and timely key financial and statistical information required by managers to make day-to-day and short-term decisions. sales revenue generated. raw material and in-process inventory. These reports typically show the amount of available cash.

Accounting entity (similar to a bank account) for recording expenditures and revenues associated with a specific activity. 4. Popular term for mutual fund kaizen Hide links within definitionsShow links within definitions Definition:Japanese term for a gradual approach to ever higher standards in quality enhancement and waste reduction.Rate: backflush costing Hide links within definitionsShow links within definitions Definition:Method of costing a product that works backwards: standard costs are allocated to finished products on the basis . Two common methods of cash-budgeting are (1) Adjusted net income approach and (2) Cash receipts and disbursements budget Hide links within definitionsShow links within definitions Definition:Financial plan that is a summary of estimated receipts (cash inflows) and payments (cash outflows) over a stated period. 3. See also funds. fund Hide links within definitionsShow links within definitions Definitions (4) 1. or project. To finance or underwrite a business. 2. through small but continual improvements involving everyone from the chief executive to the lowest level workers. Popularized by Mosaki Imai in his books 'Kaizen: The Key To Japan's competitive Success. program. Sum of money set aside and earmarked for a specified purpose.

Also called backflush accounting. (3) activities are the cost drivers. This number is computed by referring to the number of parts withdrawn from the inventory (and delivered to the shopfloor) and the number of parts assumed (according to the bill of materials) to have been consumed in a manufacturing line at one or more deduct points. It is a more sophisticated kind of absorption-costing and replaces labor based costing system. and usually eliminates separate accounting for work-in-process. (2) it is the activities (and not the products) that consume resources. Rate: backflushing Hide links within definitionsShow links within definitions Definition:Process of determining the number of parts that must be subtracted from inventory records. activity based costing (ABC) Hide links within definitionsShow links within definitions Definition:Cost accounting approach concerned with matching costs with activities (called cost drivers) that cause those costs. ABC states that (1) products consume activities. target costing Hide links within definitionsShow links within definitions Definition Product costing method in which a final cost is determined after market analysis. and (4) that activities are not necessarily based on the volume of production. See also target cost. Used where inventory is kept at minimum (as in 'just in time' operations) this method obviates the need for detailed cost tracking required in absorption costing. marketing.of the output of a repetitive manufacturing process. finance). and the product is designed or redesigned to meet it. ABC . Instead of allocating costs to cost centers (such as manufacturing.

attending to a customer complaint.cost technique. MARGINAL COSTING VS. in the form of direct materials. Where as Absorption costing. or setting up a machine. a technique of costing which includes only variable manufacturing costs . In the costing of product/service. K. Sikdar. where as total fixed costs are fixed and per unit fixed cost is variable in nature and furthermore variable costs are controllable in nature. direct labour.allocates direct and indirect costs to activities such as processing an order. because per unit variable cost is fixed and total costs are variable in nature. Developed by professors Robert Kaplan and Robin Cooper of Harvard University in late 1980's. A subset of activity based management (ABM). is a costing technique that includes all manufacturing costs. Faculty EIRC of ICWAI Marginal costing is also termed as variable costing. while determining the cost per unit of a product. a marginal costing technique considers the behavioural characteristics of costs (segregations of costs into fixed and variable elements). ABSORPTION COSTING: A PARCTICAL PERESPECTIVE P. direct labour. and both variable and fixed manufacturing overheads. Sr. and variable manufacturing overheads while determining the cost per unit of a product. while total fixed costs are un-controllable . it enables management to better understand (a) how and where the firm makes a profit. It is also referred to as the full. (b) indicates where money is being spent and (c) which areas have the greatest potential for cost reduction. in the form of direct materials.

Absorption costing gives better information for pricing products as it includes both variable and fixed costs. In the context of costing of a product/service. Customers may still expect these lower prices as demand/capacity increases. where as in absorption costing technique these are absorbed into the cost of goods produced and are only charged against profit in the period in which those goods are sold. Marginal costing is useful for short-term planning. the contribution is calculated after deducting variable costs from sales value with reference to each product or service. In absorption costing technique. Marginal costing technique treats fixed manufacturing overheads as period costs. an absorption costing considers a share of all costs incurred by a business to each of its products/services. costs incurred in relation to other business functions are deducted to arrive at the net profit. As the fixed costs are treated as period costs. In . particularly in a business where multi-products are produced. costs are classified according to their functions. are deducted from total contribution to arrive at net profit. Marginal costing may lead to lower prices being offered if the firm is operating below capacity. In marginal costing technique. in order to calculate the total contribution from all products/services which are made towards the total fixed costs incurred by the business. control and decision-making. Profit Statements under Marginal and Absorption Costing: The net profit shown by marginal costing and absorption costing techniques may not be the same due to the different treatment of fixed manufacturing overheads. The gross profit is calculated after deducting production costs from sales and from gross nature.

Terms explained: Product and Period Costs: 1 Product costs: the costs of manufacturing the products. (’000) 720 Sales Production costs : 432 .absorption costing income statement. or written off to the income statement each period. debited to.000 Rs. A Case Example on Marginal and Absorption Costing: Data for a Quarter for a manufacturing company:— Level of Activity Sales and Production(Units) 60% 36. (’000) 100% 60. 2 Period costs: these are the costs other than product costs that are charged to.000 Rs. adjustment pertaining to under or over-absorption of overheads is also made to arrive at the profit.

00 0 Re.00 0 Rs. in which 16. Actual fixed costs were the same as budgeted.50.) Total costs of 60.000 1. Marginal costing can be worked out as under:— Production Costs (Rs.(Variable and fixed) Sales.000 24.000 units Variable costs per unit 1. There were no stocks of the product at the start of the quarter.) . and fixed costs are incurred evenly throughout the year.000 units (fixed plus variable) Total costs of 36. Then.66.500 units were sold.000 units.000 5.000 units (fixed plus variable) Difference = variable costs of 24.44.000 Sales etc costs (Rs.6 Producti on Costs 3.26.10.) 1. distribution and administration costs (Variable and fixed) 366 510 126 150 The normal level of activity for the current year is 60.500 units were made and 13.1 Sales etc. various calculations regarding Absorption vs. Costs (Rs.

2.(Rs.250 (ii) Budgeted annual fixed production overhead = Rs.000 90.00 0 3.50 per unit.000 ÷ 60.1.5 00 .00 0 1.0 00 The rate of absorption of fixed production overheads will therefore be: Rs.2 50 3.50.00 0 1. 41.50.50 = Rs.10.000 Rs.500 units produced × Rs.000 ÷ 4) Production overhead absorbed into production [see (i) above] Over -absorption of fixed production overhead 41.75 0 37.50.60. (i) The fixed production overhead absorbed by the products would be 16. 2.000 units Fixed costs 5.000 = Rs.50.1.000 units Variable costs of 60.50. Actual quarterly fixed production overhead = budgeted quarterly fixed production overhead (1.000 60.) Total costs of 60.

1.(iii) (a) Profit statement for the quarter.5 00 22.5 00 36.50) ( units × full production cost of Rs.50) Less value of closing stock (3.14.000) 13.7 50 Sales etc costs Variable (13.50 0) 1.0 00 Profit 15.0 00 . 1) Fixed (1/4 of Rs.12) Costs of production (no opening stocks) Value of stocks produced (16. 8. Sales (13. 8. 90.500× Rs.500 × Re. using Absorption Costing Rs.7 50 3.00 0 Total cost of sales Less over-absorbed production overhead 1.00 0 1.750 1.62.2 50 Rs.40. Rs.500 × Rs.

6) Variable production cost of sales Variable sales etc.1) Total variable cost of sales (13. costs (13.500 × Rs. 5) Fixed Costs: Production Sales etc.500 × Re.00 0 Profit 7.0 00 81. 7) Contribution (13.(b) Profit statement for the quarter using Marginal Costing Rs.0 00 Conclusion: Hence.5 00 60. Profits as shown by Marginal and Absorption Costing techniques are not the same.5 00 94. 37.500 × Rs. due to the reasons explained above.0 00 18.62. Sales (13.5 00 22.50 0 Rs. .500 99.0 00 13.500×Rs. 6) Less value of closing stocks (3. 1.000 × Rs.12) Variable costs of production (16.50 0 67.500 × Rs.

Sign up to vote on this title
UsefulNot useful