EXERCESANDASSI

GMENT
EXERCES1
Bleasi
ng Nig.Lt
d pr
esenty
ouwi
tht
hef
oll
owi
ng i
l
lust
rat
ionconcer
ning t
hey
earendend
31/12/2019
Unitproduced 60,
000uni
ts
Directmat eri
als ₦2/uni t
Directl
abour ₦3/uni t
Var i
abl
epr oductionO/H ₦1/uni t
Fi
xedpr oducti
onO/ H ₦140,000
Unitsold 60,
000uni t
s
Salescommi ssion 50kobo/unit
Otherfixedcost ₦80,
000
Selli
ngpr i
ce ₦18/unit
Required:
Preparedt heincomestat
ementusi ngMargi
nalCostTechni
ques(
MCT)

Mar
ginal
CostTechni
ques
1.Cal
cul
ati
onoft
heVar
iabl
epr
oduct
ioncostperuni
t

DM ₦2
DL ₦3
V/
prod O/H ₦1
₦6
2.Cal
cul
ati
onoftheVar
iabl
ecostofgoodssol
d
Uni
tsol
dxVariabl
eCostperuni
t
60,
000x₦6 =₦360, 000

3.Preparat
ionofthei
ncomestat
ementusi
ngMCT
₦ ₦
Sales[SPXUnitSol
d( ₦18x60,
000)
] 1,
080,
000
Less:costofgoodsol
d 360,
000
720,
000
Less:
Salescommi ssi
on[
SC/
uni
tpr
oduce(
50/
100x60,
000)
]30,000
690,
000
Less:
Fixedcost
Fixedprod.O/H 140,
000
Otherfi
xedcost 80,
000 220,
000
NetProfi
t 470,
000

1
EXERCES2
StarModer nShoemaker sCompanyLi mi t
ed,Wambai ,Kano,foundt hattheirproductioncosts
forthe2000account ingy earhadbeenasf ol
lows:
₦
Directwages 8,000,
000
Directmat erialcost 5,
000,000
Directexpenses 1,
500,000
Product i
onov erheadcost 2,
400,000
Totalshoemanuf actured 160,000units
Machi net i
meused 10,000hour s
DirectLabourt i
meused 40,000hour s
500pai r
sofshoeswer epr oduceddur ingthefi
rstt woweeksoft hey earasasi ngl
ejob,which
hadadi r
ectwagescostofN8, 000,di r
ectmat erialcostofN5, 000anddi rectexpensesof
N1,500. Thecompanyappor ti
onsf i
xedov erheadcostusi ngtheper centager at
eondi rect
wagesandchar gesadmi ni
str
ativeexpensesandsel li
ngexpensesatt her ateof15%and10%
respect i
velyofpr oductioncost.
Required: Determi nethef ol
lowing:
(a)Product ioncost
(b)Tot alcost
(c)Costperpai rsofshoe
SOLUTI ON
StarModer nShoemaker sCompanyLt d,Wambai ,Kano
Comput ati
onofPr oduct i
onCost&Tot alCost
₦
Directwages 8,
000
Directmat erialcost 5,
000
Directexpenses 1,
500
Primecost 14,
500
Product i
onOv erhead 2,
400
Product i
onCost 16,
900( a)
Admi n.expenses 2,
535
Selli
ngexpenses 1,
690
TotalCost 21,
125( b)
(c)Costperpai rofshoes=21, 125/500=N42. 25
Wor ki
ngs
1.%Rat eonDi r
ectwages= N2, 400,000x100=30%
N8,000,000
2.Pr oduct i
onOv erheadcostont hejob= 30%of8, 000=N2, 400
3.Admi nist
r ativeexpenses=15%of16, 900=N2335
4.Sel l
ingex penses= 10%of16, 900=N1690

2
 ASSI
GMENT
1.Bleasi
ngNig.Lt
dpr
esenty
ouwi
tht
hef
oll
owi
ngi
l
lust
rat
ionconcer
ningt
hey
earendend
31/12/2019

Unitproduced 60,
000uni
ts
Directmat eri
als ₦2/uni t
Directl
abour ₦3/uni t
Var i
abl
epr oductionO/H ₦1/uni t
Fi
xedpr oducti
onO/ H ₦140,000
Unitsold 60,
000uni t
s
Salescommi ssion 50kobo/unit
Otherfixedcost ₦80,
000
Selli
ngpr i
ce ₦18/unit
Required:
Preparedt heincomestat
ementusi ngMargi
nalCostTechni
ques(
MCT)
2.Ment
ion5t
hef
eat
uresofj
obcost
ing

3.St
ate4di
ff
erencesbetweenjobcosti
ngandpr
ocesscost
ing
4.Menti
onf
ivefeat
uresofProcessCosti
ng