QUESTION # 1

Ali & Co. is a manufacturing business. The following information relates to the year
ended 30 April 2005.

Rs.
Direct material 146,300
Direct labour 175,400
Factory overheads 83,800
Work in progress, 1 May 2004 10,000
Work in progress, 30 April 2005 10,000

REQUIRED: Calculate
1. Prime cost
2 Factory cost of production

QUESTION # 2
ABC is a manufacturer. The following balances were extracted from his books on 1
December 2010.
Rs.
Inventories (stocks) 1 January 2010:
Raw materials 14,700
Work in progress 23,570
Purchases of raw material 75,600
Direct factory wages 62,140
Factory Rent 28,000
Factory management salaries 31,500
Office salaries 41,600
Sundry office expenses 9,870
Carriage inwards 2,000
Purchase return 1,000
Factory heat and light 2,500
Additional information:
Inventories (stock) 31 December 2010:
Rs.
Raw material 16,250
Work in progress 18,780
Required:
Prepare the Statement of cost of goods manufactured
QUESTION # 3
Maqbool & company is a manufacturer. The following balances were extracted from the
books on 31 December 2011.
Rs.
Inventory at 1 January 2011
Raw materials 20,900
Work in progress 30,800
Purchases of raw materials 147,200
Royalties paid 10,000
Direct factory wages 85,960
Factory indirect expenses 23,450
Rent 30,000
Factory management salaries 36,000
Office salaries 28,500
Distribution costs 18,650
Carriage inward 15,000
Purchase return 9,000
General factory expenses 11,300
Plant and machinery (cost) 75,000
Office equipment (cost) 24,000
Provisions for depreciation: Plant and machinery 25,000
Provisions for depreciation: Office equipment 9,000

Additional information:
1. Inventory at 31 December 2011
Rs.
Raw materials 28,100
Work in progress 34,250
2. Rent is to be apportioned four fifths (4/5) to the factory and one fifth (1/5)
to the administration.
3. Depreciation is to be charged as follows:
i. Factory plant and machinery at 20% per annum using the
diminishing (reducing) balance method.
ii. Office equipment at 10% on cost using the straight-line method.

REQUIRED:
Prepare the Statement of cost of goods manufactured

QUESTION # 4
Following information relates to the Karachi Steel Manufacturing Company:
 Rs.
Direct materials 25,000
Indirect materials 5,000
Direct labour 30,000
Indirect labour 4,500
Factory overhead (excluding indirect materials and indirect labour) 15,000
Plant cost 500,000
Required: Compute the
i. Prime costs
ii. Conversion costs
iii. Cost of production

QUESTION # 5
Sugar Mills Limited. submits the following data on October 31, 2010, material put into
process Rs.42,300; direct labour is paid at the rate of Rs.7.8 and Rs.8.4 in department
A and B respectively. Department A worked 6125 hours and Department B reported
9875 hours. Factory overhead is applied on the basis of direct labour hours at the rate
of Rs.5 per hour in Department A and Rs.4.2 per hour in Department B.

Oct.1 Oct.31
Finished goods 11,300 9400
Work in process 17,300 19,425
Materials 15,000 19,200

Required: Determine
i. Total manufacturing cost
ii. Cost of goods manufactured
iii. Cost of goods sold

QUESTION # 6
From the following information prepare the Statement cost of cost of goods
manufactured and income statement for the year ending 31 December 19X6 and the
balance sheet as at 31
December 2012 for the firm of M. Ali.
 Rs. Rs.
Purchase of raw materials 258,000
Fuel and light 21,000
Administration salaries 17,000
Factory wages 59,000
Carriage outwards 4,000
Rent and rates 21,000
Sales 482,000
Returns inward 7,000
General office expenses 9,000
Repairs to plant and machinery 9,000
Stock at 1 January 2012
Raw materials 21,000
Work in progress 14,000
Finished goods 23,000
Sundry creditors 37,000
Capital account 457,000
Freehold premises 410,000
Plant and machinery 80,000
Debtors 20,000
Provision for depreciation on plant and
Machinery at 1 January 2012 8,000
Cash in hand 11,000
984,000 984,000
Make provision for the following:
1. Stock in hand at 31 December 2012
Raw materials 25,000
Work in progress 11,000
Finished goods 26,000
2. Depreciation of 10% on plant and machinery – straight line method
3. 80% of fuel and light and 75% of rent and rates to be charged to
manufacturing

QUESTION # 7
Hassan Textile Mills Limited. started in business on 1st January 2013 as a manufacturer of gaming
machines. The following figures are extracted from his records on 31 st December 2013.

Rs.
Sales (30,000 machines at Rs.30 each) 900,000
Plant and machinery (bought 1st January 2013) 80,000
Motor vans (bought 1st January 2013) 10,000
Administrative wages 18,000
Loose tools bought 6,400
Light and power 40,000
Building repairs 20,000
Raw materials bought 273,400
Salesmen’s salaries 29,000
Driver’s wages 24,000
Motor van expenses 5,000
Direct wages 302,000
General administration expenses 6,000
Indirect wages 54,000
Repairs to machinery 11,000
Rates and insurance 10,000

The following information is also made available to you:

1. The work in progress on 31st December 2013, valued at production cost was ￡55,000.
2. The closing stocks on 31st December 2013 were: Raw materials ￡13,400, Loose tools ￡2,400.
3. Depreciate motor vans 20%, plant and machinery 10%.
4. Allocate expenses as follows:
Factory Administration
Light and power 9/10 1/10
Building repairs 3/5 2/5
Rates and insurance 4/5 1/5

Required: Prepare the Statement of cost of goods manufactured

Question 8
Raw material (1-1-03)
Work-in-Process(1-1-03)
Finished Goods (1-1-03)
Sales
Sales return
Purchases of raw material
Administrative expense
Marketing expense
Indirect material
Indirect labour
4,500
12,500 Raw material (31-12-03) 32,000
6,300 Work-in-Process(31-12-03) 16,500
12,500 Finished Goods(31-12-03) 25,000
678,600 Direct labour
15,000 25,000
245,000 Other factory overhead 17,600
70,000 Repair and maintenance 10,000
55,000 Insurance-factory 12,000
8,000 Depreciation-factory 22,000

Required:
i. Statement of cost of goods manufactured
ii. Income Statement

QUESTION # 9
The Delta Company manufactures small stuffed gorillas. The total revenue is Rs.59,000

The Company incurred the following costs:

 Rs.
Materials 5,200 (10% is indirect materials)
Labour 7,000 (12% is indirect labour)
Factory overhead 25,000 (including indirect materials and indirect labour)
General expenses 14,700
Office salaries 4,800
Equipment purchased 5,300
Total 62,000
There were no units still in process at the end of the year, and 92% of the goods
produced during the year were sold.

Required: Prepare Income Statement showing net income or loss.

QUESTION # 10
During the month of August, Binder Electronics applied overhead to jobs using an
overhead rate of 150% direct labour cost. Direct labour in August was Rs.65,000.
Actual overhead in August was Rs.140,000. Assume that actual overhead was
composed of the following items.
Rs.
Indirect material 20,000
Indirect labour 45,000
Utilities 5,000
Depreciation 50,000
Repair expense 20,000
REQUIRED:
a. Calculate over/under applied overhead
b. What would impact of be over/under applied overhead on cost of
product?
.