17.

16-2(a)
Step 1
Flow of Production Physical Units
Work in process beginning (given) 0
Started during current period (given) 10,000
To account for 10,000
Completed and transferred out during current period 9,000
Work in process, ending 1,000
Accounted for 10,000
Equivalent units of work done to date

Total Production Costs

(Step 3)
Work in process, beginning (given) 0
Costs added in current period (given) 14,800,000
Total costs to account for 14,800,000
(Step 4)
Costs incurred to date 14,800,000
Divide by equivalent units of work done to date
Cost per equivalent unit of work done to date

17.18
Step 1
Flow of Production Physical Units
Work in process beginning (given) 8
Started during current period (given) 50
To account for 58
Completed and transferred out during current period 46
Work in process, ending 12
Accounted for 58
Equivalent units of work done to date
17.19
Total Production Costs
(Step 3)
Work in process, beginning (given) ₹ 5,844,000
Costs added in current period (given) ₹ 46,120,000
Total costs to account for ₹ 51,964,000
(Step 4)
Costs incurred to date ₹ 51,964,000
Divide by equivalent units of work done to date
Cost per equivalent unit of work done to date
Completed and transferred out during current period (46 units) ₹ 45,862,000
Work in process, ending (12 units) - breaked into 7.2 units of direct material and Total Work in Process
3.6 units of conversion costs from cells C29 & C30 ₹ 6,102,000
 Step 2
Direct Materials Conversion Costs

9,000 9,000
1,000 500

10,000 9,500

Direct Materials Conversion Costs

7,200,000 7,600,000
7,200,000 7,600,000

7,200,000 7,600,000
10,000 9,500
720 800

Step 2
Direct Materials Conversion Costs

46 46
7.20 3.60

53.20 49.60

Direct Materials Conversion Costs

₹ 4,933,600 ₹ 910,400
₹ 32,200,000 ₹ 13,920,000
₹ 37,133,600 ₹ 14,830,400

₹ 37,133,600 ₹ 14,830,400
53.20 49.60
₹ 698,000 ₹ 299,000
₹ 32,108,000 ₹ 13,754,000
₹ 5,025,600 ₹ 1,076,400
Net realisable value method Joint costs Buttercream
Joint Costs 24,000,000
Separable cost of processing 25,000 gallons
cream into 20,000 gallons of butter cream 2,800,000
Separable cost of processing 75,000 gallons liquid
skim into 50,000 gallons of condensed milk

Cooking Oil Soap Oil

Beginning inventory 0 0
Production (gallons) 1,000,000 500,000
Transfer to further processing 0 0
Sales (gallons) 1,000,000 500,000
Ending inventory 0 0
Selling price per gallons 50 25

Panel A Cooking Oil Soap Oil Total

Final sales value 50,000,000 12,500,000 62,500,000
Separable costs 30,000,000 7,500,000 37,500,000
Net realisable value after splitoff 20,000,000 5,000,000 25,000,000
Proportion of NRV 0.800 0.200
Joint costs allocated 19,200,000 4,800,000
Production costs per gallon 19.200 9.600

Panel B Cooking Oil Soap Oil Total

Revenue 50,000,000 12,500,000 62,500,000
COGS 19,200,000 4,800,000 24,000,000
Gross profit 30,800,000 7,700,000 38,500,000
GPM 61.60% 61.60% 61.60%
Ending inventory 0 0 0
Condensed milk

5,200,000
Net realisable value method Joint costs
Joint Costs 4,000,000
Separable cost for only Z

X Y Z
Beginning inventory 0 0 0
Production (gallons) 300 400 500
Transfer to further processing 0 0 0
Sales (gallons) 120 340 475
Ending inventory 180 60 25
Selling price per gallons 15,000 10,000 7,000

Panel A X Y Z
Final sales value 4,500,000 4,000,000 3,500,000
Separable costs 0 0 2,000,000
Net realisable value after splitoff 4,500,000 4,000,000 1,500,000
Proportion of NRV 0.450 0.400 0.150
Joint costs allocated 1,800,000 1,600,000 2,600,000
Production costs per gallon 6,000 4,000 5,200

Panel B X Y Z
Revenue 1,800,000 3,400,000 3,325,000
COGS 720,000 1,360,000 2,470,000
Gross profit 1,080,000 2,040,000 855,000
GPM 60.00% 60.00% 25.71%
Ending inventory 1080000 240000 130000
Z Panel A Amount in Rs.
Sales value of total productio ₹ 12,000,000
2,000,000 Total costs (joint and separab ₹ 6,000,000
Gross margin ₹ 6,000,000
GPM 50.00%

Panel B X Y Z
Sales value of total productio ₹ 4,500,000 ₹ 4,000,000 ₹ 3,500,000
Deduct gross margin ₹ 2,250,000 ₹ 2,000,000 ₹ 1,750,000
Total production costs ₹ 2,250,000 ₹ 2,000,000 ₹ 1,750,000
Separable costs ₹ - ₹ - ₹ -
Joint costs ₹ 2,250,000 ₹ 2,000,000 ₹ 1,750,000
Total production costs per ga ₹ 7,500 ₹ 5,000 ₹ 3,500
Total
12,000,000 Panel C X Y Z
2,000,000 Revenue ₹ 1,800,000 ₹ 3,400,000 ₹ 3,325,000
10,000,000 Joint Costs Allocated ₹ 2,250,000 ₹ 2,000,000 ₹ -250,000
Separable Costs ₹ - ₹ - ₹ 2,000,000
6,000,000 COGS ₹ 2,250,000 ₹ 2,000,000 ₹ 1,750,000
Ending inventory ₹ 1,350,000 ₹ 300,000 ₹ 87,500
Gross profit ₹ 900,000 ₹ 1,700,000 ₹ 1,662,500
Total GPM 50.00% 50.00% 50.00%
8,525,000
4,550,000
3,975,000
46.63%
1450000
Total
₹ 12,000,000
₹ 6,000,000
₹ 6,000,000

Total
₹ 8,525,000

₹ 6,000,000
₹ 1,737,500
₹ 4,262,500
50%
 Joint Costs
Joint costs (costs of 1,10,000 gallons raw milk and 53,000

Cookies/Soymeal ( Soyola/Soy Oil (gallons)

Beginning inventory 0 0
Production (gallons) 575 160
Sales (gallons) 575 160
Ending inventory 0 0
Selling price per gallons 124 425

Sales Value at Split Method

Panel A Soymeal (pounds) Soy Oil (gallons) Total
Sales value of total production at splitoff point 71,300 68,000 139,300
Proportion of total sales 0.512 0.488
Joint costs allocated 27,128 25,872 53,000
Joint costs per gallon 47 162

Panel B Soymeal (pounds) Soy Oil (gallons)

Revenue 71,300 68,000 139,300
COGS 27,128 25,872 53,000
Gross profit 44,172 42,128 86,300
GPM 62% 62%
Ending Inventory 0 0 0
 Net Realizable Value Method
Cookies (pounds) Soyola (quarts)
Beginning inventory 0 0
Production (gallons) 725 640
Sales (gallons) 725 640
Ending inventory 0 0
Selling price per gallons 224 135

Soymeal (pounds) Soy Oil (gallons) Total

Final sales value 162,400 86,400 248,800
Separable costs 38,000 24,000 62,000
Net realisable value after splitoff 124,400 62,400 186,800
Proportion of NRV 0.67 0.33
Joint costs allocated 35,296 17704 53,000
Production costs per gallon 49 28

Panel B Soymeal (pounds) Soy Oil (gallons)

Revenue 162,400 86,400 248,800
COGS 35,296 17,704 53,000
Gross profit 127,104 68,696 195,800
GPM 78% 80% 79%
Ending Inventory 0 0 0

Cookies/Soy Meal Soyola/Soy Oil

2 Revenue if sold at split off 71,300 68,000
Process further NRV 124,400 62,400
Profit(/Loss) from processing furt 53,100 -5,600

SP should prcess soymeal into cookies which increases profit by

53,100/- whereas refrain from processing soyoil into soyola as they
are incurring a loss of 5600 by processing soy oil further
 15.24
A/H IS GOVT CORP
A/H 0.25 0.4 0.35 1
IS 0.1 0.3 0.6 1

Direct Method A/H IS GOVT CORP

Departmental Cost Before Allocation 600000 2400000 8756000 12452000
Allocation: A/H 600000 320000 280000
Allocation: IS 2400000 800000 1600000

Step down Method (allocating A/H First) A/H IS GOVT CORP

Departmental Cost Before Allocation 600000 2400000 8756000 12452000
Allocation: A/H 150000 240000 210000 600000
Allocation: IS 255000 2550000 765000 1530000 2550000

Step Down Method A/H IS GOVT CORP

Departmental Cost Before Allocation 600000 2400000 8756000 12452000
Allocation: A/H - 150000 240000 210000
Allocation: IS 240000 - 720000 1440000

Reciprocal Method A/H IS GOVT CORP

Departmental Cost Before Allocation 600000 2400000 8756000 12452000 600000
Allocation A/H 2400000
A/H & IS Support Departments
GOVT & CORP Operating Departments
Question No.
Budget for January 2018
1 Revenue Budget Royal Bucket Royal Drum
Units 60000 40000
Selling price 165 250
Total revenue ₹ 19,900,000

2 Production budget Royal Bucket Royal Drum

Beginning Inventory 20000 8000
Number produced 65000 41000
Total requirements for sale 85000 49000
Numbers to be sold 60000 40000
Ending inventory 25000 9000

3 Direct materials usage budget A B C

Physical units budget:
Beginning inventory 32000 29000 6000
Purchases 469000 256000 42000
Materials avaiable for production 501000 285000 48000
Materials consumed 465000 253000 41000
Ending inventory 36000 32000 7000
4 Cost budget:
Beginning inventory ₹ 384,000 ₹ 145,000 ₹ 18,000
Budgeted Purchases ₹ 5,628,000 ₹ 1,280,000 ₹ 126,000
Cost of materials available for production ₹ 6,012,000 ₹ 1,425,000 ₹ 144,000
Cost of materials consumed ₹ 5,580,000 ₹ 1,265,000.00 ₹ 123,000

5 Direct Manufacturing labor budget Royal Bucket Royal Drum

Produced Units 65000 41000
DML per product (hrs) 2 3
Total labor hours 130000 123000
Wage rate per hour ₹ 12 ₹ 16
Total direct manufacturing labor ₹ 1,560,000 ₹ 1,968,000 ₹ 3,528,000

6 Manufacturing overhead budget Royal Bucket Royal Drum

Variable manufacturing overhead ₹ 2,600,000 ₹ 2,460,000
Fixed manufacturing overhead ₹0 ₹0
Total manufacturing overhead ₹ 2,600,000 ₹ 2,460,000 ₹ 5,060,000
Royal Bucket Royal Drum
6 Budgeted manufacturing overhead rate ₹ 20 ₹ 20

7 Budgeted manufacturing overhead cost per unit ₹ 40 ₹ 60

8 Budgeted cost of a snowboard Royal Bucket Royal Drum

Direct Materials
A ₹ 48 ₹ 60
B ₹ 10 ₹ 15
C ₹0 ₹3
Direct Manuf Labor cost ₹ 24 ₹ 48
Manufacturing overhead ₹ 40 ₹ 60
Total cost ₹ 122 ₹ 186
Finished Inventory Expected ₹ 3,050,000 ₹ 1,674,000
Given SP of equipment increase 10% 1.1
Increase in Equipment sales in units 6% 1.06
Increase in Units of maintenance contracts 6% 1.06
Cost of each of units sold 3% 1.03
Marketing Costs increase by ₹ 25,000
Administration Costs remain same ₹ 90,000
Increase in Distribution costs is same as increase in number of
units 6% 1.06
Customer Maintenance Costs ₹ 130,000

Revenues
Equipment ₹ 699,600
Maintenance Contracts ₹ 190,800
Total revenues ₹ 890,400
Cost of Goods Sold ₹ 502,228
Gross Margin ₹ 388,172
Operating Costs
Marketing Costs ₹ 85,000
Distribution Costs ₹ 15,900
Customer Maintenance Costs ₹ 113,000
Administrative Costs ₹ 90,000
Total Operating Costs ₹ 303,900
Operating Income ₹ 84,272
Given Fixed Costs April May
Fixed Manuf Costs 20000000 20000000
Operating Costs 6000000 6000000

Variable Costing
Absorption Costing
April May Revenues
Beginning Inventory 0 150 Beginning Inventory
Production 500 400 Variable Manuf costs
Goods Available for Sale 500 550 Cost of Goods Available for Sale
Units Sold 350 520 Ending Inventory
Ending Inv 150 30 Variable cost of goods sold
Variable operating costs
Total manuf. Costs per unit Total variable Costs
Fixed Manuf Costs 20000000 20000000 Contribution Margin
Units produced 500 400 Fixed Manuf Costs
Fixed Manuf Costs per uni 40000 50000 Fixed Operating Costs
Variable Manuf Costs per 100000 100000 Total Fixed Costs
Total Manuf. Costs 140000 150000 Operating Income

Abosorption Costing
Revenue
Cost of Goods Sold
Beginning Inventory
Variable Manufacturing Costs
Fixed Manufacturing Costs
Costs of Goods Available for sale
Deducting Ending Inventory
Cost of Goods Sold
Gross Margin
Operating Costs
Variable Operating Costs
Fixed Operating Costs
Total Operating Costs
Operating Income
 Absoprtion Costing Operating - Variable Costing Operating
April May Income Income
₹ 84,000,000 ₹ 124,800,000
₹0 ₹ 15,000,000
₹ 50,000,000 ₹ 40,000,000
₹ 50,000,000 ₹ 55,000,000
₹ 15,000,000 ₹ 3,000,000
₹ 35,000,000 ₹ 52,000,000
₹ 10,500,000 ₹ 15,600,000
₹ 45,500,000 ₹ 67,600,000
₹ 38,500,000 ₹ 57,200,000
₹ 20,000,000 ₹ 20,000,000
₹ 6,000,000 ₹ 6,000,000
₹ 26,000,000 ₹ 26,000,000
₹ 12,500,000 ₹ 31,200,000

₹ 84,000,000 ₹ 124,800,000

0 21000000
50000000 40000000
20000000 20000000
70000000 81000000
21000000 4500000
49000000 76500000
₹ 35,000,000 ₹ 48,300,000 Gross Margin = Revenue - COGS

10500000 15600000
6000000 6000000
16500000 21600000
₹ 18,500,000 ₹ 26,700,000
e Costing Operating = Fixed Manufacturing Costs in - Fixed Manufacturing Costs in
Income Ending Inventory Beginning Inventory
Given Fixed Costs Jan-01
Fixed Manuf Overhead Costs 14400000
Fixed Operating Costs 10800000

Absorption Costing
Jan-01
Beginning Inventory 85000
Production 294900
Goods Available for Sale 379900
Units Sold 345400
Ending Inv 34500

Total manuf. Costs per unit

Fixed Manuf Costs ₹ 14,400,000
Units produced ₹ 345,400
Fixed Manuf Costs per unit ₹ 42
Variable Manuf Costs per unit ₹ 51
Total Manuf. Costs ₹ 93

Total Operating Costs

Variable Operating Cost per uni 3799400
Fixed Operating Costs 10800000
Total Operating Costs 14599400
Variable Costing Absoprtion Costing Operating
Jan-01 Income
Revenues ₹ 75,988,000
Beginning Inventory ₹ 4,335,000
Variable Manuf costs ₹ 15,039,900
Cost of Goods Available for Sale ₹ 19,374,900
Ending Inventory ₹ 1,759,500
Variable Costs
Variable cost of goods sold ₹ 17,615,400
Variable operating costs ₹ 3,799,400
Total variable Costs ₹ 21,414,800
Contribution Margin ₹ 54,573,200
Fixed Costs
Fixed Manuf Costs ₹ 14,400,000
Fixed Operating Costs ₹ 10,800,000
Total Fixed Costs ₹ 25,200,000
Operating Income ₹ 29,373,200

Fixed manufacturing overhead allocation rate ₹ 2,400

Fixed manufacturing overhead allocation rate per unit ₹ 48

Abosorption Costing
Revenue ₹ 75,988,000
Cost of Goods Sold
Beginning Inventory ₹ 8,415,000
Variable Manufacturing Costs ₹ 15,039,900
Fixed Manufacturing Costs ₹ 14,155,200
Adjusting for manufacturing vari ₹ 244,800
Costs of Goods Available for sale ₹ 37,854,900
Deducting Ending Inventory ₹ 3,415,500
Cost of Goods Sold ₹ 34,439,400
Gross Margin ₹ 41,548,600 Gross Margin = Revenue - COGS
Operating Costs
Variable Operating Costs ₹ 3,799,400
Fixed Operating Costs ₹ 10,800,000
Total Operating Costs ₹ 14,599,400
Operating Income
- Variable Costing Operating = Fixed Manufacturing Costs in - Fixed Manufacturing Costs
Income Ending Inventory Beginning Inventory
Fixed Manufacturing Costs in
Beginning Inventory
3.42 a Fixed Cost 60000000
Contributi 75000000
Units Sold 200000
Breakeven 160000
SC DC
b Units Sold 150000 500000 650000
Revenues ₹ 150,000,000 ₹ 75,000,000 ₹ 225,000,000
VC ₹ 105,000,000 ₹ 45,000,000 ₹ 150,000,000
CM ₹ 45,000,000 ₹ 30,000,000 ₹ 75,000,000
FC ₹ 36,000,000 ₹ 24,000,000 ₹ 60,000,000
Operating ₹ 9,000,000 ₹ 6,000,000 ₹ 15,000,000

Breajeven 120000 400000

c SC DC
Units Sold 180000 20000 200000
Revenues ₹ 180,000,000 ₹ 30,000,000 ₹ 210,000,000
VC ₹ 126,000,000 ₹ 18,000,000 ₹ 144,000,000
CM ₹ 54,000,000 ₹ 12,000,000 ₹ 66,000,000
FC ₹ 36,000,000 ₹ 24,000,000 ₹ 60,000,000
Operating ₹ 3,600,000 ₹ 2,400,000 ₹ 6,000,000

Breajeven 120000 40000