Assignment

Cost and Management Accounting

Date: May 04, 2022
Question 01:

The following data relates to the manufacture of a standard product during the
month of April:
Particulars (Amount)
Raw materials ₹ 1,80,000
Direct wages ₹ 90,000
Machine hours worked (hours) 10,000

Machine hour rate (per hour) ₹ 8

Administration overheads (general) ₹ 35,000
Selling overheads (per unit) ₹ 5
Units produced 4,000
Units sold 3,600
Selling price per unit ₹ 125

You are required to Prepare a cost sheet in respect of the above showing:
(i) Cost per unit
(ii) Profit for the month

Ans to the Que No. Q1

Particulars Calculation Total Cost Cost per (unit)
(₹) (₹)
A) Raw materials 1,80,000÷4,000 1,80,000 45.00
B) Direct wages 90,000÷4,000 90,000 22.50
C) Prime cost (A+B) 2,70,000 67.00
D) Factory overheads (10,000 hrs. × ₹ 8 per hour) ÷4,000 80,000 20.00
E) Cost of Production (C+D) 3,50,000 87.00
F) Opening Stock of FG N/A 0 --
G) Closing Stock of FG (4000 - 3600) units ×87.50 35,000 --
H) Cost of Goods Sold (E+F-G) 3,15,000 87.00
I) Administration overheads 35,000÷3,600 35,000 9.72
J) Selling overheads 3,600×₹5 18,000 5.00
K) Cost of sales (total Cost) (H+I+J) 3,68,000 102.22

ii) Profit for the Month

Particulars Calculation ₹
Sales Revenue (3,600 units @ ₹ 125) 4,50,000
Less: Cost of sales (total Cost) 3,68,000
Profit 82,000
Name: Srabon Barua
Registration No: AU/2021/0006623
Roll No: PG/13/MBABA/2021/008
Question 02:

Materials X and Y are used as follows:

Minimum usage - 50 units each per week
Maximum usage - 150 units each per week
Normal usage - 100 units each per week
Ordering quantities X = 600 units and Y = 1,000 units
Delivery period X = 4 to 6 weeks and Y = 2 to 4 weeks
Calculate for each material (i) Maximum level (ii) Minimum level and (iii) Ordering level.

Ans to The Que No: 02

Particulars Material X Material Y

i) Re-order stock level = 150 x6 150 x4
(Maximum Usage x Maximum Reorder = 900 Units = 600 Units
Period)
ii) Minimum stock level = 6+4 4+2
900-(100 x ) 600-(100 x )
2 2
Reorder level- (Average rate of consumption x
=400 Units =300 Units
Average Reorder Period)
iii) Maximum Stock level = 900+600-(50 x 4) 600+1,000-(50 x 2)
Reorder level + Reorder Quantity- (Minimum =1,300 Units =1,500 Units
Consumption x Minimum Reorder Period)

Question 03:

Ace Ltd. manufactures a product and the following particulars are collected for the year ended
March, 2013:
Monthly demand (units) 250
Cost of placing an order (₹) 100
Annual carrying cost (₹ per unit) 15
Normal usage (units per week) 50
Minimum usage (units per week) 25
Maximum usage (units per week) 75
Re-order period (weeks) 4–6
You are required to calculate:
(i) Re-order quantity
(ii) Re-order level
(iii) Minimum level
(iv) Maximum level

Name: Srabon Barua

Registration No: AU/2021/0006623
Roll No: PG/13/MBABA/2021/008
 Ans to The Que No: 03

𝟐 ×𝑪𝟎 ×𝑫
i) Re-order Quantity = EOQ = √ 𝑪𝒉
Note:
Annual demand of Raw Materials for (250×12) =3000 units of finished goods
= 52 weeks ×50 (Normal usage of raw materials) =2600 units of Raw materials
𝟐 ×𝟐𝟔𝟎𝟎 ×𝟏𝟎𝟎
So, Re-order Quantity = EOQ = √ 𝟏𝟓
=186 units

ii) Re-order level of Raw Materials = Maximum re-order period x maximum usage
= (6 x 75) = 450 units

iii) Minimum level of Raw Material = Re-order level – (normal usage x average re-order
period)

𝟔+𝟒
= 450 - (50 x 𝟐
) = 200 units

iv) Maximum level of Raw Materials = Re-order level + Re-order quantity – (minimum
usage x Minimum order period.)
= 450+186 – (25 x 4) = 536 Units

Name: Srabon Barua

Registration No: AU/2021/0006623
Roll No: PG/13/MBABA/2021/008