Cost and Management Accounting

Mid Term Suggested Answers

Sec B & C
Answer – 1
Total MD-A MD-B Maintenance
Basis
Actual overheads: --------------------- Rs. ---------------------
Indirect labor Direct labor 217,400 130,440 86,960 - 1 mark
Deprecation NBV 43,200 18,000 18,000 7,200 1.5 marks
Food expenses Employees 45,000 15,750 24,750 4,500 1.5 marks
Building expenses Floor space 54,000 21,600 21,600 10,800 1.5 marks
Other OH Given 112,800 - - 112,800 0.5 mark
185,790 151,310 135,300
Secondary apportionment:
Maintenance Labor hours 63,140 72,160 (135,300) 1 mark
248,930 223,470 -
Applied overheads [388,800 x 70%][4,000 x 40] 272,160 160,000
1 mark 1 mark
Overapplied /(Under) OH 23,230 (63,470)
0.5 mark 0.5 mark

Answer – 2

Beta Plus Units

Opening FG 1,500
FG Produced (balancing) 11,500 1 mark
Closing FG (800)
FG Sold 12,200

Process II Units
Opening WIP -
Transfer in (balancing) 14,000 1 mark
Closing WIP (2,500)
Output 11,500

Process I Units
Opening WIP 7,000
Input (balancing) 41,000 1.5 marks
NL [42,000 x 5%] (2,100) 0.5 mark
AL (300)
Closing WIP (3,600)
Output [14,000 x 3/1] 42,000 1 mark
 Cost and Management Accounting
Mid Term Suggested Answers
Sec B & C
Answer – 3

Cost of closing leather shoes inventory = 370 (W-1) x 1,470 (W-2)

= 543,900 1 mark

W-1
Closing leather shoes (pairs) = 200 + 2,000 - 1,830
= 370 1 mark

W-2
Cost of shoes manufactured: Rs. Rs.
Opening stock of leather 0.5 mark 150,000
Leather purchases [1,404,000 / 1.17] 1 mark 1,200,000
Closing stock of leather 0.5 mark (210,000) 1,140,000 0.5 mark
Direct labor 950,000 0.5 mark
Factory overheads:
Factory rent [800,000 x 50%] 1 mark 400,000
Other manufacturing overheads 0.5 mark 120,000
Indirect material 0.5 mark 90,000
Depreciation of factory assets 0.5 mark 250,000 860,000
2,950,000 0.5 mark

Rs. Pairs
Opening FG stock 284,000 200
FG manufactured 2,950,000 2,000
3,234,000 2,200

Average rate per unit [3,234,000 / 2,200] 1,470.00 2 marks

 Cost and Management Accounting
Mid Term Suggested Answers
Sec B & C

Answer – 4

Raw material:
Rs. Units Rate Marks
Opening stock [ 75,000 75 1,000 0.50
Purchases 500,000 400 1,250
Raw material consumed (150 x 2.5) (375) 1.00

Closing stock 100 1,250 using FIFO 0.50

Cost of closing stock [100 x 1,250] 125,000 1.00

Raw material consumed = opening stock + purchases - closing stock

=75,000 + 500,000 - 125,000
= 450,000 1.00

Cost of goods manufactured:

Rs.
Raw material consumed 450,000 0.50
Direct labour 120,000 0.50
Depreciation on plant and machinery 225,000 0.50
Factory manager’s salary 300,000 0.50
Indirect labour 645,000 0.50
Indirect material consumed 780,000 0.50
Other production overheads 60,000 0.50
Add: opening WIP 175,000 0.50
Less: closing WIP (86,000) 0.50
Cost of goods manufactured 2,669,000 0.50
 Cost and Management Accounting
Mid Term Suggested Answers
Sec B & C
Answer – 5

Mr. A Marks Rs.

Basic wages [160 x Rs. 500] 1 80,000
Overtime [24 x Rs. 500 x 1.4] 2 16,800
96,800

Mr. B
1,000 x Rs. 10 1 10,000
500 x Rs. 15 1 7,500
(140 – 30) x Rs. 20 1.5 2,200
19,700

Mr. C
Basic wages [300 x Rs. 160] 1 48,000
Bonus [(1.8 x 200 – 300) x 50% x Rs. 160] 1.5 4,800
52,800
 Cost and Management Accounting
Mid Term Suggested Answers
Sec B & C
Answer – 6
Total Vita Zita
Basis (W-1)
----------------------------- Rs. -------------------------------
P-01 Labor hours 252,000 148,819 103,181
P-02 Labor hours 360,000 169,279 190,721
318,098 293,902
2 marks 2 marks

Budgeted units 15,000 13,000

OAR per unit 21.21 22.61

1 mark 1 mark

Total labor hours: P-01 P-02

Vita [15,000 x 3] [15,000 x 4] 45,000 60,000
Zita [13,000 x 2.40] [13,000 x 5.20] 31,200 67,600
0.5 mark 0.5 mark
 Cost and Management Accounting
Mid Term Suggested Answers
Sec B & C

Answer – 7

Process I
Kgs Rs. Kgs Rs.
b/d - - Transfer out 9,200 555,956
Direct material 12,000 240,000 NL 500 5,000
Direct labor - 200,000 AL 300 18,129
FOH [200,000 x 120%] - 240,000 c/d 2,000 100,860

Process II
Kgs Rs. Kgs Rs.
b/d - - Transfer out:
Transfer in 9,200 555,956 - A 8,056 625,790
Direct material 15,000 450,000 - B 12,084 938,685
Direct labor - 300,000 Abnormal loss 1,060 82,341
FOH [300,000 x 150%] - 450,000 c/d 3,000 109,086

Process III
Kgs Rs. Kgs Rs.
b/d - - Transfer out 10,084 1,107,727
Transfer in 12,084 938,685 By product 0.5 mark 800 16,000
Direct labor - 150,000 c/d 1,200 114,972
FOH [150,000 x 100%] 150,000

WORKINGS
Quantity schedule Marks P-I P-II P-III
Opening WIP - - -
Transfer in 0.5/0.5 - 9,200 12,084
Material X 12,000 - -
Material Y - 15,000 -
Closing WIP (2,000) (3,000) (1,200)
10,000 21,200 10,884
NL [10,000 x 5%] 0.5 (500) - -
AL [10,000 x 3%] [21,200 x 5%] 0.5/0.5 (300) (1,060) -
By-product - - (800)
Output 0.5/0.5/0.5 9,200 20,140 10,084

Joint output:
- A [20,140 x 40%] 0.5 - 8,056 -
- B [20,140 x 60%] 0.5 - 12,084 -
- 20,140 -
 Cost and Management Accounting
Mid Term Suggested Answers
Sec B & C
Equivalent production
Process-I
Material Conversion
Completed units 100% 9,200 9,200
Abnormal loss 100% 300 300
Closing WIP:
- Material 100% 2,000
- Conversion 75% 1,500
11,500 11,000
1 mark 1 mark
Process-II
P-I New mat. Conversion
Completed units 100% 20,140 20,140 20,140
Abnormal loss 100% 1,060 1,060 1,060
Closing WIP:
-PI 100% 3,000
- New material 0% -
- Conversion 40% 1,200
24,200 21,200 22,400
1 mark 1 mark 1 mark
Process-III
P-II Conversion
Completed units 100% 10,084 10,084
Closing WIP:
- P-II 100% 1,200
- Conversion 50% 600
11,284 10,684
1 mark 1 mark
Cost per unit
Process-I
Mat-X Conversion
Current period cost
(Rs.) 240,000 440,000
Normal loss [500 x 10] (5,000) -
235,000 440,000
Eq. units 11,500 11,000
Cost per unit (Rs.) 20.43 40.00
1 mark 0.5 mark
Process-II
P-I Mat-Y Conversion
Current period cost
(Rs.) 555,956 450,000 750,000
Eq. units 24,200 21,200 22,400
Cost per unit (Rs.) 22.97 21.23 33.48
1 mark 0.5 mark 0.5 mark
 Cost and Management Accounting
Mid Term Suggested Answers
Sec B & C

Process-III
P-II Conversion
Current period cost
(Rs.) 938,685 300,000
By-product [800 x 20] (16,000) -
922,685 300,000
Eq. units 11,284 10,684
Cost per unit (Rs.) 81.77 28.08
1 mark 0.5 mark
Statement of evaluation
Process-I
Rs.
Cost of completed units [9,200 x (20.43 + 40)] 555,956 0.5 mark

Cost of AL [300 x (20.43 + 40)] 18,129 0.5 mark

Cost of Closing WIP:

- Material [2,000 x 20.43] 40,860
- Conversion [1,500 x 40] 60,000
100,860 0.5 mark

Process-II
Rs.
Cost of completed units [20,140 x (22.97 + 21.23 + 33.48)] 1,564,475

Allocated to:
- A 40% 625,790 0.5 mark
- B 60% 938,685 0.5 mark

Cost of AL [1,060x (22.97 + 21.23 + 33.48)] 82,341 0.5 mark

Cost of Closing WIP:

- P-l [3,000 x 22.97] 68,910
- Conversion [1,200 x 33.48] 40,176
109,086 0.5 mark

Process-III
Rs.
Cost of completed units [10,084 x (81.77+28.08)] 1,107,727 0.5 mark

Cost of Closing WIP:

- P-lI [1,200 x 81.77] 98,124
- Conversion [600 x 28.08] 16,848
114,972 0.5 mark
 Cost and Management Accounting
Mid Term Suggested Answers
Sec B & C

Answer – 8
(a)
Allocation / Apportionment
Items Basis Total Cutting Stitching Finishing Maint. Canteen Marks
----------------------------- Rs. million ---------------------------
Dep (build.) Area 40.00 13.64 10.91 7.27 4.55 3.64 1
Dep (P&M) Cost 18.00 6.00 9.00 3.00 - - 1
Indirect labor Given 54.00 11.00 12.00 13.00 10.00 8.00 0.5
Insurance (build.) Area 22.00 7.50 6.00 4.00 2.50 2.00 1
Power KWH 96.00 21.33 53.33 21.33 - - 1
Light
Gen. light 14.00 4.00 4.00 3.00 1.00 2.00
points 1
Machine
Repairs (P&M) 36.00 12.00 18.00 6.00 - -
hours 1
75.47 113.24 57.61 18.05 15.64
Secondary apportionment:
Canteen 4.69 4.69 5.47 0.78 (15.64) 1
Maintenance 4.71 8.47 5.65 (18.83) - 1

Total OH 84.87 126.41 68.73 - -

Basis 56,250 36,000 30,000 3

Labor Machine Labor
hours hours hours

OAR per hour (Rs.) 1,508.75 3,511.27 2,290.90 0.5

(b)
Cutting Stitching Finishing

OAR (Rs. per hour) 1,508.75 3,511.27 2,290.90

Actual hours 51,000 34,000 31,000
--------- Rs. million ---------
Applied FOH 76.95 119.38 71.02 1.5
(Over) / Under applied FOH (4.30) 9.00 3.75 1
Actual FOH 72.65 128.38 74.77 1

Total actual FOH of SG 275.80 0.5

 Cost and Management Accounting
Mid Term Suggested Answers
Sec B & C

Answer – 9
Jameel Ltd
Journal Entries
Particulars Debit (Rs.) Credit (Rs.)
a) RM Inventory 0.5 mark 22,000
Accounts Payable 22,000
b) 1 mark
WIP-Job 621 5,300
WIP-Job 622 7,400
WIP-Job 623 5,900
FOH Control 2,400
RM Inventory 21,000
c) RM Inventory 1 mark 600
WIP – Job 622 400
FOH Control 200
d) Accounts Payable 0.5 mark 800
RM Inventory 800
e) Wages control [38,000* x 75%] 28,500
Admin & selling [38,000 x 25%] 9,500
Payable to employees 1.5 marks 30,970
WHT Payable 7,030

* Payroll = 30,970 + 7,030 = 38,000

30,970
Payable to employees 0.5 mark 30,970
Cash
f) 1.5 marks
WIP-Job 621 6,420
WIP-Job 622 8,160
WIP-Job 623 6,320
FOH control (38,000 x 20%) 7,600
Wages control 28,500
g) FOH Control 0.5 marks 5,500
Cash 5,500
h) 1.5 marks
WIP-Job 621 (Rs. 6,420 × 80%) 5,136
WIP-Job 622 (Rs. 8,160 × 80%) 6,528
WIP-Job 623 (Rs. 6,320 × 80%) 5,056
FOH control 16,720

FOH control [16,720 – 15,300(W-2)] 1,420

Cost of sales 1 mark 1,420

i) FG – Job 621 23,436

FG – Job 622 2.5 marks 29,948 23,436
WIP-Job 621 (W-1) 29,948
WIP-Job 622 (W-1)
 Cost and Management Accounting
Mid Term Suggested Answers
Sec B & C
W-1
Job 621 = 6,580 + 5,300 + 6,420 + 5,136 = 23,436
Job 622 = 8,260 + 7,400 – 400 + 8,160 + 6,528 = 29,948

W-2
Actual FOH = 2,400 – 200 + 7,600 + 5,500 = 15,300