NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Cost & Management Accounting
Internal Assignment December 2023 Examination

Q1)
Ans:
Particulars Amount (Rs.)
Opening stock of materials 282,000
Add: Purchases 1,248,000
Add: Freight inward 48,000
Total 1,578,000
Less: Closing stock 300,000
Raw material consumed 1,278,000
Direct wages 357,600
(i) Prime cost 1,635,600
(ii) Add: Factory overheads:
Indirect wages 24,000
Repairs to plant and machinery 63,600
Rent, rates and taxes - Factory 18,000
Depreciation - Plant and
machinery 42,600
Electricity charges 72,000
Fuel 96,000
Manager's salary (20%) 14,400 330,600
(iii) Factory cost 1,966,200
(iv) Administrative overheads:
Salaries to administration staff 60,000
Freight outward 30,000
Rent, rates and taxes - Office 9,600
Travelling 18,600
Salesmen's salaries and
commission 50,400

Depreciation - Furniture 3,600

Director's fees 36,000
General charges 37,200
Manager's salary (80%) 57,600 303,000
(v) Cost of sale 2,269,200

Prime cost: Rs16,35,600

Factory overheads: Rs330,600
Factory cost: Rs19,66,200
Administrative overheads: Rs 303,000
Cost of sale: Rs 22,69,200

Q2)
Ans:
Labor turnover can be measured using various methods. Here, we will calculate labor turnover using
three different methods:

1. Separation Method

2. Replacement Method

3. Flux Method

Let's calculate the labor turnover using each method:

1. Separation Method:

Labor Turnover = (Number of workers who left during the period) / (Average number of workers during
the period)

Number of workers who left during the period = 50 (left on their own) + 80 (discharged) = 130

Average number of workers during the period = (Total workers at the beginning + Total workers at the
end) / 2

Average number of workers = (3,800 + 4,200) / 2 = 4,000

Labor Turnover (Separation Method) = 130 / 4,000 = 0.0325 or 3.25%

2. Replacement Method:

Labor Turnover = (Number of workers replaced during the period) / (Average number of workers during
the period)

Number of workers replaced during the period = 60 (appointed)

Average number of workers during the period (as calculated above) = 4,000

Labor Turnover (Replacement Method) = 60 / 4,000 = 0.015 or 1.5%

3. Flux Method:

Labor Turnover = [(Number of workers who left during the period + Number of workers replaced during
the period) / (Average number of workers during the period)] * 100

Number of workers who left during the period = 130 (as calculated in the Separation Method)

Number of workers replaced during the period = 60 (as calculated in the Replacement Method)

Average number of workers during the period (as calculated above) = 4,000

Labor Turnover (Flux Method) = [(130 + 60) / 4,000] * 100 = (190 / 4,000) * 100 = 4.75%

So, the labor turnover for Manas Ltd. in December 2022 is as follows:

- Separation Method: 3.25%

- Replacement Method: 1.5%

- Flux Method: 4.75%

Q3a)

Ans:
To prepare an income statement for each year based on absorption costing, we need to allocate both
variable and fixed manufacturing overhead to the cost of goods sold (COGS). Here's how to calculate the
COGS and then create the income statements for Year 1 and Year 2:

Selling price (Rs) 3

Year 1 Year 2
Sales (Units) 1500 1800
Production (Units) 2100 1500
Cost: (Rs.) (Rs.)
Variable manufacturing 1050 750
Fixed Manufacturing 1050 1050
Variable marketing and administration 1500 1800
Fixed Marketing and administration 600 600
Absorption Costing Income statement
(Amount in Rs)
Particulars Year 1 Year 2
A. Sales at Rs 3 per unit 4500 5400
B. Cost of Goods Sold
Cost of Production:
Variable Manufacturing cost 1050 750
Fixed Manufacturing cost 1050 1050
Cost of Production 2100 1800
Cost of manufacturing per unit 1 1.2
Add: Opening stock 600
Less: Closing stock 600 360
Cost of Goods sold 1500 2040
C. Gross Profit: (A) - (B) 3000 3360
D. Marketing and Administration cost:
Variable 1500 1800
Fixed 600 600
Total 2100 2400
E. Profit: (C) - (D) 900 960

Marginal or variable costing Income statement

(Amount in Rs)
Particulars Year 1 Year 2
A. Sales at Rs 3 per unit 4500 5400
B. Cost of Goods Sold
Cost of Production:
Variable Manufacturing cost 1050 750
Inventory calculation figure = variable
cost/Production 0.5 0.5
Add: Opening stock 300
Less: Closing stock 300 150
Cost of Goods sold (B) 750 900
C.Gross marginal contribution: (A) - (B) = (C) 3750 4500
D. Fixed and other Overhead costs
Fixed manufacturing cost: 1050 1050
Variable marketing and administration cost 1500 1800
Fixed marketing and administrative cost 600 600
Total 3150 3450
E.Profit: (C) - (D) 600 1050