MGT AC - Prob-New

Prob 1 Sterling auto is open from Monday to Friday
Some details are as follows :
No of cars serviced 2,080

Revenue 468,000
Less Op Expenses
Supplies (RM) 5,824
Wages on piece rate basis 104,000
Water / other variables 12,480
Supervisor / admin Salaries 65,000
Rent 36,000
Depreciation 5,000
Other F Costs 1,050
Total Cost 229,354
Income before taxes 238,646
The owner is toying with the idea of keeping it open on Saturdays too
He can hire a part time employee to substitute for the supervisor (who is
entitled to 2-day of off per week) - at $ 300 / day
The co may service an additional 10 cars on each Saturday.
Thus for 52 saturdays in a year
Qns What is the incremental Revenue / Total revised Revenue

What is the incremental cost / total Revised cost
What is the incremental Profit / Total revised Profit
Prob 2 Budgets
Santiago's Salsa need prepare a production cost budget for the month of May
The actual costs for the mont of April are as below
Units produced 25,000
Ingredient cost (Variable) Variable 20,000

Labour cost (variable) Variable 12,000
Rent (Fixed) Fixed 5,000
Depreciation Fixed 6,000
Others Fixed 1,000
1 Preapre a budget for May, for a sale of 30,000 units

2 Does the budget suggest that additional workers will be needed
3 Calculate the actual cost per unit in april and budgeted cost per unit in May
Prob 3 The above co is currently producing and selling 3,25,000 jars annually.
The jars sell for $ 5 each. The co is considering lowering the price
to $ 4.60. Suppose this action will increase the sales to 3,75,000
0 Units produced 25,000 325,000

0 0 0 5
Revenue 1,625,000
0.80 Ingredient cost (Variable) 20,000 260,000

0.48 Labour cost (variable) 12,000 156,000
Fixed Rent (Fixed) 5,000 60,000
Fixed Depreciation 6,000 72,000
Fixed Others 1,000 12,000
0 0 0 0
Total cost 560,000
Cost / unit 1.72
Profit 1,065,000
Gabon prepared the folloiwing budget for 2014 for his dept
($ 000's)
Sales 10,000
Salaries (fixed) 400
Commission (variable) 150
Advertising (fixed) 75
Office Rent (fixed) 3
Office supplies (variable) 2
The mgt suggested that the advt budget be increased to $ 100,000

The mgt suggested the sales be assumed at $ 11 Bn.
The same was to be achieved without adding to sales force
Gabon's occupies approximately 250 sft out of a total of 25,000 Sft of office space
The $ 3,000 charge is allocated to him based on the area occupied by his dept
towards Rent, utilities and janitor services
Prepare a Revised budget based on the above
Prob 1-4 At the end of 2014, Cyril, cfo for central products received the following report
for the company's plant in Minnesota
Description Budget Actual

Materials 3,200,000 3,500,000
Direct Labour 2,300,000 2,500,000
Supervisory Salaries 475,000 500,000
Utilities (Power. Water, Phone, cable, gas) 125,000 135,000
M/c Maintenance 350,000 380,000
Depr of Building 90,000 90,000
Depr of Equipment 250,000 255,000
Janitorial (Cleaning and Maint) 220,000 235,000
Total 7,010,000 7,595,000
Cyrils first thought was that the actual cost must be out of control, due the whopping variance
However, he realised that the budget was for a production level of 60,000. But the actual production
was 65,000.
Given the above, Which costs are likely to increase and which ones are likely to remain constant
What will be the revised budget
Per
Unit Present
NO 2,080
Revenue 225 468,000
Costs
Supplies (RM) 3 5,824

Wages 50 104,000
Water / other variables 6 12,480
Supervisor Salary 65,000
Rent 36,000
Depreciation 5,000
Other F Costs 1,050
Total Cost 0
Per unit Present New

No of cars serviced 1.00 2,080 2,600
Revenue 225.00 468,000 585,000
Esps
Supplies 2.80 5,824 7,280
Wages 50.00 104,000 130,000
Water / Other Var 6.00 12,480 15,600
Supervisor salary 65,000 300 80,600
Rent 36,000 36,000
Depre 5,000 5,000
Other F Cost 1,050 1,050
275,530
309,470
Budget for May
Apr
No of hrs No of hrs
Units produced 20 25,000
Ingredient cost (Variable) 0.80 20,000

Labour cost (variable) 0.48 600.0 12,000 720
Rent (Fixed) 5,000
Depreciation 6,000
Others 1,000
Total Cost 44,000

Unit cost 1.76
Unit cost Present

Units produced 25,000 30,000
Ingredient cost 0.80 20,000 24,000

600 Labour cost 0.48 12,000 14,400
Rent 5,000 5,000

Depreciation 6,000 6,000
Others 1,000 1,000
Total 44,000 50,400
Per unit cost 1.76 1.68
What is the Incremental cost associated with Increasing Prod/sales

What is the Incremental Revenue associated with reducing Unit price
Is it desirable to reduce the unit price
375,000 325,000 375,000

4.60 Units produced
1,725,000 sales 5.00 4.60
Revenue 1625000.0 1725000.0
300,000
180,000 Ingredient cost 260,000 300,000
60,000 Labour cost 156,000 180,000
72,000 0 0
12,000 Rent 60,000 60,000
Depreciation 72,000 72,000
624,000 Others 12,000 12,000
1.66 0
Total 560,000 624,000
1,101,000 Cost/ unit 1.72 1.66
Profit 1,065,000.0 1,101,000.0
Description fixed Var fixed Var
Sales 10,000.0 11,000.0
Salaries 400.0 400.0
Commission 150.0 165.0
Advt 75.0 100.0
Supplies 2.0 2.2
475.0 152.0 500.0 167.2

Non discretionary
Office Rent 3.0 3.0
Total 478.0 503.0
Description Unit Price

Sales 10,000.0 11,000.0
Salraies 400.0 400.0
Commission 150.0 165.0
Advt 75.0 100.0
Office Rent 3.0 3.0
Office supplies 0.02% 2.0 2.2
Total 630.0 670.2
P&L 9,370.0 10,329.8
60,000 65,000 65,000
Diff Description Budget Rev Budget Actual Diff

(300,000) Materials 3,200,000 3,466,667 3,500,000 (33,333)
(200,000) Direct Labour 2,300,000 2,491,667 2,500,000 (8,333)
(25,000) Supervisory Salaries 475,000 514,583 500,000 14,583
(10,000) Utilities 125,000 135,417 135,000 417
(30,000) M/c Maintenance 350,000 379,167 380,000 (833)
0 Depr of Building 90,000 90,000 90,000 0
(5,000) Depr of Equipment 250,000 250,000 255,000 (5,000)
(15,000) Janitorial 220,000 220,000 235,000 (15,000)
0 0
(585,000) Total 7,010,000 7,547,500 7,595,000 (47,500)
pping variance 60,000 65,000

he actual production Description Budget Actual Rev Bdgt
Materials 3,200,000 3,500,000 3,466,667
Direct Labour 2,300,000 2,500,000 2,491,667
remain constant Supervisory Salaries 475,000 500,000 514,583
Utilities 125,000 135,000 135,417
M/c Maintenance 350,000 380,000 379,167
Depr of Building 90,000 90,000 90,000
Depr of Equipment 250,000 255,000 250,000
Janitorial 220,000 235,000 220,000
Total 7,010,000 7,595,000 7,547,500

300
Addl Proposed
520 2,600
117,000 585,000
1,456 7,280
26,000 130,000
3,120 15,600
15,600 80,600
36,000
5,000
1,050
0
70,824 309,470
117,000
0
1,456
26,000
3,120
15,600
0
0
0
May
30000
24,000
14,400
5,000
6,000
1,000
50,400
1.68
Var
(33,333)
(8,333)
14,583
417
(833)
0
(5,000)
(15,000)
(47,500)
Div A Div B
Sales 10,000 15,000
Total Cost 11,000 13,000

Profit -1,000 2,000
Based on the above the management decided to close down division A. CEO salary is apportioned betw
Sales 10,000 15,000

Ceo salary 7,000 7,000
Other var Costs 4,000 6,000
Net Profit (1,000) 2,000
A Civil contract needs to register with PWD paying Rs . 10, 000

Before bidding for any contract. He regd himself after paying the same.
Post registration, he can bid for the following 2 contracts
A B
Revenue 50,000 60,000
Cost of Matl 30,000 32,000

Cost of Labor/ OHs 16,000 23,000
Regn fee (PWD) 10,000 10,000
Profit / (Loss) -6,000 ( 5, 000)
Decision ?
No Bid cont A
Rev 50,000
Matl cost 30,000

Lab/ Ohs 16,000
Regn fee 10,000 10,000
Net profit / Loss (10,000) (6,000)

Net Gain over no bid loss 4,000
4,000
sterling Auto workd from Monday to fridaySome details are as follows :

No of cars serviced 2,080
Revenue 468,000
Less Op Expenses
Supplies (RM) 5,824
Wages on piece rate basis 104,000
Water / other variables 12,480
Supervisor / admin Salaries 65,000
Rent 36,000
Depreciation 5,000
Other F Costs 1,050
Total Cost 229,354
The owner is toying with the idea of keeping it open on Saturdays too
He can hire a part time employee to substitute for the supervisor (who is
entitled to 2-day of off per week) - at $ 300 / day
The co may service an additional 10 cars on each Saturday.
Thus for 52 saturdays in a year
What is the incremental Revenue / Total revised Revenue

What is the incremental cost / total Revised cost
What is the incremental Profit / Total revised Profit
Gabon prepared the folloiwing budget for 2014 for his dept
($ 000's)
Sales 10,000
Salaries (fixed) 400
Commission (variable) 150
Advertising (fixed) 75
Office Rent (fixed) 3
Office supplies (variable) 2
The mgt suggested that the advt budget be increased to $ 100,000

The mgt suggested the sales be assumed at $ 11 Bn.
The same was to be achieved without adding to sales force
Gabon's occupies approximately 250 sft out of a total of 25,000 Sft of office space
The $ 3,000 charge is allocated to him based on the area occupied by his dept
towards Rent, utilities and janitor services
Prepare a Revised budget based on the above
At the end of 2014, Cyril, cfo for central products received the following report
for the company's plant in Minnesota
Description Budget Actual

Materials 3,200,000 3,500,000
Direct Labour 2,300,000 2,500,000
Supervisory Salaries 475,000 500,000
Utilities 125,000 135,000
M/c Maintenance 350,000 380,000
Depr of Building 90,000 90,000
Depr of Equipment 250,000 255,000
Janitorial 220,000 235,000
Total 7,010,000 7,595,000
Cyrils first thought was that the actual cost must be out of control, due the whopping variance
However, he realised that the budget was for a production level of 60,000. But the actual production
was 65,000.
Given the above, Which costs are likely to increase and which ones are likely to remain constant
What will be the revised budget
Illustration 1
Calculate prime cost from the following

particulars for a production unit:
Cost of material purchased 30,000

Opening stock of material 6,000
Closing stock of material 4,000
Wages paid 3,000 3,000
Hire Charges on a special machine for
production 5,000 5,000
Dir Mat + Dir Lab +

Prime cost Dir Exps
Prime cost DM + DL + DE
Factory cost PC + IM + IL + IE
Calculate factory cost from the following
Particulars:
OB/ clo bal of RM 20,000 25,000
Material Purchased 65,000
Productive wages 20,000
Direct Expenses 5,000
Consumable stores 2,000
Oil grease/Lubricating 500
Salary of a factory manager 6,000
Fact (Non-Prod) wages 1,000
Factory rent 2,000
Repair and Depreciation o Machine used
in prod 600
Total
25,000
(*) incl CEO salary

24,000 14,000
1,000
EO salary is apportioned between the two divisions in the ratio of 50% each
15,000
14,000
6,000
(5,000)
10, 000
ng the same.
s
Cont B
60,000
32,000
23,000
10,000
(5,000)
5,000
5,000
10 52
2,600 520
225 585,000 117,000
0
2.80 7,280 1,456
50.00 130,000 26,000
6.00 15,600 3,120
300 80,600 15,600
36,000 0
5,000 0
1,050 0
275,530 46,176
309,470 70,824
11,000
Non discr Discret Var
400
165
100
3
2.2
3 500 167 670
Diff
(300,000)
(200,000)
(25,000)
(10,000)
(30,000)
0
(5,000)
(15,000)
0
(585,000)
actual production
ain constant
Factory cost PC + IM + IL + IE OB
Calculate factory cost

from the following
Particulars: Purch
OB/ clo bal of RM 20,000 25,000 Less CB
Direct Expenses 5,000 OB
Salary of a factory
manager 6,000
Factory rent 2,000
Repair and Depreciation o

Machine used in prod 600
OB
Add
From the following

information, prepare a
cost sheet for period 31st March
ended on 2006.
Opening stock of raw
material 1,250 Ob
Purchases of raw material 9,200

Closing stock of raw
material
Outsourced materials 850
added in WIP 11,900
Direct wages 8,800
Direct expenses 1,200
Factory overheads % of
direct wages 19.33%
Admin O/Hs - % of
factory cost 15.06%
ED out of the above
Admin exps 11.17%
Selling & Distr O/Hs 1,200
Cost of opening stock of
WIP 1000
Cost of Closing stock of
WIP 1,000 Add O/H s
Cost of opening stock of
finished goods 300
Cost of Closing stock of
finished goods 7,000
Profit on cost % 3.00%
FG In hand at the
beginning of the period 60
Units produced during the
period 270
In hand at the end of the
period 30
Job cost sheets / Inv

At the start of 2014, following 3 jobs were in process and one job 257 was completed
Cost incurred as of 1/1/2014 At the end of 2014, two Jobs were in process :
Job 258 5,000 Cost incurred as of 31/12/2014
Job 259 6,000 Job 345
Job 260 3,500 Job 346
Cost incurred for completed job 1/1/2014 At the end of 2014, 4 jobs were completed awaiting shipment
Job 257 9,000 Cost incurred as of 31/12/2014
Job 341
During the year 2014, the following costs were incurred Job 342
Direct Material 750,000 Job 343
Direct Labour 1,650,000 Job 344
Mfg O/H s 2,150,000
a What are the opening and closing balances in WIP inventory

b What are the opening and closing balances in FG inventory
c What is the cost of goods sold.
d What job nos relate to the Cost of goods sold
Qn 1 Overhead alocation
Customs auto manufactures parts for antique cars. Each customer order is treated as a unique job
co has 2 jobs now : No 9823 & 9824 that are complete but Overheads have not been applied.
The co has 3 methods of applying Overheads to Jobs (i) Direct Labour Cost (ii) Direct labour Hrs
(iii) Machien Hours. The estimates for the current year are as below :-
Total Job 9823 Job 9824

Direct Labour cost ($) 300,000 1,000 2,000
Direct Labour Hours 25,000 1,400 1,400
Machine Hours 8,000 150 130
Overhead costs ($) (Alloca 200,000
Exps Incurred directly 130 270
Depreciation on machinery accounts for 75% of the overhead costs.
a Determine the overhead allocation rates under the 3 methods
b Calculate the cost of Jobs 9823 and 9824
c Discuss which allocation base appears favourable
Crafters Cabinet has the following figures $

Revenue 2,500,000
Works Cost (bef adj for Under/Over absorbed OH's) and bef A 1,000,000
Admin OH's 600,000
Selling and distribution OH's 400,000
Mfg Overheads are applied using a Pre-determined rate of 75% of the Direct labour cost. Act Lab cost
was $ 700,000. Actual Overhead cost was $ 450,000. The ending balances in the invenotry a/cs
(Prior to adjustment for over/under applied OH's) are
Raw material Inventory 32,000

WIP Inventory 80,000
FG Inventory 48,000
a Calculate the Net revenue after applying Over/under applied OH's to COS
b Calculate the Net revenue after applying Over/under applied OH's to resp Inv accounts (RM. WIP, FG)
c Discuss the Impact of the alternative treatmentts
Job cost sheet
The controller of a furniture co has gathered the following data for the month of Nov
Labour Job 77 Job 78 Job 79
Direct Labour hours 3,500 3,000 2,000
Labour costs -Dir Labour
Labour costs -Indir Labour
Labour costs -Supervisory
Materials
Inventory - Nov 1 - RM
Inventory - Nov 1 - WIP (onlu job 77)
Inventory - Nov 1 - FG
Purchases - RM
Purchases - Supplies (Indir Matl)
Diect materials & supplies req 45,000 37,500 25,500
Su[pplies - Indirect matl
Bld related costs - Factory facilities
Bldg related costs - Sales offices
Bldg related costs - Admin offices
Prod eqpt costs - Power

Prod eqpt costs - Rep & Maint
Prod eqpt costs - Depreciation
Prod eqpt costs - Other
firm uses a job costing system. Direct labour hours are used as the cost drivers for O/H application
In december of the previous year, the co hsd prepared the following budget for dir labour and Mfg OH's for
The installed capacity of the plant is 150,000 dir lab hours. But the co estimates the utilised capacity as
Dir lab hrs Mfg OH (var) Mfg OH (fixed)
100,000 325,000 216,000
120,000 390,000 216,000
140,000 455,000 216,000
during the month of Nov jobs 77 and 78 were completed
Calculate the predetermined Oh rate to be applied for the current year.
Calculate the cost of Job 77
Preztel has the following figs for 2011

WIP Inventory (31 dec 2010) 8,100
Selling & Admin Exps 13,800
Insurance on factory Equipme 3,600
WIP Inventory ( 31/ dec / 201 8,300
F G Inventory (31/dec / 2010 14,000
cash balance (31 / dec / 201 6,000
Indirect Material used 4,900
Dep on factory equipment 2,100
R M Inventory (31 dec 2010) 10,100
Property taxes on factory 2,400
F G Inventory (31/dec / 2011 15,400
Purch of RM (2011) 39,000
Utilities for factory 6,000
Utilities for Sales and admin o 2,500
Other selling and admin exps 4,000
Indirect Labour cost incurred 29,000
Dep on factory building 3,800
Dep on cars used by sales Pe 1,200
Direct Labour cost incurred 79,000
R M Inventory (31 dec 2011) 11,000
Accounts receivable (31/ 12/ 4,100
Rental for Warehouse space ( 3,100
Rental for Co's president's offi 1,700
Applied Mfg OH's 58,000
Sales Revenue 205,800
Income Tax exp 5,100
Prepare cost sheet upto COS

Find out the Profit for 2011
Over / underapplied OH/s adjusted to COS
Herbert Plumbing produces a variety of Valves, connectors and fixtures used in plumbing
The co follows JIT system of Inventory. So it has lower levels of Inventory (RM, WIP, FG)
End of October, the co had $ 20,000 worth of Raw material in Inventory. Besides, jobs
281 and 282 were in process and job 279 was already completed. The job cost sheets
were as follows. There were no other jobs in the montj
End octber
Job No Dir Matl ($) Dir Lab ($) Overheads Total
Job 279 50,000 15,000 30,000 95,000

Job 281 20,000 5,000 10,000 35,000
Job 282 60,000 20,000 40,000 120,000
130,000 40,000 80,000 250,000

During Nov, the co started workd on 3 new jobs namely Jobs 283, 284 and 285. The status of these jobs is as follows by the en
There were no other jobs diuring the month other than the 6 as below:
Job 279 50,000 15,000 30,000 95,000

Job 281 25,000 8,000 16,000 49,000
Job 282 62,000 21,000 42,000 125,000
Job 283 30,000 20,000 40,000 90,000
Job 284 80,000 30,000 60,000 170,000
Job 285 15,000 10,000 20,000 45,000
262,000 104,000 208,000 574,000
During November the company purchsed RM for $ 120,000 and incurred $ 130,000 of actula overheads
The cosmpany charges over / under absorbed Overheads to cost of goods sold. Compute the following
a. RM / Wip / FG inventory at the end of Nove Addn
b. Cost of Goods manufactured at the end of D/M D/L
b. Cost of Goods Sold at the end of Novemeber 5,000 3,000
2,000 1,000
30,000 20,000
80,000 30,000
15,000 10,000
132,000 64,000
Act Matl purch / Lab consd / OH's incurred 120000 64,000
`` Herbert Plumbing produces a variety of Valves, connectors and fixtures used in plumbing
End octber
Job 279 50,000 15,000 30,000 95,000

Job 281 20,000 5,000 10,000 35,000
Job 282 60,000 20,000 40,000 120,000
130,000 40,000 80,000 250,000
During Nov, the co started workd on 3 new jobs namely Jobs 283, 284 and 285. The status of these jobs is as follows by the en
Job 279 50,000 15,000 30,000 95,000

Job 281 25,000 8,000 16,000 49,000
Job 282 62,000 21,000 42,000 125,000
Job 283 30,000 20,000 40,000 90,000
Job 284 80,000 30,000 60,000 170,000
Job 285 15,000 10,000 20,000 45,000
262,000 104,000 208,000 574,000
529,000
a. RM / Wip / FG inventory at the end of Novemeber
b. Cost of Goods manufactured at the end of Novemeber
b. Cost of Goods Sold at the end of Novemeber
Comprehensive Job order

Lane confectionary Produces special order candies and chocolates for airlines hotels
During march, Lane purchased on credit the following from seaOB
2,100 Lbs of confectioners sugar @ 0.80 / lbs
2,300 Lbs of granulated sugar @ 0.90 / lbs Purch
900 Lbs of chocolate at $ 4 per pound
300 Lbs of caramel at $ 1.50 per pound
in addition, lane also purchased on cash basis the following from PM foods
60 dozen eggs at $ 0.85 / dozen
90 pounds of Edible paraffin at $ 0.50 / pound
The inventory details are as below (in $ terms) Less CB

$
Inventory - Raw Materials 2,500
Inventory - WIP (Op) 6,500 OB
Inventory - F G (Op) 9,000
Inventory - Raw Materials 3,500

Inventory - WIP (Clo) 5,000
Inventory - F G ( Clo) 6,000
Direct labour costs were $ 5,400 for 450 hours. Indirect labour costs $ 2,500
Utilities cost $ 750 and rent was $ 750. Other Mfg overhead coCB
Mfg Ohs is applied at $ 17 per direct lab hours.
Sales during the month were $ 35,000 and selling & Admin exps were $ 9,000
OB FG
Prepare a job costing sheet showing Profit or loss
CB FG
RM Opening 20,000 0
Add Purchases (RM 1) 65,000

Clo Bal (RM) 25,000
Consumption of RM for the period 60,000
OP WIP
Add Material consumed 60,000
Add Outsourced Matl
add Direct Labour 20,000

Mfg exps applied (pre det rate) 9,600
Less CB WIP
Works cost / cost Of Mfr 97,100
OB of RM 20,000
Add Purchases 65,000
CB of RM 25,000
Consumption 60,000
Prod Wages 20,000
Direct exps 5,000
Dir exps - Consumable stores 2,000
Dir exps - Oil grease et 500
Prime cost 87,500
factory O/Hs -Mgr sal 6,000

Factory O/H's - Wages 1,000
factory O/Hs - Rent 2,000
factory O/Hs - Rep & Maint 600 97,100
Mar 06
RM Opening 1,250

Clo Bal (RM) 850
OP WIP 1,000
Add Outsourced Matl 11,900
Mfg exps applied (pre det rate) 19.33% 1,701
Less CB WIP 1,000
OB Fin goods 300

Add Works cost 33,201
Add Admin exps 15.06% 5,000
Less Clo Bal (FG) 7,000
Cost of goods sold 31,501

Add S& D Expss 1,200
Add Under / Less Overabsorption
Net cost of sales 32,701
Prodit 3.0% 981
Sale Value 33,682
OB FG 60
Units Produced 270
CB FG 30
Net sold 300
Cost of gods sold Total/ Unit 112.27
Op Inv
7 was completed Op Inv
Op Inv
wo Jobs were in process :
Add
2,500
5,900
4 jobs were completed awaiting shipment

Clo Inv
1,500
3,300
2,400
4,500 O/B
Add
Less
WIP
FG
Add
Less
Jobs
75%
er is treated as a unique job Total Job 9823
have not been applied. Direct Labour cost 300,000 1,000
Cost (ii) Direct labour Hrs Depreciation portion of OH's 150,000 0
Over heads- Others 50,000
Overheads total 200,000
Allocation of OH s (base : Lab Hrs) Lab Hrs 25,000 11,200

Total cost 12,200
Allocation of OH s (Lab Cost) Lab Cost 667
Total cost 1,667
Allocation of OH s (MC Hrs) MC Hrs 3,750

Total cost 4,750
MC Hour rate is more apt, since 75% of OH is Dep on Machinery
Revenue
Cost of Production 1,000,000

Overheads applied 75% 700,000 525,000
Act overheads 450,000
Direct labour cost. Act Lab cost Over absored OH's 75,000
nces in the invenotry a/cs
Admin OH's 600,000
Total cost of prodn 1,600,000
Selling & distribution exps 400,000

Cost of sales 2,000,000
Less Over absporbed OH's (75,000)
Net cost of sales
esp Inv accounts (RM. WIP, FG)
Inventory - RM 32,000 (1,111) 30,889
Inventory - WIP 80,000 (2,778) 77,222
Inventory - FG 48,000 (1,667) 46,333
Cost of goods sold 2,000,000 (69,444) 1,930,556
2,160,000 (75,000) 2,085,000
e month of Nov
Amount
204,000
15,000
6,000
10,500
54,000
112,500
135,000
15,000
12,000
6,400
1,600
1,000
9,000
4,100
1,500
1,500
1,000
8,100
t drivers for O/H application
dget for dir labour and Mfg OH's for
estimates the utilised capacity as
541,000
606,000
671,000
Job cost sheet
Details Nos
Op Inv of RM 10,100
Less clo Inv of RM 11,000
Direct material Consmed 38,100
Direcr labour Hours
Direcr labour Cost 79,000
Direct Exps (rental Rm WH) 3,100
Prime cost 120,200
Op Inv - WIP 8,100

Add consumption from RM 120,200
Add factory Ohs (Bud/allocated) 0 58,000
less clo Inv (WIP) 8,300
Cost of goods produced (COP) 178,000
OP FG 14,000
Add COP 178,000
Add Admin exps 6,800
Add S&D Exps 21,500
Less clo FG 15,400
Cost of Sales 204,900
Add/ Sub (Under / Over abs OH/s) (6,200)

Cost of sales (Post adj for U/O Abs 198,700
Ins - fact eqpt 3,600 S& D exps
Indir Matl used 4,900 Util- S&D
Dep - fact eqpt 2,100 Other S& D
Prop tax - Factory 2,400 Dep - sales
Utilities - factory 6,000 Rental - Co Prez
Indir Lab cost 29,000 Income Tax
Dep on fact Bldg 3,800
Act 51,800
Absorbed 58,000
s used in plumbing
y (RM, WIP, FG)
ry. Besides, jobs O/Bal RM
job cost sheets WIP
FG
Sales
Job status
WIP addn RM cons
Finished / not sold Lab Cons
In Process Mfg O/Hs
In Process
Addition RM
Ohs
The status of these jobs is as follows by the end of November
OB
Job status Add
Less
Sold
Sold
Sold OB
Sold Add Cons
Sold
In process
Less C/B
ed $ 130,000 of actula overheads 529,000
ods sold. Compute the following
OB
O/Hs
6,000 Less C/B
2,000
40,000
60,000
20,000
128,000
130000
s used in plumbing Derived info

y (RM, WIP, FG)
RM consumed by Prod in Nov 132,000
ry. Besides, jobs Lab cosumed by Prod in Nov 64,000
job cost sheets Ohs absorbed by prod in Nov 128,000
Op WIP / FG
CB WIP / FG
Job status Over abs / (Under abs OH) (2,000)
RM
Finished / not sold
In Process OB RM 20,000
In Process Purchased 120,000
Consumed 132,000
Inv of RM 8,000
The status of these jobs is as follows by the end of November Transferred from RM
Lab cost
Job status Mfg Ohs absorbed
Cost of Mfr
Sold CB WIP
Sold Transfers In
Sold Admin Ohs
Sold Cost of Sales
Sold Less CB
In process
ed $ 130,000 of actula overheads Op Bal RM 20,000

ods sold. Compute the following WIP + FG OB 250,000
Matl Purch for nov 120,000

Ohs abosrbed for Nov 130,000
Lab for Nov 64,000
584,000
airlines hotels
RM Opening 2,500
Add Purchases
conf Sugar 2,100 0.80 1,680
Granular sugar 2,300 0.90 2,070
Chocolate 900 4.00 3,600
Caramel 300 1.50 450
Eggs 60 0.85 51
Edible Paraffin 90 0.50 45
7,896
Clo Bal (RM) 3,500
Consumption of RM for the period 0
OP WIP 6,500
add Direct Labour 450 12.00 5,400
Indirect labour 2,500
Utilities 750
Rent 750
Other O/Hs 5,000
Mfg Ohs applied 17.00
Less CB WIP 5,000
FG for the period
OB Fin goods 9,000

Add FG for the period 22,796
Add Sales and distribution exps 9,000
Clo Bal (FG) 6,000

Cost of Sales
Sales
P&L
1250.0
9200.0
850.0
0.0 9600.0
1000.0
9600.0
11900.0
8800.0
1200.0
19.33% 1701.0
1000.0
33201.0
300.0
33201.0
15.06% 5000.1
7000.0
31501.1
1200.0
0.0
32701.1
3.00% 981.0
33682.2
60
270
30
300
112.27
WIP 14,500
FG 9,000
Total 23,500
DM 750,000
DL 1,650,000
Mfg OH/s 2,150,000
Total 4,550,000
WIP 8,400
FG 11,700
Total 20,100
RM Inv 0
Purch 750,000
C/ B RM Inv 0
Consn 750,000
OP WIP 14,500
Consn 750,000
DL 1,650,000
M OH 2,150,000
Less CB WIP 8,400
Works cost 4,556,100
OP Bal 9,000
Works cost 4,556,100
C/B FG 11,700
CGS 4,553,400
Jobs from 257, 258, 259, 260 right upto 340
Job 9824
2,000
0
11,200
13,200
1,333
3,333
3,250
5,250
Wt
If applied to Inv
2,500,000
1,925,000
13,800
2,500
4,000
1,200
1,700
5,100
21,500 6,800
O/B C/B
20,000 ? Op Inv _ RM 20,000

155,000 45,000 155,000
95,000 0 95,000
529,000 270,000
132,000 Add matl 120,000

64,000 add Lab 64,000
128,000 Add OH/s 130,000
120,000 Less C/B - RM 8,000 2,000

130,000 C/B - WIP 45,000
C/B - FG 0
RM 20,000
Purch 120,000 Cost of sales 529,000
C/B RM 8,000 Add Under abs 2,000 531,000
Consn 132,000
Op RM 270,000
WIP 155,000 Matl / Lab / Ohs 314,000
RM 132,000
Lab 64,000 Less CB Inv 53,000
Exps 128,000
45,000 Cost of sales 531,000
fact cost 434,000
FG 95,000
Fact Cost 434,000
0
Cost of sales 529,000
155,000 95,000 250,000

45,000 0
WIP FG
155,000 95,000
132,000
64,000
128,000
434,000
45,000
434,000
529,000 2,000 531,000

0
RM Inv 8,000
WIP In 45,000
Fg Inv 0
COGS 531,000
584,000
O/B R material - OB 2,500.0
Purch Confectionaries 2,100 0.80 1,680.0

Granualted Sug 2,300 0.90 2,070.0
Chocolate 900 4.00 3,600.0
Caramel 300 1.50 450.0
Eggs 60 0.85 51.0
Paraffin 90 0.50 45.0
RM - CB 3,500.0
Consumption 6,896.0
6,896 0.0
Op WIP 6,500.0
Consumption 6,896.0
Direct Labour 450 12.00 5,400.0
Ind Labour Costs 2,500.0
750 Utilities
750 Rent
5,000 Mfg O/H s 17.00 7,650.0
Less clo WIP 5,000.0
Works cost 23,946.0
Op FG 9,000.0
22,796 Works Cost 23,946.0
Admin Exps 9,000.0
Clo FG 6,000.0
Cost of Prod 35,946.0
0
(1,150) Under/ (Over) abs OH (1,150.0)
Sales and Distr Exp 34,796.0
34,796
Sales 35,000.0
35,000
204 P&L 204.0
Prob 4.17 Meerut Mfg company has severaal prod lines that are processed thru 3 depts - X, Y & Z
The relevant data for the year is as below :
Fact OH's Direct

(Incl serv Direct Lab Labout
Dept cost) Hours cost Details
Dept X 124,000 80,000 160,000 factory Ohs
Dept Y 230,000 115,000 241,500 Labour cos
Dept Z 546,000 105,000 199,500 No of Lab hrs
Fact OH/s Per Lab hr

Production records at the end of the year indicated the following Dir lab cost / lab Hr
for the product line " Krish". Units Produed 20,000 nos
Dept X Dept Y Dept Z Dept wide Rate
Prime cost 45,000 10,500 59,500 Plant wide Rate
Direct Labour Hours 10,000 5,000 30,000
For Krish product (dept w
Direct Labour Hours
1 Calculate the department wide and plant wide O/H rates based on Direct Labour hours Prime cost
2 Calculate the cost of " Krish " line using the following (i) Plant wide rate (ii) Dept wide Rat Direct Labour cost
3 Comment on the results Fact OH/s
For Krish product (Plant

Prime Cost
Direct Labour
Fact OH/s
Prob 4.6 Anglo & co has 3 production departments X,Y and Z and 2 service departments A and B
The following are the estimated figures for a certain period
Rent and rates 10,000

Lighting & Electricity 1,200
Indirect Wages 3,000
Power 3,000
Depreciation - Machinery 20,000
Other exps & sundries 20,000
following are the other relevant details available :

Details Total X Y Z A B
Floor space (Sq Mts) 10,000 2,000 2,500 3,000 2,000 500
Light points (Nos) 120 20 30 40 20 10
Direct Wages 20,000 6,000 4,000 6,000 3,000 1,000
Horse Power of Machines 300 120 60 100 20 0
Cost of Machinery 100,000 24,000 32,000 40,000 2,000 2,000
Working Hours 10,740 4,670 3,020 3,050
Exps are to be allocated as below :

Details Total X Y Z A B
A 100.0% 20.0% 30.0% 40.0% 10.0%
B 100.0% 40.0% 20.0% 30.0% 10.0%
Compute the overhead absorption rate per hour in respect of the production deparments after doing
1 secondary allocation
What will be the Total cost of an article per unit that passes through the 3 depts for 2,3 and 4 hours
2 if its matl cost is RS 80/ unit and direct lab cost is Rs 40/ unit
Prob 4.6 BB has 3 production departments A, B, C and 2 service departments X and Y. The foll is the data for 2014
The following are the estimated figures for 2014
Power 2,500
Details Total A B C X Y
Floor space (Sq Mts) 2,000 500 250 500 250 500
Cost of Machinery (lacs) 100 20 40 20 10 10
MC Hours 9,000 1,000 2,000 4,000 1,000 1,000
Horse power of M/C 150 50 40 20 15 25
Direct Material 10,000 1,000 2,000 4,000 2,000 1,000
Direct Wages 18,000 5,000 2,000 8,000 1,000 2,000
Mc Cost * Mc Hrs 200,000 20,000 80,000 80,000 10,000 10,000
HP of MC's * MC Hrs 250,000 50,000 80,000 80,000 15,000 25,000
Details Total A B C X Y
X 100.0% 45.0% 15.0% 30.0% 10.0%
Y 100.0% 60.0% 35.0% 5.0%
Show the the

Compute distribution
overheadofabsorption
overheadsrate
to various departments
per hour in respect (primary allocation)
of the production deparments
after doing secondary allocation
2
Dept X Dept Y Dept Z Total
factory Ohs 124,000 230,000 546,000 900,000
Direct 160,000 241,500 199,500 601,000
No of Lab hrs 80,000 115,000 105,000 300,000
Fact OH/s Per Lab hr 1.550 2.000 5.200 3.000

Dir lab cost / lab Hr 2.000 2.100 1.900 2.003
Dept wide Rate 3.550 4.100 7.100 5.003

Plant wide Rate
For Krish product (dept wide0

Direct Labour Hours 10,000 5,000 30,000 45,000
Prime cost 45,000 10,500 59,500 115,000
Direct Labour cost 20,000 10,500 57,000 87,500
15,500 10,000 156,000 181,500
384,000
For Krish product (Plant wide)
Prime Cost 115,000
Direct Labour 90,150
135,000 340,150
296,500 250,000
Details Basis Total X y Z
Rent and rates Floor space 10,000 2,000 2,500 3,000
Lighting & Electricity Light point 1,200 200 300 400
Indirect Wages Dir Wages 3,000 900 600 900
Power HP of M/Cs 3,000 1,200 600 1,000
Depreciation - Machinery MC cost 20,000 4,800 6,400 8,000
Other exps & sundries Dir Wages 20,000 6,000 4,000 6,000
Direct wages for serv dept 4,000
Total 61,200 15,100 14,400 19,300
Secondary allocation
Sec allocation of A 9,662 8,695 1,932 2,898 3,865
Sec allocation of B 4,116 3,705 1,646 823 1,235
Dept wise total Ohs 61,200 61,200 18,679 18,122 24,399

Working hours 10,740 4,670 3,020 3,050
Absorption rate / Hr 4.00 6.00 8.00
Prod M - Dir Mat 80
Prod M - Dir Lab 40
Prod M - OH abs 58 8 18 32
Total 178 2 3 4
9250 + 0.1 B A 10 B - A 31500
3150 + 0.1 A B -0.1 B + A 9,250 12,400
9.9 B 40,750
A - 0.1 B 9,250 B 4,116
B - 0.1 A 3,150 A 9,662
13,778
Details Basis Total A B C

he data for 2014 Rent and rates Floor space 4,000 1,000 500 1,000
Power M/C HP * MC hrs 2,500 500 800 800
Depreciation - Machinery MC cost * Mc hrs 1,000 100 400 400
Other exps & sundries Dir Wages 9,000 2,500 1,000 4,000
Dir Matl (only serv) 3,000

Dir Lab (only serv) 3,000
Total 22,500 4,100 2,700 6,200
Secondary allocation
Sec allocation of X 4,487 4,039 2,019 673 1,346
Sec allocation of Y 5,749 5,461 3,449 2,012 0
Dept wise total Ohs 22,500 9,500 9,569 5,385 7,546
4200 + 0.05 Y X 10Y - X 53,000

5,300 + 0. 10 X Y -0.05 Y + X 4,200
9.95 y 57,200
X - 0.05 Y 4,200 Y 5,749
Y - 0.1 X 5,300 Y 4,487
A B
2,000 500
200 100
450 150
200 0
400 400
3,000 1,000
3,000 1,000
9,250 3,150
61,200
X Y
500 1,000
150 250
50 50
500 1,000
2,000 1,000
1,000 2,000
4,200 5,300
Process costing
Details No % compl Equiv unit Amount
WIP - Matl 10,000 100% 10,000 18,000

WIP - Lab 10,000 80% 8,000 7,800
WIP - OH's 10,000 80% 8,000 23,400
added - Matl 70,000 100% 142,000

added - Lab 62,200
added - O/H's 186,600
Total 100,000 440,000
Little Gadener produces 2 departments namely ; Mixing and packing to preapre plant food.
Material is added at the start of each process. There is no ending WIP in packing dept
Unit Info (Gallons) Mixing Packing
Beginning WIP 2,000 0 Cost added during the year
Started during the month 60,000 61,000 Dir Matl
Ending WIP (Mixing 100%
Mat: 60% Lab/ OH's) 1,000 0 Dir Lab
Mfg Exps
Cost info at the beginning Transferred in cost
Dir Matl 4,000 0
Dir Lab 800 0
Mfg OH 1,120 0
Trfd in cost 0 0
WIP - Matl 2,000 100% 2,000 4,000

WIP - Lab 2,000 100% 2,000 800
WIP - OH's 2,000 100% 2,000 1,120
added - Matl 60,000 100% 120,000

added - Lab 30,000
added - O/H's 42,000
Total 66,000 197,920
Unit Info (Gallons) Mixing Packing

Beginning WIP 2,000 0 Cost added during the year
Started during the month 60,000 61,000 Dir Matl
Ending WIP (Mixing 100%
Mat: 60% Lab/ OH's) 1,000 0 Dir Lab
Mfg Exps
Cost info at the beginning Transferred in cost
Dir Matl 4,000 0
Dir Lab 800 0
Mfg OH 1,120 0
Trfd in cost 0 0
WIP - Matl 0 100% 0 0

WIP - Lab 0 100% 0 0
WIP - OH's 0 100% 0 0
added - Matl 61,000 100% 18,300

added - Lab 3,050
added - O/H's 6,100
Trfd in 195,200
Total 61,000 222,650

Details No % compl Equival Unit
Trfd To FG - Mat 60,000 100% 60,000

Trfd To FG - Lab 60,000 100% 60,000
Trfd To FG - OH's 60,000 100% 60,000
0
Clo WIP - Mat 20,000 100% 20,000 80,000 160,000 2.0
Clo WIP - Lab 20,000 50% 10,000 70,000 70,000 1.0
Clo WIP - OH/s 20,000 50% 10,000 70,000 210,000 3.0
e plant food.
ng dept
Mixing Packing
during the year
120,000 18,300
30,000 3,050
42,000 6,100
0 ?
Trfd To FG - Mat 61,000 100% 61,000

Trfd To FG - Lab 61,000 100% 61,000
Trfd To FG - OH's 61,000 100% 61,000
0
Clo WIP - Mat 1,000 100% 1,000 62,000 124,000 2.000
Clo WIP - Lab 1,000 60% 600 61,600 30,800 0.500
Clo WIP - OH/s 1,000 60% 600 61,600 43,120 0.700
Mixing Packing
during the year
120,000 18,300
30,000 3,050
42,000 6,100
0 ?
Trfd To FG - Mat 61,000 100% 61,000

Trfd To FG - Lab 61,000 100% 61,000
Trfd To FG - OH's 61,000 100% 61,000
0
Clo WIP - Mat 100% 0 61,000 213,500 3.500
Clo WIP - Lab 60% 0 61,000 3,050 0.050
Clo WIP - OH/s 60% 0 61,000 6,100 0.100
Amount
120,000
60,000
180,000
s
40,000
10,000
30,000
440,000
Amount
122,000
30,500
42,700
195,200
2,000
300
420
197,920
Amount
213,500
3,050
6,100
0
0
0
222,650
17.3 X Y Z Ltd supplies the following data for the year ending 31st dec 2009
Production 1100 Units

Sales 1000 Units
No opening stock
Variable mfg cost per unit 7.0

Fixed Mfg OH's (Total) 2200.0
Var S& D OH's/ Unit 0.5
Fixed S& D OH's (Total) 400.0
Selling price / Unit 15.0
Qn 1 Prepare Incoem statement under absorption costing

Prepare Incoem statement under marginal costing
Explain the differnece in Profit under the 2 methos, if any
17.4 From the following data
sales 200000
V cost 120000
Fixed cost 30000
a Caluclate the BEP from the following

b also calculate the new BEP if SP is reduced by 10%
c New BEP if VC increases by 10%
d New BEP if FC Increases by 10%
e Caluclate the Margin of saftey [ (Act sales - BEP) / act sales ]
MOS
17.8 The profit volume ratio of escorts limited is 50% and the Margin of safety is 40%
Work out the net profir and the BEP if the Sales volme is Rs 10 lacs
PV Ratio 50%
MOS 40%
Sales Value (Rs) 1,000,000
MOS (sale - BEP)/sale 40%

Sale - BEP 400,000
BEP 600,000
Contribution 300,000
F cost 300,000
Sales 1,000,000
Contribution 500,000
F Cost 300,000
Profit 200,000
Suppose price is reduced from Rs 75 to rs 60 variable cost is Rs 50 per unit
Fixed cost if rs 10,000 calculate the MOS (%). The existing sales is Rs 60,000
Now Now
Price 75 60
V cost 50 50
Contribution 25 10
Fixed cost 10,000 10,000

BEP 400 1,000
BEP (Sale) 30,000 60,000
Present sale 60,000 60,000

MOS (Sale - BEP)/ sale 50% 0%
17.10 The following data is given
Prod A Prod B
Direct material 24 14
Direct lab 6 9
Var OH @ Rs 4 / Hour 8 12
Selling Price 100 110
Standard Time for prodn 2 3
State which of the 2 to manufacture if the critical factor is (i) Labout time (ii) Sales value
Prod A Prod B
Sale price 100.0 110.0
V cost
Direct material 24.0 14.0
Direct Labour 6.0 9.0
Var OH's 8.0 12.0
Total variable cost 38.0 35.0
Contribution 62.0 75.0
Contribution/ Lab tme 31.0 25.0

Contribution/ Sale value 62.0% 68.2%
Producton 1100
sales 1000
SP 15.0
V cost (Mfg) 7.0
Var S& D 0.5
Total var cost 7.5
Contr/ unit 7.5
Contr (Total) 7500.0
Fixed Mfg cost 2200.0
Fixed S&D cost 400.0
Total fixed cost 2600.0
Profit 4900.0
Op bal 0
Add Mfg cost 1,100 7.0 7,700
Fixed Mfg exps 2,200
Total Woks cost 9.0 9,900
Goods sold 0
Add new 1,000 9,000
Add S& D (Var) 0.5 500
Add S & D (Fix) 400
COS 9,900
sales 15.0 15,000
Net profit 5,100

SP VC VC
Details -10.0% 10.0% 10.0%
Sales 200,000 180,000 200,000 200,000
V cost 120,000 120,000 132,000 120,000
Contr 80,000 60,000 68,000 80,000
Less F cost 30,000 30,000 30,000 33,000

Profit 50,000 30,000 38,000 47,000
P/V ratio 40.0% 33.3% 34.0% 40.0%

BEP FC/ PV 75,000 90,000 88,235 82,500
(Act sale-BEP)/ Sales 62.5% 50.0% 55.9% 58.8%

Cost of material purchased 30,000
Opening stock of material 6,000
Closing stock of material 4,000
Wages paid 3,000 3,000
Hire Charges on a special machine for
production 5,000 5,000
Factory cost PC + IM + IL + IE
Calculate factory cost from the following
Particulars:
OB/ clo bal of RM 20,000 25,000
Direct Expenses 5,000
Salary of a factory manager 6,000
Factory rent 2,000
Repair and Depreciation o Machine used in
prod 600
Fc + Admin Ohs + OB
Cost of Prod FG - CB FG
Cost of Sales CP + SD O/Hs
From the following information, prepare a
cost sheet for period ended on 31st March 2006.
Opening stock of raw material 1,250
Purchases of raw material 9,200
Closing stock of raw material 850
Outsourced materials 11,900
Direct wages 8,800
Factory overheads % of direct wages 19.33%
Admin O/Hs - % of factory cost 15.06%
Selling & Distr O/Hs 1,200

Cost of opening stock of finished goods 300
Cost of Closing stock of finished goods 7,000
Profit on cost % 3.00%
In hand at the beginning of the period 60

Units produced during the period 270
In hand at the end of the period 30
Job cost sheets / Inv

At the start of 2014, following 3 jobs were in process and one
job 257 was completed
Cost absorbed as of 1/1/2014
Job 258 5,000
Job 259 6,000
Job 260 3,500
Cost incurred for completed job 1/1/2014

Job 257 9,000
During the year 2014, the following costs

were incurred
Direct Material 750,000
Direct Labour 1,650,000
Mfg O/H s 2,150,000
At the end of 2014, two Jobs were in process :

Cost absorbed as of 31/12/2014
Job 345 2,500
Job 346 5,900
At the end of 2014, 4 jobs were completed
awaiting shipment
Cost incurred as of 31/12/2014
Job 341 1,500
Job 342 3,300
Job 343 2,400
Job 344 4,500
What are the opening and closing balances in WIP inventory
What are the opening and closing balances in FG inventory
What is the cost of goods sold.
What job nos relate to the Cost of goods sold
Overhead alocation
Customs auto manufactures parts for antique cars. Each customer order is treated as a unique
job
co has 2 jobs now : No 9823 & 9824 that are complete but Overheads have not been applied.
The co has 3 methods of applying Overheads to Jobs (i) Direct Labour Cost (ii) Direct labour Hrs
(iii) Machien Hours. The estimates for the current year are as below :-
Total Job 9823
Direct Labour cost ($) 300,000 1,000
Direct Labour Hours 25,000 1,400

Machine Hours 8,000 150
Overhead costs ($) (Allocable) 200,000
Exps Incurred directly 130
Depreciation on machinery accounts for 75% of the overhead costs.
Determine the overhead allocation rates under the 3 methods
Calculate the cost of Jobs 9823 and 9824
Discuss which allocation base appears favourable

Caltex has the following figs for 2011
WIP Inventory (31 dec 2010) 8,100 10,125
Selling & Admin Exps - general 13,800 17,250
Insurance on factory Equipment 3,600 4,500
WIP Inventory ( 31/ dec / 2011) 8,300 10,375
F G Inventory (31/dec / 2010) 14,000 17,500
cash balance (31 / dec / 2011) 6,000 7,500
Indirect Material used 4,900 6,125
Dep on factory equipment 2,100 2,625
R M Inventory (31 dec 2010) 10,100 12,625
Property taxes on factory 2,400 3,000
F G Inventory (31/dec / 2011) 15,400 19,250
Purch of RM (2011) 39,000 48,750
Utilities for factory 6,000 7,500
Utilities for Sales and dist office 2,500 3,125
Other selling and distr exps 4,000 5,000
0
Indirect Labour cost incurred 29,000 36,250
Dep on factory building 3,800 4,750
Dep on cars used by sales Personnle 1,200 1,500
Direct Labour cost incurred 79,000 98,750
R M Inventory (31 dec 2011) 11,000 13,750
Accounts receivable (31/ 12/ 2011) 4,100 5,125
Rental for Warehouse space (for RM) 3,100 3,875
Rental for Co's president's office 1,700 2,125
Applied Mfg OH's 58,000 72,500
Sales Revenue 205,800 257,250
Income Tax exp 5,100 6,375
Prepare cost sheet upto COS

Find out the Profit for 2011
Over / underapplied OH/s adjusted to COS

Herbert Plumbing produces a variety of Valves, connectors and fixtures used in plumbing
End octber
Job No Dir Matl ($) Dir Lab ($) Overheads
Job 279 50,000 15,000 30,000

Job 281 20,000 5,000 10,000
Job 282 60,000 20,000 40,000
RM
130,000 40,000 80,000
During Nov, the co started workd on 3 new jobs namely Jobs 283, 284 and 285.
The status of these jobs is as follows by the end of November
Job No Dir Matl ($) Dir Lab ($) Overheads
Job 279 50,000 15,000 30,000

Job 281 25,000 8,000 16,000
Job 282 62,000 21,000 42,000
Job 283 30,000 20,000 40,000
Job 284 80,000 30,000 60,000
Job 285 15,000 10,000 20,000
262,000 104,000 208,000
and 64,000 for Labour
a. RM / Wip / FG inventory at the end of Novemeber
b. Cost of Goods manufactured at the end of Novemeber
b. Cost of Goods Sold at the end of Novemeber
Crafters Cabinet has the following figures

Revenue
Works Cost (bef adj for Under/Over absorbed OH's) and bef
Ad/S&D
Admin OH's
Selling and distribution OH's
Mfg Overheads are applied using a Pre-determined rate of 75% of the Direct labour cost. Act
Lab cost
was $ 700,000. Actual Overhead cost was $ 450,000. The ending balances in the invenotry a/cs
(Prior to adjustment for over/under applied OH's) are

Raw material Inventory
WIP Inventory
FG Inventory
Calculate the Net revenue after applying Over/under applied OH's to COS
Calculate the Net revenue after applying Over/under applied OH's to resp Inv accounts (RM.
WIP, FG)
Discuss the Impact of the alternative
treatmentts
The controller of a furniture co has gathered the following data for the month of N
Labour Job 77 Job 78
Direct Labour hours 3,500 3,000
Labour costs -Dir Labour
Labour costs -Indir Labour
Labour costs -Supervisory
Materials
Inventory - Nov 1 - RM
Inventory - Nov 1 - WIP (only job 77)
Inventory - Nov 1 - FG
Purchases - RM
Purchases - Indir Matl
Diect materials & supplies used for prodn 45,000 37,500
Job 77 Job 78
Supplies -
Bld related costs - Factory facilities
Bldg related costs - Sales offices
Bldg related costs - Admin offices
Prod eqpt costs - Power

Prod eqpt costs - Rep & Maint
Prod eqpt costs - Depreciation
Prod eqpt costs - Other
firm uses a job costing system. Direct labour hours are used as the cost drivers for O/H application
In Dec of the Prev year, the co hsd prepared the following budget for dir labour and Mfg OH's for the Cur ye
The installed capacity of the plant is 150,000 dir lab hours. But the co estimates the utilised capacity as 120
Dir lab hrs Mfg OH (var) Mfg OH (fixed)

100,000 325,000 216,000
120,000 390,000 216,000
140,000 455,000 216,000
during thethe
Calculate month of Nov jobsOh
predetermined 77 rate
and to
78 be
were completed
applied for the current
year.
Calculate the cost of Job no 77
Prime cost
Inventory - Op - RM
Add Purchses
Inventory - Clo- RM
Materials consumed
Direct labour
Direct Exps - Hire chgs spl M/c
Prime cost
32,000
Prime cost
Inventory - Op - RM
Add Purchses
Inventory - Clo- RM
Materials consumed
Direct labour
Direct Exps -
Prime cost
Mfg O/H's Cons stores
Oil / grease
Salary -fact Mgr
Fact (Non-Prod) wages

Factory Rent
Rep - M/C for prod
works cost (bef WIP Inv adj)
RM Opening
Add Purchases (RM 1)
Clo Bal (RM)
Consumption of RM for the period
OP WIP
Add Material consumed
Add Outsourced Matl
add Direct Labour
Direct expenses
Mfg exps applied (pre det rate)
Less CB WIP
Works cost / cost Of Mfr
OB Fin goods
Add Works cost
Add Admin exps
Less Clo Bal (FG)
Cost of goods sold
Add S& D Expss
Net cost of sales
Prodit
Sale Value
OB FG
Units Produced
CB FG
Net sold
Cost of gods sold Total/ Unit
257 Inventory - Op - FG 257 258
258 Inventory - Op - WIP Inv - Op - FG 9,000

259 Inv - Op - WIP 5,000
260
Direct Mat
Add Materials consumed Direct Labour
Direct Labour Mfg O/Hs

Mfg O/H's
Inv - Clo - FG
Job 345 Inventory - Clo - WIP Inv - Clo - WIP

Job 346 Inventory - Clo - WIP Cost
Total Cost of Production cost of Mfr trfd to FG
Inventory - Clo - FG cost of goods sold
Cost of goods sold

Jobs under COGS
Detals
is treated as a unique
Direct Labour cost ($) Direct labour cost
ave not been applied. Direct Labour Hours Overheads (Sans Dep) 50,000
ost (ii) Direct labour Hrs Machine Hours Depreciation 75% 150,000
Job 9824 Exps Incurred directly Based ob Direct Lab Cost 200,000
2,000 Based ob Direct Lab hours
1,400 Overhead costs ($) (Allocable)Based on machine hours

130 Depreciation
Total (DL Cost)
270 Allocated based on DL Cost Total (DL Hrs)
Allocated based on DL Cost Total ( Mc Hrs)
Allocated based on Machine Hours
RM Opening 3,600
Clo Bal (RM) 2,100
6,000
OP WIP 29,000
Add Outsourced Matl
add Direct Labour
Mfg exps applied (pre det rate) 58,000
Less CB WIP (6,200)
Works cost / cost Of Mfr
OB Fin goods 1,700

Add Admin exps 6,800
Less Clo Bal (FG)
Cost of goods sold
Add S& D Expss 2,500
Add Under / Less Overabsorption 4,000
Prodit 13,800
Sale Value 21,500
Inv Op
Inv - Op RM 20,000 Inv Op
Inv - Op WIP 95,000 Inv Op
Inv - Op FG 155,000
Cost absorbed Op COS

Total Job status D material 130,000
D labour 40,000 Inv Clo
95,000 Finished / not sold O/ heads 80,000
35,000 In Process
120,000 In Process Inv - Clo - RM 0
Inv - Clo - WIP Purch RM
250,000 Inv - Clo - FG Lab addn
OH add
COS
Under / (Over absorbed) COS (Fin)
Total Job status COS (per Fin records) Under abs
Total
95,000 Sold Cost paid for (incurred)
49,000 Sold D material
125,000 Sold D labour Absorption infor
90,000 Sold O/Hs
170,000 Sold D matl
45,000 In process D Lab
574,000 Cos OH's
529,000
000 of actula overheads
ompute the following
$ Revenue
2,500,000 Works cost
1,000,000 admin OH's

600,000 S&D
400,000 Act lab cost
rect labour cost. Act

Act / abs OH co
es in the invenotry a/cs

Ending inventory
32,000
80,000
48,000 Overabsorbed
sp Inv accounts (RM.

following data for the month of Nov Job 79
Job 79 Amount 2,000 8,500
2,000 8,500 48,000 204,000
204,000 15,000
15,000 6,000
6,000 0 0
0
10,500 15,000
54,000 6,400
112,500 8,100
135,000 0
15,000 0
25,500 108,000 50,500
(50,500)
Job 79 Amount
12,000 612
6,400 48,000 204,000
1,600 10,500
1,000 25,500 135,000
9,000 12,000
4,100 11,882
1,500
1,500
1,000
8,100
drivers for O/H application
labour and Mfg OH's for the Cur year
timates the utilised capacity as 120,000
Total
541,000
606,000 10000 50500
671,000
259 260
9,000
6,000 3,500 14500
750,000
1,650,000
l 2,150,000
8,400
11,700
4,552,800 4,552,800
4,553,400
Job 9823 Job 9824
1,000 2,000
667 1,333
11,200 11,200
3,750 3,250
1,667 3,333
12,200 13,200
4,750 5,250
RM Opening 12,625
Clo Bal (RM) (13,750)
Consumption of RM for the pe 47,625
OP WIP 10,125
Add Outsourced Matl
Mfg exps applied (pre det rate 72,500 4,500 6,125 2,625 3,000 7,500
Less CB WIP (10,375)
OB Fin goods 17,500

Add Admin exps 35,375 17,250 3,125 5,000 1,500 2,125
Less Clo Bal (FG) (19,250)
Cost of goods sold 252,250
Add S& D Expss
Add Under / Less Overabsorp (3,875)
Prodit 8,875
Sale Value 257,250
Fin cost
RM 20,000 20,000
WIP 155,000 155,000
FG 95,000 95,000
529,000
RM 8,000 8,000
WIP 45,000 45,000
FG 0
120,000
64,000
130,000
531,000 529,000
2,000
531,000 531,000
orption infor
OP Clo Net (Abs) OB Addb Fin cons under
130,000 262,000 132,000 20,000 120,000 140,000 8,000
40,000 104,000 64,000 0 64,000
80,000 208,000 128,000 0 130,000 130,000 2,000
250,000 574,000 324,000 10,000
Act absorbed
2,500,000
1,000,000 1,000,000
600,000 600,000
400,000 400,000
700,000
1 450,000 525,000
ding inventory (160,000) (160,000)
2,290,000 2,365,000
(75,000)
2,290,000 2,290,000
Job 77 Job 78 Job 79
Dir lab hours 3,500 3,000 2,000 8,500
Lab cost - dir lab Abs 84,000 72,000 48,000 204,000
Inventory (WIP / RM) 54,000 10,500

Inventory (FG) 112,500
Purch (RM) 135,000
Supplies 12,000
Matl /Supp abs 45,000 37,500 25,500 108,000
Indir Lab 15,000
Lab cost - supervisor 6,000
Indir Matl 15,000
Fact OH's 6,400
Prod eqpt cost 8,100
Total Mfg OH's 50,500
Abs OH(mfg) abs 20,794 17,824 11,882 50,500
Admin exp 412 353 235 1,000

S&D exp 659 565 376 1,600
204,865
68,625
36,250 4,750
6,375
Total A B C D
Floor area 500 180 120 100 70
No. of Employees 60 20 15 12 8
HP of Machines 1500 600 400 500 0
Value of Plant 750,000 240,000 200,000 160,000 100,000
No. of Light Points 80 30 20 15 10
Items of cost Basis Total A B C

Rent 5,000 1,800 1,200 1,000
Repairs 7,500 2,400 2,000 1,600
Power 4,500 1,800 1,200 1,500
Supervision 6,000 2,000 1,500 1,200
Lighting 800 300 200 150
23,800 8,300 6,100 5,450
Total
Meerut Mfg company has severaal prod lines (incl ' krish" that are
processed thru 3 depts - X, Y & Z. The relevant data for the year are as
below : Details
Fact OH's (Incl Direct Lab Direct

serv Dept cost) Hours Labout cost Fact o/H's
Dept X 124,000 80,000 160,000 D/ Lab Hrs
Dept Y 230,000 115,000 241,500 D lab cost
Dept Z 546,000 105,000 199,500 Total (based on dept rates)
300,000 Lab cost
Production records at the end of the year indicated the following Krish Line
for the product line " Krish". Units Produed 20,000 nos Dir Lab hrs
Dept X Dept Y Dept Z Prime cost
Prime cost 45,000 10,500 59,500 Direct Lab cost
Direct Labour Hours 10,000 5,000 30,000 OH's (Dept-wise)
Total (based on dept rates)
Calculate the department wide and plant wide O/H rates based on Direct
Labour hours
Calculate the cost of " Krish " line using the following (i) Plant wide rate
(ii) Dept wide Rate O/H's (Plant wise)
Comment on the results Direct Lab cost
Total cost (incl Prime)
Anglo & co has 3 production departments X,Y and Z and 2 service departments A and B
The following are the estimated figures for a certain period
Lighting & Electricity 1,200
Indirect Wages 3,000
Power 3,000
Details Total X Y Z A
Floor space (Sq Mts) 10,000 2,000 2,500 3,000 2,000
Light points (Nos) 120 20 30 40 20
Direct Wages 20,000 6,000 4,000 6,000 3,000
Horse Power of Machines 300 120 60 100 20
Cost of Machinery 100,000 24,000 32,000 40,000 2,000
Working Hours 10,740 4,670 3,020 3,050

Details Total X Y Z A
A 100.00% 20.00% 30.00% 40.00%
B 100.00% 40.00% 20.00% 30.00% 10.00%
Compute the OH absorption rate/ hour in respect of the production deparments after doing secondary allocation
Find the total cost of an article per unit passing through the 3 depts for 2,3 and 4 hours.
The material cost is RS 80/ unit and direct lab cost is Rs 40/ unit for this article
BB has 3 production departments A, B, C and 2 service departments X and Y. The foll is the data for 2014
The following are the estimated figures for 2014
Power used by Macines 2,500
Details Total A B C
Floor space (Sq Mts) 2,000 500 250 500
Cost of Machinery (lacs) 100 20 40 20
MC Hours 9,000 1,000 2,000 4,000
Horse power of M/C 150 50 40 20
Direct Material 10,000 1,000 2,000 4,000
Direct Wages 18,000 5,000 2,000 8,000
Mc Cost * Mc Hrs 200,000 20,000 80,000 80,000
HP of MC's * MC Hrs 250,000 50,000 80,000 80,000
Details Total A B C
X 100.00% 45.00% 15.00% 30.00%
Y 100.00% 60.00% 35.00%
Show the distribution of overheads to various departments (primary allocation)
Compute the overhead absorption rate per hour in respect of the production deparments after doing
secondary allocation
Composite bases
cost * MC hours 200,000 20,000 80,000 80,000
HP * MC Hrs 250,000 50,000 80,000 80,000
E
30
5
0
50,000
5
D E
700 300
1,000 500
0 0
800 500
100 50
2,600 1,350
X Y Z Plant total
124,000 230,000 546,000 900,000

80,000 115,000 105,000 300,000
160,000 241,500 199,500 601,000
ed on dept rates) 1.55 2.00 5.20 3.00
2.00 2.10 1.90 2.00
10,000 5,000 30,000 45,000
45,000 10,500 59,500 115,000
20,000 10,500 57,000 87,500
(Dept-wise) 15,500 10,000 156,000 181,500
ed on dept rates) 80,500 31,000 272,500 384,000
(Plant wise) 135,000

90,150
ost (incl Prime) 340,150
Details Amount Basis X Y
Rent and rates 10,000 Fl Spa 2,000 2,500
Lighting & Electricity 1,200 Lit Point 200 300
Indirect Wages 3,000 Dir Wage 900 600
Power 3,000 HP M/C 1,200 600
Depreciation -
Machinery 20,000 M/C cost 4,800 6,400
Other exps & sundries 20,000 Dir Wage 6,000 4,000
Direct wage (Serv Dept) 4,000
B Total 61,200 15,100 14,400

500 Second allocat ( A ) 8,695 9,662 1,932 2,898
10 Second allocat ( B ) 3,705 4,116 1,646 823
1,000 61,200 12,400 18,679 18,122
0 No of hours ( Base) 10,740 4,670 3,020
2,000 Hourly rate 4.00 6.00
9250 + 0.1 B A 10 A - B 92,500
3150 + 0.1 A B -0.1 A + B 3,150
A - 0.10 B 9,250 9.9 A 95,650
B B - 0.1 A 3,150
10.00% A 9,662 0 1,932 2,898
B 4,116 58 1,646 823
OH cost / unit 2 3
condary allocation D material 80.0
D Labour 40.0
O/H's 58.0 8.0 18.0
178.0
ll is the data for 2014 Details Amount Basis A B
Rent and rates 4,000 Fl sp 1,000 500
Power
Depreciation - 2,500 HP*MC Hr 500 800
Machinery 1,000 MC Hr * Cost 100 400
Other exps & sundries 9,000 Dir wag 2,500 1,000
Direct wages 3,000

X Y Direct Matl 3,000
250 500
10 10 Total 22,500 22,500 4,100 2,700
1,000 1,000 Second allocat ( X ) 4,487 4,039 2,019 673
15 25 Second allocat ( Y ) 5,749 5,461 3,449 2,012
2,000 1,000 Total O/H's 22,500 9,569 5,385
1,000 2,000 MC Hours 1,000 2,000
10,000 10,000 O/H rate 9.57 2.69
15,000 25,000
5300 + 0.10 X Y
X Y 4200 + 0.05 Y X
10.00%
5.00% Y - 0.10 X 5,300
X - 0.05 Y 4,200
ments after doing
10Y - X 53,000
-0.05 Y + X 4,200
9.95 Y 57,200
10,000 10,000 Y 5,749
15,000 25,000 X 4,487
Z A B Details Amount Basis
3,000 2,000 500 Rent and rates 10,000 Fl Spa
400 200 100 Lighting & Electricity 1,200 Lit Point
900 450 150 Indirect Wages 3,000 Dir Wage
1,000 200 0 Power 3,000 HP M/C
8,000 400 400 Depreciation - Machinery 20,000 M/C cost

6,000 3,000 1,000 Other exps & sundries 20,000 Dir Wage
3,000 1,000 Direct wage (Serv Dept) 4,000 0
19,300 9,250 3,150 Total 61,200 61,200

3,865 Second allocat ( A ) 9,250
1,235 61,200
24,399 Second allocat ( B) 4,075
3,050 Total 61,200
8.00 Second allocat ( A ) 408
Total 61,200
Second allocat ( B) 41
Total 61,200
Second allocat ( A ) 4.08
3,865 Total 61,200
1,235
4 B 9250+ 0.1 A 10 B - A
A 3150 + 0.1B -0.1 B + A
B - 0.1 A 9,250 9.9 B
32.0 A- 0.1 B 3,150 B
A
C X Y
1,000 500 1,000
800 150 250
400 50 50
4,000 500 1,000
1,000 2,000
2,000 1,000
6,200 4,200 5,300

1,346
0
7,546
4,000
1.89
X Y Z A B
2,000 2,500 3,000 2,000 500
200 300 400 200 100
900 600 900 450 150
1,200 600 1,000 200 0
4,800 6,400 8,000 400 400

6,000 4,000 6,000 3,000 1,000
0 0 0 3,000 1,000
15,100 14,400 19,300 9,250 3,150

1,850 2,775 3,700 0 925
16,950 17,175 23,000 0 4,075
1,630 815 1,223 408 0
18,580 17,990 24,223 408
82 122 163 0 41
18,662 18,112 24,386 0 41
16 8 12 4 0
18,678 18,120 24,398 4
1 1 2 0 0
18,679 18,122 24,399
92500
3,150
95650
9661.616
4116.162
Div A Div B Total
Sales 10,000 15,000 25,000
Total Cost 11,000 13,000 24,000 (*) incl CEO salary 14,000
Profit (1,000) 2,000 1,000
Based on the above the management decided to close down division A.

CEO salary is apportioned between the two divisions in the ratio of 50%
each
Post the closure the results were worse as below
B Total A
Sales 15,000 15,000 Sales 10,000
Cost 20,000 20,000 Cost 18,000
Cost type 2 Cost type 2
Poi (5,000) (5,000) Poi (8,000)
When reworked
Div A Div B Total
Sales 10,000 15,000 25,000
V cost 4,000 6,000 10,000
Contribution 6,000 9,000 15,000
Fixed cost 7,000 7,000 14,000

Net profit 1,000
W/ out DIV A
Loss in contr 6,000
Net profit/ Loss (5,000)
W/ Our div B
loss of Cont 9,000
Net profit/ Loss (8,000)

SP 10
V Cost 5
F Cost 400
Volume Sale Tot Cost VC FC Profit 2,500
0 0 400 0 400 (400)
20 200 500 100 400 (300) 2,000
40 400 600 200 400 (200)
60 600 700 300 400 (100)
1,500
80 800 800 400 400 0
Sal
100 1,000 900 500 400 100
Tot
120 1,200 1,000 600 400 200 1,000
140 1,400 1,100 700 400 300
160 1,600 1,200 800 400 400 500
180 1,800 1,300 900 400 500
200 2,000 1,400 1,000 400 600
0
0 200400
X Y Z Ltd supplies the following data for the year ending
31st dec 2009 Marg
Sale price 15
Production 1100 Units
Sales 1000 Units V Costs - Mfg c 7
No opening
stock V Costs - S & D 0.5
Variable mfg
cost per unit 7 Var cost/ unit 7.5
Fixed Mfg OH's
(Total) 2200 Contribution 7.5
Var S& D OH's/
Unit 0.5
Fixed S& D
OH's (Total) 400 Total contribut 1000 7500
Selling price /
Unit 15 Less fixed cost
Prepare Incoem statement under Fixed Mfg 2200
absorption costing
Prepare Incoem statement under marginal Fixed S&D 400
costing
Explain the differnece in Profit under the 2 2600
methos, if any Net profit 4900
0 OP bal 100 Clo stock (FG) 900

1100 Prod 1000 Sales 15000
V cost (Mfg) 7 7,700
F cost (mfg) 2,200
Total cost of Mfr 9,900
Var S&D OH 0.5 500
Fixed S&D Ohs 400
S&D OH's 900
Total cost 10,800
5,100
15,900 15900
From the
following data SP VC
-10% 10%
sales 200,000 Sales 200,000 180,000 200,000
V cost 120,000 VC 120,000 120,000 132,000
Fixed cost 30,000 Contr 80,000 60,000 68,000
FC 30,000 30,000 30,000
Caluclate the BEP from the

following Profit 50,000 30,000 38,000
also calculate the new BEP if

SP
Newis reduced
BEP if VCby 10% by
increases BEP
10%
New BEP if FC Increases by PV ratio 40.0% 33.3% 34.0%
10% FC/ PVR 75,000 90,000 88,235
Caluclate the Margin of
saftey [ (Act sales - BEP) /
act sales ] MOS Contr 30,000 30,000 30,000
62.5% 55.0% 55.9%
Profit = 0 BEP P Price / Unit

Rev - cost 0 V VC /Unit
Rev - V cost - F cost 0 P-V Cont / Unit
SP - SV - FC 0 C/P Cont per uint / Sales per unit
S(P-V) - FC 0
S (P-V) FC
S FC / (P-V)
P-V Contrib
Cont FC
Cont / sales FC /sales
Sales FC / (C/S) FC / PV Ratio
The profit volume ratio of escorts limited
is 50%out
andthe
thenet
Margin
profirof safety is 40%
Work and the BEP if the
Sales volme is Rs 10 lacs
MOS 1-(BEP/S) 40%

BEP/ Sales 60%
BEP 60% Sales 1,000,000
Sales 1,000,000 VC 500000
BEP 600,000 Cont 500,000
PV ratio 50% MOS 40.0%
Contribituion 300,000 Profit 200,000
F Cost 300,000
MOS (Act S - BEP)/Act S sales 1,000,000

S * MOS S - BEP Contr 500,000
BEP S (1-MOS) F Cost 300,000
BEP 600,000 Net profit 200,000
Cont = FC 300,000
Suppose price is reduced from Rs 75 to rs 60 variable
cost is Rs 50 per unit
Fixed cost if rs 10,000 calculate the MOS (%). The

existing sales is Rs 60,000
Now Now
Price 75 60
V cost 50 50
Contribution 25 10
Fixed cost 10,000 10,000

BEP 400 1,000
BEP (Sale) 30,000 60,000 400
Present sale 60,000 60,000 800

MO (Sale - BEP)/
S sale 50% 0%
Sale 75 60
VC 50 50
Contr 25 10
FC 10,000 10,000
PV ratio 33.3% 60000
FC / PV 30000
Fc/ Cont (sale No 400
MOS 30,000 0
17.10The variable cost structure of a prodcut manufactured by a company is as under for the prev Last year
Sale price 270
Material 120 Material 120
Labour 30 Labour 30
Overheads (varia 12 Overheads 12
SP 270 Total V Cost 162

Fixed cost 1,400,000 Contr/ Unit 108
Sales 4,050,000 PV ratio 40.0%
Total contr 1,620,000
During the year the direct labour is entitled to a wage increase of 10% from the beginning of the year
Similarly Material cost, Variable cost and fixed cost are likely to increase by F cost 1,400,000
The following are required: Profit 220,000
1 New Sale price for the upcoming year if the existing P/V ratio is to be maintained
2 No of units to be sold to maintain the same level of profits as last year, if Selling price cant
be increased
3 If there is an order that is to be mandatorily secured, what is the lowest price that can be
quoted during the current year
The following
data is given Prod A
Prod A Prod B SP 100
Direct
material 24 14 V cost
Direct lab
cost / Hr 6 9 D matl 24
Var OH @ Rs 4
/ Hour 8 12 D lab 12
Selling Price 100 110 V OH 8
Standard Time
for prodn 2 3 VC / Unit 44
Cont/ Unit 56
State which of the 2 to manufacture if the
critical factor is (i) Labout time (ii) Sales
value
Cont/ Lab time 28
Cont / sale
value 56.0%
For past 3 yrs, Rhetorix Inc has produced the model X100 stereos sold in pairs
Sale (2500 units * $ 900) 1
The model is in demand and the co can sell as many pairs as they produce V cost assembly 5
The selling price per pair is $ 900. The Variable cost of prod in $ 300 V cost Others
Fixed costs per year are 4 720,000 V cost / Unit
Contribution / Unit
each pair of speakers requires 5 hours of assembly time. Contribution / Assembly hour
currently the co has 5 assembly workers who are highly skilled and can work a Total contrib 2500
totla of 12,500 hour in a year
The co finds it difficult to hire additional assembly workers at the current rate F Cost
of $ 40 / Hour, with the skilled needed to assemble x 100 Profit
Jurgis rand, the owner is considerin offering assmebly workers an overtime premium of
$ 20 per hour. (wages in excess of regular wages) to get them to work more than 12500 hours/year
Increase in profit
In thinking about how muc to offer, jurgis's calculations are as below Increase in Units
Increase in assembly hours
Sale (2500 units 2500 900 2250000 Incre in Profit/ incr assem hour
Less V cost 2500 300 750000
Less F cost 720000
Profit 780000
Profit/ assembly 12500 62.4
Jurgis feels that this is a great deal. The workers make an extra $ 20 per hour and I make
an extra $ 42.40 / hour
qns 1How much would the profit truly increase per hour if the assembly workers are available at the
present wage rate for additional production too
2 compare ans above with Jurgis' calcuations and find the flaw in his reasoning
3 suppose Jurgis pays the overtime arte, what will be the increase in profits
(S-V) Q - FC = Profit Sale price/ Unit S MOS
(S-V) Q = FC V cost/ Unit V
(S - BEP)/ S = MOS 1- (BEP/S) MOS Q Quantity in nos
BEP/ (1- MOS) = S (1-MOS) BEP /S FC Fixed cost (Total)
BEP = S (1-MOS)
Selling Price (Rs) V cost (Rs) / Contri (Rs) / Fixed cost (Rs) Capacity
Sales (In Units) / unit Unit unit (Total) (Units) BEP (Units)
200 20 1,000 600

200 20,000 300 200
1,000 300 100 1,200 600
500 50 20 600
350 35,000 700 320

80 10 0 1,000 270
600 60 20 600
750 425 75 1,200 450
800 80 4,200 2,400

300 30,000 800 300
1,000 600 200 1,200 800
500 50 20 600
600 60,000 900 600

320 10 0 1,200 960
600 60 20 600
600 425 150 1,200 450
Total
15,000
20,000
(5,000)
2,500
2,000
1,500
Sale
Tot Cost
1,000
500
0
0 200400
FC
10%
200,000
120,000
80,000
33,000
47,000
40.0%
82,500
33,000
58.8%
15000
Total
4,050,000
1,800,000
450,000
180,000
0
2,430,000
1,620,000
1,400,000
220,000
Prod B
110
14
27
12
53
57
19
51.8%
900
40
mbly hours
Margin of safety %
Bep FC / Unit cont FC/ (S-V)

MOS (AS - BEPS)/AS (1-MOS)*AS BEP
MOS (1-(BEP/AS)) BEP/ (1-MOS) = AS
Sales (In Selling Price V cost (Rs) / Contri (Rs) / Fixed cost (Rs) Capacity
MOS (%) Units) (Rs) / unit Unit unit (Total) (Units)
25.00% 800 200 180 20 12,000 1,000

20.00% 250 300 200 100 20,000 300
1,000 400 300 100 60,000 1,200
10.00% 500 50 20 30 13,500 600
20.00% 438 450 350 100 35,000 700

10.00% 267 80 70 10 2,400 1,000
25.00% 600 60 20 40 18,000 600
750 500 425 75 33,750 1,200
25.00% 3,200 800 720 80 192,000 4,200

25.00% 400 400 300 100 30,000 800
1,000 800 600 200 160,000 1,200
25.00% 500 50 20 30 11,250 600
20.00% 750 700 600 100 60,000 900

10.00% 1,067 320 310 10 76,800 1,200
25.00% 600 60 20 40 18,000 600
600 575 425 150 67,500 1,200
BEP (Units) MOS (%)
600 25.00%
200 20.00%
600 40.0%
450 10.00%
BEP (Units) MOS (%)
350 20.00%
240 10.00%
450 25.00%
450
BEP (Units) MOS (%)
2,400 25.00%
300 25.00%
800 20.0%
375 25.00%
BEP (Units) MOS (%)
600 20.00%
960 10.00%
450 25.00%
450 25.00%
ABX ltd produces and sells a single product. Sales Budget for 2006 is given hereunder
Opening Inventory is 4,000 Units and closing inventory is 6, 500 units
Production is customarily expected to provide for 2/3rds of the current quarter's sales
and 1/3rd of next quarter sales. Thus, production anticipates sales by a month 0.67
0.33
No of units to
Quarter be sold
I 12,000
II 15,000
III 16,500
Iv 18,000
Standard cost per unit is as follows :
Needed Per unit

prod ( Lbs/ Hrs) rate/ Unit 17
Dir material (in lbs) 10.0 0.5 5.0
Dir Labour (Hrs) 1.5 4.0 6.0
Var OH's (Hrs) 1.5 1.0 1.5
V/cost / Unit 0.0 12.5
Fixed Ohs (Hrs) 1.5 2.0 (*)
(*) Based on a budgeted production volume of 90,000 direct labour Hours for the year 90000
Prepare a Production budget for 2006 by quarters showing the no of units to be

produced and the total cost of direct material, direct labour, variable O/H's and fixed
OH's
If the budgeted selling price per unit is Rs 17, what would be the budgeted profit for
the year as a whole
In which quarter, would the company break even
Standard Material Variances
Actual production for the period was

The following are the standards for an output of 1,00o Kgs of a finised Product thereof as below :
Material Quantity Std rate / Kg

Kgs Rs
P 450 20
Q 400 40
R 250 60
Total (gross) 1,100
Loss 100
Nwt 1,000
are as below
AQ at AM AR Total AQ in AM SR Total
P 10,000 19 190,000 10,000 20 200,000
0 0
Q 8,500 42 357,000 8,500 40 340,000
0 0 0 0
R 4,500 65 292,500 4,500 60 270,000
23,000 839,500 23,000 810,000
Loss
Net 20,000 41.98 839,500 20,000 40.50 810,000
Price Variance (29,500)

Mix Variance
Usage Variance
Yield Variance
Matl Cost Variance

The following are the standards for an output of 1,00o Kgs of a finised Product thereof

Kgs Rs
A 62.50 20
B 37.50 10
C 25.00 5
Total (gross) 125.00
Loss 25.00
Nwt 100.00
Actual production for the period was 20,000 Kgs. The actual materials used and the prices thereof
are as below
A 4,500 21 94,500 4,500 20 90,000
0 0
B 1,500 8 12,000 1,500 10 15,000
0 0 0 0
C 1,500 6 9,000 1,500 5 7,500
7,500 115,500 7,500 112,500
Loss
Net 5,600 20.63 115,500 5,600 20.09 112,500

Mix Variance
Usage Variance
Yield Variance
Cost Variance
The following are the standards for a job expected to be completed in 30 weeks Actual details ae as below. The job t
are as below
Labour Quantity Std
Weekly wage
No of workers rate (Rs)
Skilled 2,250.00 60 60
Semi 1,350.00 40 40
UnSkilled 1,800.00 30 30
Total (gross) 5,400.00
Loss 0.00
Nwt 1.00
Skilled 2,240 70 156,800 2,240 60 134,400
0 0
Semi 960 50 48,000 960 40 38,400
0 0 0 0
UnSkilled 2,560 20 51,200 2,560 30 76,800
5,760 256,000 5,760 249,600
Loss
Net 1 256,000.00 256,000 1 249,600.00 249,600

Mix Variance
Usage Variance
Yield Variance
Cost Variance
Overheads Cost Var =

200
Act Bdgtd / Std Vol Var =
Working days 22 20 21.25
man hours 4300 4000 4250 OH cost var
OH abs rate Per Unit of

Prod 5 Bdgt Var
Hours/ Unit of Output 10 10 Volume Var
Act F Ohs Incurred 1800 Capa Var
No of unit produced 425 400 425 Calender Var
200 Efficiency Var
Act Bdt
0 Act days
Act Hrs / day
0 Act Hrs (Total)
No of units 425.0 400

Hrs/ Unit
Act amount
Loss
Net 1,800 2,000.0
Bdt Var 200.0

125.0

200
Working days 22 20 21.25
Prod 5 Bdgt Var
Act F Ohs Incurred 1800 2000 Capa Var
200 Efficiency Var
Act BGtd Ohs

Act days
425.0 4.24 400
1,800 2,000.0
OH cost Var (Act - BdT) 325

bdgt Var (Abs - Bd) 200
Vol var Compo 125.0
- Due to calender
- due to Cap
- Due to effy
Standard Material Variances Actual production for the period was

are as below

Kgs Rs
P 450 20 9,000
Q 400 40 16,000
R 250 60 15,000
Total (gross) 1,100
Loss 100 40,000
Nwt 1,000 40.00
Calculate the (a) Matl cost Variance
AQ in AM AR Total AQ at AM SR Total
P 10,000 19 190,000 10,000 20 200,000

Q 8,500 42 357,000 8,500 40 340,000
R 4,500 65 292,500 4,500 60 270,000
0
839,500 810,000

Mix Var
Yield Var
OH cost Var
Total Matl Cost Var

Kgs Rs
A 62.50 20 1,250
B 37.50 10 375
C 25.00 5 125
Total (gross) 125.00
Loss 25.00 1,750
Nwt 100.00 17.50
A 4,500 21 94,500 4,500 20 90,000

B 1,500 8 12,000 1,500 10 15,000
C 1,500 6 9,000 1,500 5 7,500
0
115,500 112,500
7,500 7,500

Mix Var
Yield Var
OH cost Var
Usage var
Standards to do a certain type of work

Labour Quantity Std
Weekly wage
No of workers rate (Rs)
Skilled 2,250 60 135,000

Semi 1,350 40 54,000
UnSkilled 1,800 30 54,000
Total (gross) 5,400
Loss 0.00 243,000
Nwt 1.00 243,000
2,240 70 156,800 2,240 60 134,400

960 50 48,000 960 40 38,400
2,560 20 51,200 2,560 30 76,800
0
256,000 249,600
5,760 5,760
Rate Variance (6,400)

Mix Var
Efficiency Var
Totsk cost Var
lab Usage var

200
Working days 22 20
Prod 5 Bdgt Var
Act F Ohs Incurred 1800 Capa Var
200 Efficiency Var
Act Base AR BGtd Ohs
425 0.00 1800 400 5.00
1800 2000
OH cost Var (Act - BdT) 325

bdgt Var (Abs - Bd) 200
Vol var Compo
- Due to calender
- due to Cap
- Due to effy

1200
Working days 27 25
man hours 31,500 30,000 0 OH cost var
hrs 0 1 Bdgt Var
Hours/ Unit of Output 0 Volume Var
Act F Ohs Incurred 31,000 30,000 Capa Var
No of unit produced 22,000 20,000 22,000 Calender Var
Efficiency Var
Act Base AR BGtd Ohs
31,500 0.98 31,000 30,000 1.00
31,000 30,000
OH cost Var (Act - BdT) 2,000

bdgt Var (Abs - Bd) (1,000)
Vol var Compo
- Due to calender
- due to Cap
- Due to effy
Qtr 1 Quarter 2 Qtr 3 Qtr 4 Total
Op Inventry 4,000 5,000 5,500 6,000 4,000

Prodn (for cur Qtr) 8,000 10,000 11,000 12,000 41,000
Prodn (for Nxt Qtr 5,000 5,500 6,000 6,500 23,000
Total Prodn 13,000 15,500 17,000 18,500 64,000

Sales 12,000 15,000 16,500 18,000 61,500
Closing Inv 5,000 5,500 6,000 6,500 6,500
Net Inv Addn/ con 1,000 500 500 500
Dir matl cost 65,000 77,500 85,000 92,500 320,000
Dir Lab cost 78,000 93,000 102,000 111,000 384,000
Var OH's (Hrs) 19,500 23,250 25,500 27,750 96,000
Inv (add )/ Cons (12,500) (6,250) (6,250) (6,250) (31,250)
Total cost 150,000 187,500 206,250 225,000 768,750 768,750
Sales 204,000 255,000 280,500 306,000 1,045,500
Contributio 54,000 67,500 74,250 81,000 276,750
Less F costs 180,000

Profit 54,000 67,500 74,250 96,750
Contribution/ Unit 4.5 4.5
BEP 40,000
ual production for the period was 20,000 Kgs. The actual materials used and the prices
reof as below :

Kgs Rs
P 10,000 19
Q 8,500 42
R 4,500 65
Total (gross) 23,000
Loss
Nwt 20,000
Calculate the (a) Matl cost Variance (b) Matl Price Variance (c ) Matl Mix Var and (d) Mat Yield Var
Act input in std prop Std input for act prod
AQ in SM SR SR SQ/ SM SR SR
9,409 20 188,182 9,000 20 180,000
0
8,364 40 334,545 8,000 40 320,000
0 0 0
5,227 60 313,636 5,000 60 300,000
23,000 836,364 22,000 800,000
20,000 41.82 836,364 20,000 40 800,000
26,364
(10,000)
(36,364)
(39,500)
reof
60 7500
Kgs Rs
P 4,500 21 60.0%
Q 1,500 8 20.0%
R 1,500 6 20.0%
Total (gross) 7,500
Loss 1,900
Nwt 5,600
Act input in std prop
3,750 20 75,000 3,500 20 70,000
0
2,250 10 22,500 2,100 10 21,000
0 0 0
1,500 5 7,500 1,400 5 7,000
7,500 105,000 7,000 98,000
5,600 18.75 105,000 5,600 18 98,000
(7,500)
(14,500)
(7,000)
(17,500)
ual details ae as below. The job took 32 weeks to complere

as below
60 324000
Labour Quantity Act

No of Weekly wage
workers rate (Rs)
P 2,240 70 60.0% 70
Q 960 50 20.0% 30
R 2,560 20 20.0% 80
Total (gross) 5,760
Loss 0
Nwt 1
Calculate the (a) Total Lab cost Variance (b) Lab Rate Variance (c ) Lab Mix Var and (d) Lab Yield Var
Act input in std prop Std input for act prod
2,400 60 144,000 2,250 60 135,000
0
1,440 40 57,600 1,350 40 54,000
0 0 0
1,920 30 57,600 1,800 30 54,000
5,760 259,200 5,400 243,000
1 259,200.00 259,200 1 243,000 243,000
9,600
(6,600)
(16,200)
(13,000)
Bdgt Var + Vol Var
Effy var + Capac var + Calend Var
Absorbed Ohs - Actual Ohs
Bdgt Ohs - Act Ohs

Absorbed Ohs - Bdgt Ohs
Std Ohs - Rev Bdgt Ohs
Rev Bdgt Hrs - Bdgtd Hrs
Absorbed Ohs - Std Ohs
Rev Bdgt std
440 430 425
2,200.0 2,150.0
(50.0) (25.0)
Bdgt Var + Vol Var
Bdgt Ohs - Act Ohs

Std for act Input
Rev Bdgt std
440 5.0 430 5.0 425
2,200.0 2,150.0
200.0
(50.0)
reof
as below
Material Quantity Std rate / Kg Std rate / Kg

Kgs Rs Rs
P 10,000 19 190,000
Q 8,500 42 357,000
R 4,500 65 292,500
Loss 839,500
Nwt 20,000 41.98
culate the (a) Matl cost Variance (b) Matl Price Variance (c ) Matl Mix Var and (d) Mat Yield Var
SQ (for act
AQ in SM SR Total prod) in SM SR Total
9,409 20 188,182 9,000 20 180,000

8,364 40 334,545 8,000 40 320,000
5,227 60 313,636 5,000 60 300,000
836,364 800,000
23,000 22,000
26,364
(36,364)
(39,500)
(10,000)
reof
60 7500
Kgs Rs
P 4,500 21 94,500 60.0%
Q 1,500 8 12,000 20.0%
R 1,500 6 9,000 20.0%
Total (gross) 7,500
Loss 1,900 115,500
Nwt 5,600 20.63
Act input in std prop
SQ (for act
3,750 20 75,000 3,500 20 70,000

2,250 10 22,500 2,100 10 21,000
1,500 5 7,500 1,400 5 7,000
105,000 98,000
7,500 7,000
(7,500)
(7,000)
(17,500)
(14,500)
Actuals to do the same work

60 324000
Labour Quantity Act
No of Weekly wage
workers rate (Rs)
P 2,240 70 156,800 60.0% 70
Q 960 50 48,000 20.0% 30
R 2,560 20 51,200 20.0% 80
Total (gross) 5,760
Loss 0 256,000
Nwt 1 256,000
Calculate the (a) Total Lab cost Variance (b) Lab Rate Variance (c ) Lab Mix Var
and (d) Lab Yield Var
SQ (for act
2,400 60 144,000 2,250 60 135,000

1,440 40 57,600 1,350 40 54,000
1,920 30 57,600 1,800 30 54,000
259,200 243,000
5,760 5,400
9,600
(16,200)
(13,000)
(6,600)
Bdgt Var + Vol Var
Bdgt Ohs - Act Ohs

Std for act Input

Rev Bdgt std
440 5.00 430 5.00 425
2200 2150
125
200.0
(50.0)
Bdgt Var + Vol Var
Bdgt Ohs - Act Ohs

Std for act Input

Rev Bdgt std
32,400 1.00 31,500 1.00 33,000
32,400 31,500
3,000
2,400
(900)
Qtr 1 Quarter 2 Qtr 3 Qtr 4
Op Inventory 4,000 5,000 5,500 6,000

Clo Inventory 5,000 5,500 6,000 6,500
Sales 12,000 15,000 16,500 18,000 61,500
Production (2/3) 8,000 10,000 11,000 12,000 41,000

Production (1/3) 5,000 5,500 6,000 6,500 23,000
Production (Total) 13,000 15,500 17,000 18,500 64,000
Clo Inv 0
Dir material 65,000 77,500 85,000 92,500 320,000
Dir Labour 78,000 93,000 102,000 111,000 384,000
Var OH's 19,500 23,250 25,500 27,750 96,000
Less Inv cost 50,000 -81,250 -31,250
Sales Value 204,000 255,000 280,500 306,000 1,045,500

0
Net contribution -8,500 61,250 68,000 156,000 276,750
Less Fixed cost 180,000
Profi 96,750
AbsorBed
2,125.0
2,125.0
Std for act output
AbsorBed
2,125.0
(25.0)
Std for act output
AbsorBed
5.00
2125
(25.0)
Std for act output

AbsorBed
1.00
33,000
1,500
18,000
800,000
Master Budget
following are the figures for the 4th quarter of 2014
Sales of Bug spray 500,000
Less v cost of spray 280,000
contr margin 220,000
Less fixed prod cost 90,000
fixed S & D/ Admin 50,000 140,000
Income bef taxes 80,000
Income taxes 40% 32,000
Variable costs alone are included in Inventory. Fixed costs are treated
period costs and charged to revenue
Co's Balance sheet as at the end of the 4th quarter of 2014
Fixed production costs (Other than Rs. 5,000
Sales and Var costs are to increase by 7% by 1.5%. Cash Fixed production exps are pai
All sales are on credit. 50 % collected in the next quarter Fixed Admin costs (Other than Rs. 3,000/ -
Var costs cmprise of 40% material, 40$ Dir labour and 20% Var Ohs Cash Fixed production exps are paid in the g
Materials are purchased on credit. 40 % of matl cost is o/st at the end of The tax rate is 40%. All taxes are paid for in
Dir labour and dir exps are paid in full in each quarter and there are no
O/st hereunder No Purchase of fixed assets was made in th
prepare a budgete
New Quarter
Sales of Bug spray 500,000 7% 535,000 60%
40% Less v cost - Matl 112,000 7% 119,840 60%
40% Less v cost - Labour 112,000 7% 119,840
20% Less V Cost -Exp 56,000 7% 59,920
contr margin 220,000 235,400
Less fixed prod cost- Dep 5,000 5,000
Less fixed prod cost- others 85,000 1.50% 86,275
fixed S & D / Admin (Dep) 3,000 3,000

fixed Admin S&D (othr) 47,000 3% 48,410
Total Prod cost 140,000 142,685

Income bef taxes 80,000 92,715
40% Income Tax 32,000 37,086
Income after taxes 48,000 55,629
Master Budget
Master Budget
fixed S & D/ Admin 50,000 140,000
Variable costs alone are included in Inventory. Fixed costs are

treated as period costs and charged to revenue
Sales and Var costs are to increase by 7% for next year Cash Fixed production exps are paid in the give
All sales are on credit. 50 % collected in the next quarter Fixed Admin costs (Other than Rs. 3,000/ - of
Var costs cmprise of 40% material, 40$ Dir labour and 20% Var Ohs Cash Fixed production exps are paid in the give
Materials are purchased on credit. 40 % of matl cost is o/st at the end of every
quarter The tax rate is 40%. All taxes are paid for in ful
Dir labour and dir exps are paid in full in each quarter and there are no O/st
hereunder No Purchase of fixed assets was made in the fir
Fixed production costs (Other than Rs. 5,000/ - of Depreciation) are expected
to increase by 1.5% prepare a budgete
Details Cur Yr Gr Next yr

Sales 500,000 7% 535,000
40% V cost - Mat 112,000 7% 119,840
40% V cost - Lab 112,000 7% 119,840
20% V cost - OH's 56,000 7% 59,920
Tot V cost 280,000 299,600
Cont 220,000 235,400
Prod cost - dep 5000 5,000
Prod cost - Others 85,000 1.50% 86,275
Admin/ SD - dep 3000 3,000

Admin/ SD - Others 47,000 3% 48,410
PBT 80,000 92,715
40% Tax 32000 37,086
PAT 48,000 55,629
Following are the stds for an output of 1,00o Kgs of a finised Product
Std rate /
Material Quantity Kg
Kgs Rs
P 450 20 9,000
Q 400 40 16,000
R 250 60 15,000
Total (gross) 1,100
Loss 100 40,000
Net 1,000 Unit Cost 40
AQ in AM AR Total AQ at AM SR
P 10,000 19 190,000 10,000 20

Q 8,500 42 357,000 8,500 40
R 4,500 65 292,500 4,500 60
23,000 839,500 23,000
Matl Cost Var (39,500)

Matl Price Var
Matl Mix Var
Matl Yiled Var
Matl usage var

Kgs Rs
A 62.5 20 1,250
B 37.5 10 375
C 25 5 125
Total (gross) 125
Loss 25 1,750
Nwt 100 Unit cost 17.5
4,500 21 94,500 4,500 20

1,500 8 12,000 1,500 10
1,500 6 9,000 1,500 5
7,500 115,500 7,500

Matl Price Var
Matl Mix Var
Matl Yiled Var
Matl usage var
Standard Lab Variances

Weekly rate
No of workers (Rs)
Skilled 2,250 60 135,000
Semi 1,350 40 54,000
UnSkilled 1,800 30 54,000
Total (gross) 5,400
Loss
Net Job 1 Cost 243,000
2,240 70 156,800 2,240 60

960 50 48,000 960 40
2,560 20 51,200 2,560 30
5,760 256,000 5,760

Matl Price Var
Matl Mix Var
Matl Yiled Var
Matl usage var
Overhead Var
Act Bud / Std
Working days 22 20
man hours 4,300 4,000
Prod 5
Hours/ Unit of Output 10

Act F Ohs Incurred 1,800
No of unit produced 425 400

200
Act Bdgt
0
425 4.24 1,800 400 5
0
425 1,800 400
Cost var 325

Bud Var
Vol Var
Calender
Cap Var
Effy Var
Overhead Var
Act Bud / Std
Working days 27 25
man hours 31,500 30,000
OH abs rate Per Lab Hr 1
Hours/ Unit of Output

Act F Ohs Incurred 31,000 30000
Act Bdgt
0
31,500 0.98 31,000 30,000 1
0
31,500 31,000 30,000
Cost var 2,000

Bud Var
Vol Var
Calender
Cap Var
Effy Var
Liabilities Assets
Accounts Payable 44,800 Cash 30,000
Retained earnings 175,000 account receivable 250,000
Common stock 110,200 Total CA 280,000
Fixtures and Eqpt 130,000
less Acc Depr 80,000 50,000
330,000 330,000
Fixed production costs (Other than Rs. 5,000/ - of Depreciation) are expected to increase
by 1.5%. Cash Fixed production exps are paid in the given quarter abd there are no O/ ST
Fixed Admin costs (Other than Rs. 3,000/ - of Depreciation) are expected to increase by 3%
Cash Fixed production exps are paid in the given quarter abd there are no O/ ST
The tax rate is 40%. All taxes are paid for in full in each quarter
No Purchase of fixed assets was made in the first quarter of 2015

prepare a budgeted P&L , cash flow and B/Sheet
Addn Dedn CB
Accounts Payable 44,800 119,840 116,704 47,936 Cash
Retained earnings 175,000 55,629 230,629 account receiva
Common stock 110,200 110,200 Total CA
Fixtures and Eqp
less Acc Depr
330,000 388,765
Cash Budget
O/ Bal 30,000 A/cs Payable 116,704
Drs 517,500 Labour 119,840
V cost - exps 59,920
F cost - prod 86,275

F cost - Adm /SD 48,410
Tax paid 37,086
547,500 468,235
Cash Bal 79,265
547,500 547,500

Liabilities Assets
Retained earnings 175,000 Receivable 250,000
Fixtures /Eqpt 130,000
330,000 330,000
Liab OB Addn Ded CB Assets

AC payable 44,800 119,840 116,704 47,936 Cash
Ret earnings 175,000 55,629 230,629 Recbls
Com stock 110,200 110,200 Total CA
Fixt / Eqpt
Acc depr
330,000 175,469 116,704 388,765
OB
Recbl
Actual production for the period was 20,000 Kgs. The actual materials used and the
prices thereof are as below
Material Quantity Std rate / Kg Std rate / Kg

Kgs Rs Rs
P 10,000 19 190,000
Q 8,500 42 357,000
R 4,500 65 292,500
Loss 839,500
Net 20,000 Unit Cost 41.98
Calculate the (a) Matl cost Var (b) Matl Price Var (c ) Matl Mix Var and (d) Mat Yiled Var
A (inp) Q in SQ for Act O/put

Total SM SR Total @ SM SR
200,000 9,409 20 188,182 9,000 20

340,000 8,364 40 334,545 8,000 40
270,000 5,227 60 313,636 5,000 60
810,000 23,000 836,364 22,000
(29,500)
26,364
(10,000)

Kgs Rs
P 4,500 21 94,500
Q 1,500 8 12,000
R 1,500 6 9,000
Total (gross) 7,500
Loss 1,900 115,500
Net 5,600 Unit Cost 20.63
Calculate the (a) Matl cost Var (b) Matl Price Var (c ) Matl Mix Var and (d) Mat Yiled Var

90,000 3,750 20 75,000 3,500 20

15,000 2,250 10 22,500 2,100 10
7,500 1,500 5 7,500 1,400 5
112,500 7,500 105,000 7,000
(3,000)
(7,500)
(14,500)

Kgs Rs
P 2,240 70 156,800
Q 960 50 48,000
R 2,560 20 51,200
Total (gross) 5,760
Loss
Net Job 1 256,000
Calculate the (a) Lab cost Var (b) Lab rate Var (c ) Lab Mix Var and (d) Lab Yield Var

134,400 2,400 60 144,000 2,250 60

38,400 1,440 40 57,600 1,350 40
76,800 1,920 30 57,600 1,800 30
249,600 5,760 259,200 5,400
(6,400)
9,600
(6,600)
Cost Var = Bdgt Var + Vol Var
Vol Var = Effy var + Cap var + Calend Var
Absorbed Ohs
OH cost var - Actual Ohs
Bdgt Var Bdgt Ohs - Act Ohs
Absorbed Ohs
Volume Var - Bdgt Ohs
Capa Var Std Ohs - Rev Bdgt Ohs
Calender Var Rev Bdgt Hrs - Bdgtd Hrs
Absorbed Ohs
Efficiency Var - Std Ohs
Rev Bud Std for the given Input
0 0
2,000 440 5 2,200 430 5
0 0
2,000 440 2,200 430
200
125
200
Absorbed Ohs
OH cost var - Actual Ohs
Absorbed Ohs
Volume Var - Bdgt Ohs
Absorbed Ohs
Efficiency Var - Std Ohs
Rev Bud Stds for the given Input
0 0
30,000 32,400 1 32,400 31,500 1
0 0
30,000 32,400 32,400 31,500
(1,000)
3,000
2,400
Addn Dedn CB
30,000 79,265
250,000 535,000 517,500 267,500
280,000
130,000
(80,000) (8,000) 0 42,000
330,000 388,765
OB Addn Ded CB
30,000 79,265
250,000 535,000 517500 267,500
280,000 535,000 517,500 346,765
130,000 130,000
80,000 8,000 88,000
330,000 527,000 517,500 388,765
Cash Book
30,000
517500 payable 116,704
Labour 119,840
V Ohs 59,920
Prod OH 86,275
Admin Oh 48,410
Tax paid 37,086
547,500 468,235
Bal 79,265
terials used and the
Var and (d) Mat Yiled Var
180,000
320,000
300,000
800,000
(36,364)
Var and (d) Mat Yiled Var
70,000
21,000
7,000
98,000
(7,000)

and (d) Lab Yield Var
135,000
54,000
54,000
243,000
(16,200)
Absorbed (SQ for the given Output) *
e given Input SR
0 0
2,150 425 5 2,125
0 0
2,150 425 2,125
(50)
(25)
Absorbed (SQ for the given Output) *

he given Input SR
0 0
31,500 33,000 1 33,000
0 0
31,500 33,000 33,000
(900)
1,500
fixed S & D/ Admin 50,000 140,000
Variable costs alone are included in Inventory. Fixed costs are treated
period costs and charged to revenue
Fixed production costs (Other than R
Sales and Var costs are to increase by 7% by 1.5%. Cash Fixed production exps
All sales are on credit. 50 % collected in the next quarter Fixed Admin costs (Other than Rs. 3,
Var costs cmprise of 40% material, 40$ Dir labour and 20% Var Ohs Cash Fixed production exps are paid
Materials
Dir labour and dir exps are paid in full in each quarter and there are no O/st The tax rate is 40%. All taxes are paid
are purchased on credit. 40 % of matl cost is o/st at the end of ever
hereunder No Purchase of fixed assets was mad
prepare a b
P&L A/C Cur Gr Next
Sales of Bug spray 500,000 7.0% 535,000

40% V cost - mat 112,000 7.0% 119,840
40% V cost - Lab 112,000 7.0% 119,840
20% V cost - Exps 56,000 7.0% 59,920
V Cost - Total
contr margin 220,000 235,400
Fixed prod cost - Dep 5,000 5,000
Fixed prod cost - Other 85,000 1.5% 86,275
fixed S & D/ Admin - Dep 3,000 3,000

fixed S & D/ Admin - Other 47,000 3.0% 48,410
PBT 80,000 92,715
40% Tax 32,000 37,086
PAT 48,000 55,629
Overhead Var
Act Bud / Std
Working days 27 25
man hours 31,500 30,000
OH abs rate Per Lab Hr 1
Hours/ Unit of Output

Act F Ohs Incurred 31,000 30000

Act Bud
22,000 1 31,000 30,000 1
Cost Var 2,000

Bud Var
Vol Var
- Calender
- Capacity Var
- Effy Var
Liabilities Assets
Retained earnings 175,000 account receivable 250,000
Fixtures and Eqpt 130,000
330,000 330,000
Fixed production costs (Other than Rs. 5,000/ - of Depreciation) are expected to increase
by 1.5%. Cash Fixed production exps are paid in the given quarter abd there are no O/ ST
Liab OB Add Ded CB Assets
Accounts Payable 44,800 119,840 116,704 47,936 Cash

Retained earnings 175,000 55,629 230,629 account receivable
Common stock 110,200 110,200 Total CA
Fixtures and Eqpt
less Acc Depr
Total 330,000 388,765 Total
OB
Recbl
Absorbed
OH cost var Ohs - Actual Ohs
Absorbed
Volume Var Ohs - Bdgt Ohs

Absorbed
Efficiency Var Ohs - Std Ohs
Rev Bud Act Input at SR
30,000 32,400 1 32,400 31,500 1
(1,000)
3,000
2,400
OB Add Ded
30,000 79,265
250,000 535,000 517,500 267,500
280,000 535,000 517,500 346,765
130,000 130,000
80,000 8,000 88,000
0
330,000 388,765
l
Cash
30,000 Payable 116,704
517,500 VC Lab 119,840
VC - Exp 59,920
Prod OH 86,275
Admin OH 48,410
Tax 37,086
547,500 Total 468,235

Bal 79,265
Abs (for act out
31,500 33,000 1 33,000
(900)
1,500
The following data is for Heartstrings , a greeting card Mfr
$
Serv Dept costs 50,000
Dir lab wages 242,500
Dir lab - fringe benefits 47,500
Indir Lab - fringe benefit 15,000
Fringe benefit - Prod supervisor 4,500
Total O/T prem paid (above normal rate) 27,500
Idle time cost : Prod dept 20,000
Admin costs 75,000
Office Rent - Sales personnel 7,500
Sales commission 2,500
Prod promotion costs 5,000
Direct material used 1,050,000
Advt exp 49,500
Depr - Fdactory building 57,500
Cost of FG Inventory - Yr end 57,500
Indirect labour - Wages 70,000
Prod supervisor's salary 22,500
Compute the following

1 Total prime cost
2 Total Mfg O/H cost
3 Total Conversion cost
4 Total product (Inventoriable) cost
5 Total Period Cost
6 identify the Opportunity cost
2.43 Loredo Luggae co has the following data for the year 20X2
$
Sales revenue 950,000
WIP Inventory - Dec 31 30,000
WIP Inventory - Jan 1st 40,000
Selling & distribution exps 150,000
Income tax expense 90,000
Purchase of RM 180,000
RM Inventory - dec 31 25,000
RM Inventory - 1st jan 40,000
Direct labor 200,000
Utilities 40,000
Depr - Plant and machinery 60,000
FG Inventory - Dec 31 50,000
FG Inventory - 1st Jan 20,000
Indirect material used 10,000
Indirect labor 15,000
Other Mfg O/H 80,000
Prepare Laredo's Schedule of cost of Goods manufactured

Prepare Laredo's Schedule of cost of Goods Sold
Prepare Laredo's revenue statement
Purchase cost revised to 92, 000 and Indirect Labour revised RS 9,000
What shall be the revised COGM and COGS
2.38 RM Purchases 175,000
Page 67 Direct Labor 254,000
Indirect Labor 109,000
Selling & Admin - Salaries 133,000
Bldg Depr - factory 60,000
Bldg Depr - Admin 20,000
Other Selling & Distr exps 195,000
Other factory costs 344,000
Sales Rev ($ 130 / unit) 1,495,000
0
Inventory data Op clo
RM 15,800 18,200
WIP 35,700 62,100
FG 111,100 97,900
FG (units) 1,350 1,190
Units
Calculate
Mfg Ohs
COGM
COGS
Net Income ( Income Tax - 30%)
no of completed units
Cost / produt Unit 1,350
11,340
1,190
11,500
11,500
2 Determine the missing amounts in the following cases
Details Case A Case B Case C
Sales 0 0 240,000
Opening Inventory - RM 0 60,000 7,500
Clo Inventroy - RM 180,000 0 15,000
Purcahse of RM 200,000 255,000 0
Direct Mterial used (consumed) 140,000 285,000 0
Direct labour 0 300,000 62,500
Mfg O/H's 500,000 80,000
Total Mfg costs 1,040,000 1,035,000 170,000
OP inv - WIP 70,000 60,000
Clo inv - WIP 105,000 2,500
Cost of goods Mfd 1,050,000 175,000
OP inv - FG 100,000 120,000
Cost of goods available for sale 185,000
Clo Inv - FG 12,500
Cost of goods sold 1,090,000 990,000
Gross margin 510,000 510,000
Selling & Admin O/H's 225,000
Income before taxes 300,000 45,000
Income Tax 80,000 135,000
Income after Taxes 27,500
Direct Material Inner
Add OP Inv - RM
Add Purchases
Total RM available for Use
Less Clo Inv of RM
Raw Material used (cons/ Dir matl used) 1,050,000
Direct labour 242,500

Direct labour -fringe benefits 47,500
Direct Exps
Prime cost 1,340,000
Mfg Overheads
Indirect Material
Indirect Labour - wages 70,000
Indir Labour - O/T Prem paid for Dir/Ind Lab 27,500
Idle time cost 20,000
Indirect Labour - fringe benefits 15,000
Prod Supervisor's remn - Salary 22,500
Prod Supervisor's remn - fringe benefits 4,500
Indirect Exps - Dep 57,500
Indirect Exps - Others 50,000
Mfg OH/s - others
Total Mfg O/Hs 267,000
Total Mfg cost / works cost / factory cost 1,607,000
Total conversion cost (lab + OH's) 557,000
Add Op Inv - WIP

Add Mfg / Works / factory Cost 1,607,000
Less Clo Inv - WIP
Cost of goods Manufactured 1,607,000
Add FG - OP Inv
Add Cost of goods Mfd 1,607,000
Less FG - Clo Inv 57,500
Cost of Goods sold 1,549,500
Add Admin OH's 75,000

Add S& D O/H's
- Office rent for sales 7,500
- Sales commissions 2,500
- Prod Prom exps 5,000
- Advt exps 49,500
Cost of S& D O/H's 139,500
Total cost 1,689,000
Direct Material
Add OP Inv - RM 40,000
Less Clo Inv of RM 25,000
Raw Material used (cons/ Dir matl used) 195,000

Direct Exps
Prime cost 395,000
Mfg Overheads
Indirect Material 10,000
Indirect Labour 15,000
Mfg OH'' - others 40,000
Total Mfg O/Hs 80,000 205,000
Total Mfg cost / works cost / factory cost 600,000
Add Op Inv - WIP 40,000

Add Mfg Cost / Works 600,000
Less Clo Inv - WIP 30,000
Cost of goods Manufactured 610,000
Add FG - OP Inv 20,000
Add Cost of goods Mfd 610,000
Cost of Goods sold 580,000
Sales Revenue 950,000

Less Cost of Goods sold 580,000
Gross Margin 370,000
Less Admin OH's
Less S& D O/H's 150,000
Income before Taxes 220,000
Tax 90,000
PAT 130,000
Direct Material
Add OP Inv - RM 15,800
Less Clo Inv of RM 18,200

Prime cost 426,600
Mfg Overheads
Indirect Material
Indirect Labour 109,000
Indirect Exps - Others
Mfg OH'' - others 344,000
Total Mfg O/Hs 513,000
Total Mfg cost / works cost / factory cost 939,600

Cost of goods Manufactured 913,200
Add FG - OP Inv 111,100
Cost of Goods sold 926,400
130 Sales Revenue 1,495,000

Less Cost of Goods sold 926,400 11,500
Gross Margin 568,600
Less Admin OH's 20,000
Less S& D O/H's 328,000 1,274,400
Income before Taxes 220,600
30.0% Tax 66,180
PAT 154,420
Direct Material
Add OP Inv - RM 120,000 60,000
Add Purchases 200,000 255,000
Less Clo Inv of RM 180,000 30,000
Raw Material used (cons/ Dir matl used) 140,000 285,000
Direct labour 400,000 300,000

Direct Exps
Prime cost
Mfg Overheads 500,000 450,000

Indirect Material
Indirect Labour
Indirect Exps - Dep
Mfg OH'' - others
Total Mfg O/Hs
Total Mfg cost / works cost / factory cost 1,040,000 1,035,000
Add Op Inv - WIP 70,000 60,000

Add Mfg Cost / Works 1,040,000 1,035,000
Less Clo Inv - WIP 60,000 105,000
Cost of goods Manufactured 1,050,000 990,000
Add FG - OP Inv 100,000 120,000
Add Cost of goods Mfd 1,050,000 990,000
Cost of goods available for sale 1,150,000 1,110,000
Less FG - Clo Inv 60,000 120,000
Cost of Goods sold 1,090,000 990,000
Sales Revenue 1,600,000 1,500,000
Less Cost of Goods sold 1,090,000 990,000
Gross Margin 510,000 510,000
Less Admin & Selling OH's 210,000 225,000
Income before Taxes 300,000 285,000
Tax 80,000 135,000
PAT 220,000 150,000
Period Direct Material
Add OP Inv - RM
Add Purchases
Total RM available for Use
Less Clo Inv of RM
Raw Material used (cons/ Dir matl used)
Direct labour
Direct labour -fringe benefits
Direct Exps
Prime cost
Mfg Overheads
Indirect Material
Indirect Labour - wages
Indir Labour - O/T Prem paid for Dir/Ind Lab
Idle time cost
Indirect Labour - fringe benefits
Prod Supervisor's remn - Salary
Prod Supervisor's remn - fringe benefits
57,500 Indirect Exps - Dep
Mfg OH/s - others
Total Mfg O/Hs
Total Mfg cost / works cost / factory cost
Total conversion cost (lab + OH's)
Add Op Inv - WIP

Add Mfg / Works / factory Cost
Less Clo Inv - WIP
Cost of goods Manufactured
Add FG - OP Inv
Add Cost of goods Mfd
Less FG - Clo Inv
Cost of Goods sold
75,000 Add Admin OH's

0 Add S& D O/H's
7,500 - Office rent for sales
2,500 - Sales commissions
5,000 - Prod Prom exps
49,500 - Advt exps
139,500 Cost of S& D O/H's
Total cost
Direct Material
Add OP Inv - RM
Add Purchases
Less Clo Inv of RM
Direct labour
Direct Exps
Prime cost
Mfg Overheads
Indirect Material
Indirect Labour
Indirect Exps - Dep
Mfg OH'' - others
Total Mfg O/Hs
Add Op Inv - WIP
Add Mfg Cost / Works
Less Clo Inv - WIP
Add FG - OP Inv
Less FG - Clo Inv
Cost of Goods sold
Sales Revenue
Less Cost of Goods sold
Gross Margin
Less Admin OH's
Less S& D O/H's
Income before Taxes
28.3% Tax
PAT
US
Direct Material
Add OP Inv - RM
Add Purchases
Less Clo Inv of RM
Direct labour
Prime cost
Mfg Overheads
Indirect Material
Indirect Labour
Indirect Exps - Dep
Mfg OH'' - others
Total Mfg O/Hs
Add Op Inv - WIP

Less Clo Inv - WIP
Add FG - OP Inv
Less FG - Clo Inv
Cost of Goods sold
Sales Revenue
80.56 CGS/Unit Less Cost of Goods sold
Gross Margin
Less Admin OH's
110.82 COS/ Unit Less S& D O/H's
Income before Taxes
40.0% Tax
PAT
Direct Material
7,500 Add OP Inv - RM
35,000 Add Purchases
15,000 Less Clo Inv of RM
27,500 Raw Material used (cons/ Dir matl used)
62,500 Direct labour

Direct Exps
Prime cost
80,000 Mfg Overheads

Indirect Material
Indirect Labour
Indirect Exps - Dep
Mfg OH'' - others
Total Mfg O/Hs
170,000 Total Mfg cost / works cost / factory cost
7,500 Add Op Inv - WIP

170,000 Add Mfg Cost / Works
2,500 Less Clo Inv - WIP
175,000 Cost of goods Manufactured
10,000 Add FG - OP Inv
175,000 Add Cost of goods Mfd
185,000 Cost of goods available for sale
12,500 Less FG - Clo Inv
172,500 Cost of Goods sold
240,000 Sales Revenue
172,500 Less Cost of Goods sold
67,500 Gross Margin
22,500 Less Admin & Selling OH's
45,000 Income before Taxes
17,500 26.7% Tax
27,500 PAT
Inner Outer Period 2.37
Direct Material
Add OP Inv - RM
Add Purchases
1,050,000 Total RM available for Use
Less Clo Inv of RM
47,500
Direct labour
1,340,000 Direct labour -fringe benefits
Direct Exps
Prime cost

27,500 Indirect Material
20,000 Indirect Labour - wages
15,000 Indirect Labour - overtime Prem paid
22,500 Idle time cost
4,500 Indirect Labour - fringe benefits
57,500 57,500 Prod Supervisor's remn - Salary
Prod Supervisor's remn - fringe benefits
267,000 Indirect Exps - Others
1,607,000 Mfg OH'' - others
557,000 Total Mfg O/Hs
Total conversion cost
Add Op Inv - WIP

Less Clo Inv - WIP
1,607,000
1,549,500 Add Cost of goods Mfd
Add Admin OH's
75,000 75,000 Add S& D O/H's
- Office rent for sales
7,500 - Sales commissions
2,500 - Prod Prom exps
5,000 - Advt exps
49,500 64,500 Less FG - Clo Inv
1,689,000 197,000
Direct Material
25,000 Total RM available for Use
105,000 Less Clo Inv of RM
200,000
Direct labour
305,000 Direct Exps
Prime cost

7,500 Indirect Material
60,000 Indirect Labour
40,000 Idle time cost
197,500 Indirect Exps - Others
502,500 Mfg OH'' - others
502,500 Total conversion cost
30,000
50,000 Cost of goods Manufactured
482,500
Add FG - OP Inv
467,500 467,500 Add S& D O/H's
Less FG - Clo Inv
317,500 317,500
90,000 Sales Revenue
227,500 Less Cost of Goods sold
Gross Margin
Selling& adsmin
Income before Taxes
129% Tax
PAT
Indian
2.44
15,800 Direct Material
172,600 Total RM available for Use
Less Clo Inv of RM
426,600
Direct labour
Direct Exps
Prime cost
109,000
Indirect Material
344,000 Indirect Labour
Idle time cost
35,700 Mfg OH'' - others
939,600 Total Mfg O/Hs
913,200 Total conversion cost
111,100
1,495,000
328,000 Add S& D O/H's
220,600 Less FG - Clo Inv
132,360
Sales Revenue
Gross Margin
2.45
Direct Material
120,000 60,000 7,500 Add OP Inv - RM
200,000 255,000 35,000 Add Purchases
180,000 30,000 15,000 Total RM available for Use
140,000 285,000 27,500 Less Clo Inv of RM
400,000 300,000 62,500
Direct labour
Direct Exps
Prime cost
500,000 450,000 80,000
Mfg Overheads
Indirect Material
Indirect Labour
Idle time cost
Indirect Exps - Dep
1,040,000 1,035,000 170,000 Indirect Exps - Others
Mfg OH'' - others
70,000 60,000 7,500 Total Mfg O/Hs
1,040,000 1,035,000 170,000 Total Mfg cost / works cost / factory cost
60,000 105,000 2,500 Total conversion cost
1,050,000 990,000 175,000
100,000 120,000 22,500 Add Op Inv - WIP
1,050,000 990,000 175,000 Add Mfg Cost / Works
1,150,000 1,110,000 185,000 Less Clo Inv - WIP
60,000 120,000 12,500 Cost of goods Manufactured
1,090,000 990,000 172,500
1,600,000 1,500,000 240,000 Add FG - OP Inv
1,090,000 990,000 172,500 Add Cost of goods Mfd
510,000 510,000 67,500 Add Admin OH's
210,000 225,000 22,500
300,000 285,000 45,000 Cost of goods avail for sale
80,000 135,000 17,500 Less FG - Clo Inv
220,000 150,000 27,500 Cost of Goods sold
Sales Revenue
Gross Margin
Less Selling exps
PBT
IT Exps
Net Income
Prod costs Period Costs
1,050,000
242,500
47,500
1,340,000
70,000
27,500
20,000
15,000
22,500
4,500
57,500 57,500
50,000
267,000
1,607,000 1,549,500 57,500
557,000
1,607,000
75,000 75,000
0
7,500 7,500
2,500 2,500
5,000 5,000
49,500 49,500
57,500 57,500
1,689,000
20,000 20,000
90,000 92,000
110,000 112,000
12,500 12,500
97,500 99,500
100,000 100,000
197,500 199,500
5,000 5,000
7,500 9,000
30,000 30,000
20,000 20,000
40,000 102,500 40,000
300,000 199,500
20,000 20,000
300,000 199,500
15,000 15,000
305,000 204,500
10,000 10,000
305,000 204,500
25,000 25,000
290,000 189,500
475,000 475,000
290,000 189,500
185,000 285,500
150,000 150,000
35,000 135,500
45,000 45,000
(10,000) 90,500
31,600 31,600
350,000 350,000
381,600 381,600
36,400 36,400
345,200 345,200
508,000 508,000
853,200 853,200
218,000 218,000
120,000 120,000
688,000 688,000
1,026,000 1,026,000
1,879,200 1,879,200
71,400 71,400
1,879,200 1,879,200
124,200 124,200
1,826,400 1,826,400
222,200 222,200
1,826,400 1,826,400
266,000 266,000
420,000 420,000
195,800 195,800
2,538,800 2,538,800
2,990,000 2,990,000
2,538,800 2,538,800
451,200 451,200
120,000 60,000 7,500
200,000 255,000 35,000
180,000 30,000 15,000

140,000 285,000 27,500
400,000 300,000 62,500
585,000 90,000
500,000 450,000 80,000
1,040,000 1,035,000 170,000
70,000 60,000 7,500

1,040,000 1,035,000 170,000
60,000 105,000 2,500
1,050,000 990,000 175,000
100,000 120,000 10,000

1,050,000 990,000 175,000
1,150,000 1,110,000 185,000

60,000 120,000 12,500
1,090,000 990,000 900,000 172,500
1,600,000 1,500,000 240,000

1,090,000 990,000 172,500
510,000 510,000 67,500
210,000 225,000 22,500
300,000 285,000 45,000
80,000 135,000 17,500
220,000 150,000 27,500
3.47
JLR provides consulting services throughtout California.

It uses a Job-order system
Tracable costs are directly charged to individual clients
Other non-traceabe ones are charged using a predetermined OH rate
Clinets are charged for (i) Traceable costs (ii) Overaheads and (c ) A mark up
Golden state anticipates the following costs for the upcoming year.
% cost directly traceable
to clients OH
Prof staff salaries 2,500,000 80.0%
Admin staff 300,000 60.0%
Travel 250,000 90.0%
Photo copying 50,000 90.0%
Other Op cost 100,000 50.0%
3,200,000
The firms' partners want a profit of $ 6,40,000 and plan to add a % mark up to achieve the same
On March 10, JLR completed work on a project for Martin mfg. following costs were incurred.
Prof staff salaries 41,000

Admin staff 2,600
Travel 4,500
Photo copying 500
Other Op cost 1,400
50,000
Calculate tracable costs for the next year

Calculate pre-determine O/H rate. The basis is chargeable cost
% Mark up margin to be added ?
Show the Invoice to be sent to Martin
3.56 Tiana, the controller for caesar glassware co, is in the process of analyzing the overhead
costs for november. She has gathered the following data.
Details Job 77 Job 78 Job 79 common

Lab Direct lab Hrs 3,500 3,000 2,000
Direct lab wages 204,000
Indir Lab Wages 15,000
Supervisor salary 6,000
OP inv RM - OP inv 10,500

WIP - Op Inv 54,000
FG - OP Inv 112,500
Purchases
RM 135,000
Supplies (Indir Matl) 15,000
Dir Matl requisitined by Prod 45,000 37,500 25,500
Ind Matl requisitined by Prodn 12,000
Oth Building occupation costs

factory facilities 6,400
Sales offices 1,600
Admin offices 1,000
Prod Eqpt Costs
Power 4,100
Rep & Maint 1,500

Deprn 1,500
Others 1,000
RM Inv
3.6 Tele teck makes 2 differenr tyoes of color printers : viz. Basic and advanced
Current year cost estimates are as follows : Table " A " Below :
Each models needs 20 hours of direct labour
The basicsystem needs 5 hrs in dept A and 15 hrs in dept B
The advaced system needs 15 Hrs in dept A and 5 Hrs in dept B
The Overhead cost budgeted in the 2 departments are as in table " B " below ;
Table " A "

Basic Advanced
Direct Material 400 800
20 Hrs *
Direct labor $15/Hr 300 300
Mfg O/H ( * ) 400 400
1,100 1,500
( * ) predetermined O/H rate / Dir Lab Hrs 20
Table " B "

Dept A Dept B
Variable Cost ($/ Lab Hr) 16.00 4.00 20.00 400,000
Fixed cost 200,000 200,000 400,000
No of Hrs 20000 20000 800,000
The firm’s management expects to operate at a level of 20,000 direct-labor hours in each production department
during the current year. (This estimate is based on the practical capacity of each department.)
Required:
Show how the company’s predetermined overhead rate was determined.
If the firm prices each model of color printer at 10 percent over its cost, what will be the price of each model?
Suppose the company were to use departmental predetermined overhead rates. Calculate the rate for each of the
two production departments.
Compute
Compute the to
the price product cost offor
be charged each model
each using
model, the departmental
assuming O/H
the company rates calculated
continues in requirement
to price each product at (3).
10
percent above cost. Use the revised product costs calculated in requirement (4).
use a plantwide overhead rate or departmental rates. Consider the potential implications of the overhead rates and
the firm’s pricing policy. How might these considerations affect the firm’s ability to compete in the marketplace?

RM - OP inv 10,500
WIP - Op Inv 54,000
FG - OP Inv 112,500
Purchases
RM 135,000

Sales offices 1,600
Admin offices 1,000
Prod Eqpt Costs
Power 4,100
Rep & Maint 1,500

Deprn 1,500
Others 1,000

RM - OP inv 10,500
WIP - Op Inv 54,000
FG - OP Inv 112,500
Purchases
RM 135,000

Sales offices 1,600
Admin offices 1,000
Prod Eqpt Costs
Power 4,100
Rep & Maint 1,500

Deprn 1,500
Others 1,000
Non-
Traceable Ttraceable
Prof staff salaries 2,000,000 500,000
Admin staff 180,000 120,000
Photo copying 225,000 25,000
Travel 45,000 5,000
Other Op cost 50,000 50,000
2,500,000 700,000
OH % on absorption Base % of Traceable 28.0%
Margin
Margin / Mark up (%)
ame Prof staff salaries 41,000

Admin staff 2,600
d. Photo copying 4,500
Travel 500
Other Op cost 1,400
Total cost (Traceable) 50,000
OH absorption 14,000 28.0%

Total Cost 64,000
Mark up 12,800 20.0%
Invoice 76,800
In November of the previous year,Tiana has prepared the following budget for
direct labour hours and Mfg O/H's for the current year
The plant's theoretical capacity is 1,50,000 direct Lab - Hrs. but practical capacity
Total is 120,000 Hrs. The co uses Direct Labor-Hrs - measured at practical capacity -
8,500 as the cost driver for O/H application.
204,000
15,000 Mfg Oh/ Mfg O/H -
6,000 Abs- /Hr Dir Lab Hrs Mfg OH - var fixed FOH/ Hr
0 3.25 100,000 325,000 216,000 2.16
10,500 3.25 120,000 390,000 216,000 1.80
54,000 3.25 140,000 455,000 216,000 1.54
112,500
0
0 During November, the following jobs were completed. Viz : Job 77 and Job 78
135,000
15,000 Help Tiana wih the following calculations
108,000 1. Calculate the Predetermined O/H rates for the current year
12,000 2. Total cost of Job 77 ?
3. Compute the amount of Mfg O/H applied to Job 79 during the month
0 4. What was the total Mfg O/H applied during November
6,400 5. Compute the actual Mfg O/H incurred during November
1,600 6. Calculate the Overapplied / underapplied O/H for November
1,000
0
4,100
Mfg O/H -
1,500 Dir Lab Hrs Mfg O/H / Unit Mfg OH - var fixed
1,500 100,000 325,000 216,000
1,000 120,000 390,000 216,000
0 140,000 455,000 216,000
Basis Rate/ basis Basic
Direct labor Hrs 20
200,000 10.0 Dept A 20,000 16 5
200,000 10.0 Dept B 20,000 4 15
Direct Material 400
Direct labor Dir lab Hrs 15 300
Mfg O/H ( * ) Dir lab Hrs 20 400
1,100
Price Mark up 10% 1,210
OH rates (dept) 80
Var OH's 60
Fixed OH's Dept A 50
Dept B 150
Dept O/H rates 340
Prod cost (rev) 1,040
20 New price 1,144
duction department
)
ce of each model?
the rate for each of the
deach
in requirement
product at (3).
10
he overhead rates and
n the marketplace?
204,000
15,000
Mfg O/H -
6,000 Dir Lab Hrs Mfg OH - var fixed
0 100,000 325,000 216,000
10,500 120,000 390,000 216,000
54,000 140,000 455,000 216,000
112,500
0
135,000
1,000
0
4,100
Mfg O/H -
1,500 Dir Lab Hrs Mfg O/H / Unit Mfg OH - var fixed
1,500 3.25 100,000 325,000 216,000 2.16
1,000 3.25 120,000 390,000 216,000 1.80
0 3.25 140,000 455,000 216,000 1.54
204,000
15,000
Mfg O/H -
6,000 Dir Lab Hrs Mfg OH - var fixed
0 100,000 325,000 216,000
10,500 120,000 390,000 216,000
54,000 140,000 455,000 216,000
112,500
0
135,000

1,000
0
4,100
MFg var OH/ Mfg (FOH/
1,500 Dir Lab Hrs Mfg OH - var Mfg O/H - fixed Unit Unit)
1,500 100,000 325,000 216,000 3.25 2.16
1,000 120,000 390,000 216,000 3.25 1.80
0 140,000 455,000 216,000 3.25 1.54
% cost directly
Total traceable
2,500,000 Prof staff salaries 2,000,000
300,000 Admin staff 180,000
250,000 Photo copying 225,000
50,000 Travel 45,000
100,000 Other Op cost 50,000
3,200,000 2,500,000
OH rate basis Prof staff sal

Rate
640,000 Mark Up needed

20.0% Total cost
% Mark over total cost
New project
Prof staff salaries 61,500

Admin staff 3,900
Photo copying 750
Travel 6,750
Other Op cost 2,100
Total Dir cost 75,000
OH absorbed 26,250
Total cost 101,250
Mark Up 30,375
Total Job cost 131,625
g budget for Direct Material Rm

Add OP Inv - RM / Indir Matl 10,500
actical capacity Add Purchases 135,000
al capacity - Less Clo Inv of RM
5.41 Prime cost

5.05 Mfg Overheads
4.79 Indirect Material
Indirect Labour
Indirect Labour - suprvr sal
Job 77 and Job 78 Bldg occupation- factory facilities
Power cost
Rep & Maint
Depreciaton
Others
month Mfg O/H's
Total Mfg cost

Total OH abs
rate Add FG - OP Inv 112,500
0.00 Add Cost of goods Mfd 328,824
0.00 Less FG - Clo Inv
0.00 Cost of Goods sold
Sales Revenue
Gross Margin
Less Admin OH's
Less S& D O/H's
Income before Taxes
30.0% Tax
0
Advanced
20 Direct Material
15 Direct labor 20
5 Mfg O/H ( * ) 20
800 Total
300 Price 10%
400
1,500
Var OH / Hr Total FOH
1,650 Dept A 16.0 200,000.0

Dept B 4.0 200,000.0
240
20
150
50
460
1,560 Direct Material
Direct labor 20.0
1,716
Mfg OH - Dept A
Total
New price 10%
Dept A 26.0
Dept B 14.0
g budget for Direct Material Rm

al capacity - Less Clo Inv of RM 37,500
Prime cost 312,000

Mfg Overheads
Indirect Material
Indirect Labour
Power cost
Rep & Maint
Depreciaton
Others
month Mfg O/H's
Total Mfg cost

Total OH abs
5.05 Less FG - Clo Inv 0
Cost of Goods sold
Sales Revenue
Less Cost of Goods sold 441,324
Gross Margin
Less Admin OH's 1,000
Less S& D O/H's 1,600
Income before Taxes
30.0% Tax
0
g budget for Direct Material RM

al capacity - Less Clo Inv of RM 37,500
Prime cost 312,000

Mfg Overheads
Indirect Material
Indirect Labour
Power cost
Rep & Maint
Depreciaton
Others
month Mfg O/H's
Total Mfg cost

Total OH abs
5.41 Add Cost of goods Mfd 328,824
5.05 Less FG - Clo Inv
4.79 Cost of Goods sold
Sales Revenue
Gross Margin
Less Admin OH's
Less S& D O/H's
Income before Taxes
30.0% Tax
O/H's Total
500,000 2,500,000
120,000 300,000
25,000 250,000
5,000 50,000
50,000 100,000
700,000 3,200,000
2,000,000
35.00%
960,000
3,200,000
30.0%
35.00%
30.0%
Indi Mat Job 77 Job 78 Job 79

Lab hrs 3,500 3,000 2,000
15,000
D Labour 84,000 72,000 48,000
12,000 145,500 D material 45,000 37,500 25,500
Op WIP 54,000
OH rate (Abs)
Total
312,000 Act O/H arte
Act O/H 's 19,559 16,765 11,176
12,000 Under / (Over abs)
15,000 Act costs 202,559 126,265 84,676
6,000 84,676
6,400 441,324
4,100 Job cot (w/o oh) 183,000 109,500 73,500
1,500 0 Abs OH 17,675 15,150 10,100
1,500 200,675 124,650 83,600
1,000 under abs 1,884 1,615 1,076
47,500 total 202,559 126,265 84,676
359,500
328,824
441,324
1,000
1,600
Basic Advanced
400 800
15 300 300
20 400 400
1,100 1,500
1,210 1,650
Hrs/ yr FOH / Hr Total OH/Hr
20,000.0 10.0 26.0

20,000.0 10.0 14.0
Basic Advanced
400.0 800.0
15.0 300.0 300.0
130.0 390.0
210.0 70.0
1,040.0 1,560.0
1,144.0 1,716.0
5.0 15.0
15.0 5.0
Indi Mat Job 77

D lab hrs 3,500
15,000
3,000 D Material 45,000
12,000 108,000 Dir Lab 84,000
WIP 54,000
FG
Abs OH 17,675
Total Abs cost 200,675
5.58823529 Act MOH 19,559
12,000
15,000 Under /(ove) abs 1,884
6,000 Act job cost 202,559
6,400
4,100 FG 328,824
1,500 0
1,500
1,000
47,500
359,500
328,824
441,324
Indi Mat Details Job 77

D lab hrs 3,500
15,000
3,000 D Material 45,000
12,000 108,000 Dir Lab 84,000
WIP 54,000
FG
Abs OH 17,675
Total Abs cost 200,675
5.59 Act MOH 19,559
12,000
15,000 Under /(ove) abs 1,884
6,000 Act job cost 202,559
6,400
4,100 FG (frsesh/ old) 328,824
1,500 0 WIP
1,500
1,000
47,500
359,500
328,824
441,324
441,324
1,600
1,000
443,924
Total FG job
8,500 8,500
0
204,000 204,000
0 108,000 108,000
54,000 54,000
112,500 112,500 112,500
0 0
0 0
0 0
0 47,500 47,500
0 0
112,500 526,000
112,500 478,500
0 42,925 42,925
112,500 521,425 4,575
0 4,575
112,500 526,000
Job 78 Job 79 Job Unspec Total
3,000 2,000 8,500
0
37,500 25,500 108,000
72,000 48,000 204,000
54,000
112,500 112,500
15,150 10,100 42,925

124,650 83,600 112,500 521,425
16,765 11,176 0 47,500
1,615 1,076 4,575

126,265 84,676 112,500 526,000
0
112,500 441,324
0
0
0
0
0
0
0
Job 78 Job 79 Other Job Total - Co
3,000 2,000 8,500
37,500 25,500 108,000

72,000 48,000 0 204,000 204,000
54,000
112,500 112,500
15,150 10,100 42,925 521,425

124,650 83,600 112,500 521,425
16,765 11,176 0 47,500 47,500
0
1,615 1,076 0 4,575
126,265 84,676 112,500 526,000
0
112,500 441,324
84,676 84,676
0
0
Units % compln value WIP Inventory -
WIP Inventory 20,000 (Mat - 100% comp : C
Of this Direct material 100.0% 50,000 Costs incurred dur
Conversion cost 10.0% 7,200
Total WIP Inventory - O/Bal 57,200
Units started during the month 30,000 125.0%

Units completed and Trfd to FG by EOM 40,000
Material Conv cost

Sl no Details Units Value Units Value Sl no
Op WIP 20,000 50,000 20,000 7,200

% completion 100.0% 10.0%
Units newly Added 30,000 90,000 30,000 193,500

Direcet material
50,000 140,000 50,000 200,700
Material Conv cost

OP WIP
Mat 20,000 50,000 10,000 7,200
Additions 30,000 90,000 30,000 193,500

Mat
50,000 140,000 40,000 200,700
Piscataway Plastics Company manufactures a highly specialized plastic that is used

extensively in the automobile industry. The following data have been compiled for the
month of June. Conversion activity occurs uniformly throughout the production process. WIP - End June - Direct m
Conversion: 60% complet
Work in process, June 1—50,000 units: Costs incurred during Jun
Direct material: 100% complete, cost of $120,000 Direct material
Conversion: 40% complete, cost of 34,400 Conversion costs:
Balance in work in process, June 1 $154,400 Direct labor
Applied manufacturing o
Units started during June 200,000 Total conversion costs
Required: Prepare sched
Units completed during June and transferred out 190,000 costing steps for the mo
Work in process, June 30:
Material Conv cost

OP WIP 50,000 120,000 50,000 34,400

Additions to WIP during the month 200,000 492,500 200,000 349,800
250,000 612,500 250,000 384,200

996,700
OP WIP
Mat 50,000 120,000 50,000 34,400
Additions 200,000 492,500 200,000 349,800
250,000 612,500 250,000 384,200

WIP Inventory - Clo balance 10,000 Analysis of physical flow of units.
(Mat - 100% comp : Conv - 50% compl) Calculation of equivalent units.
Costs incurred during the montrh Computation of unit costs.
Direct material 90,000 Analysis of total costs.
Applied Mfg O/H's
(Predetermined OH rate * Dir lab 107,500
cost
Totla conversion cost 193,500
Details Units Value Units Value
FG transferred 40,000 40,000

% completion 100.0% 100.0%
WIP Inventory 10,000 10,000

% Completion 100.0% 50.0%
Total equivalent units 50,000 45,000

Unit cost / equiv Unit 2.80 4.46
FG (Equiv / Wtd Avg) 40,000 112,000 40,000 178,400 290,400

WIP (Equiv / Wtd avg) 10,000 28,000 5,000 22,300 50,300
Wtd Avg cost 50,000 140,000 50,000 200,700 340,700
Transferred to FG 40,000 40,000

% completion 100.0% 100.0%
Equivalent units 40,000 40,000
Clo WIP 10,000 10,000
Total Equiv units 50,000 45,000

Wtd avg cost 2.80 4.46
FG Value (Trfd) 40,000 112,000 40,000 178,400 290,400

WIP value 10,000 28,000 5,000 22,300 50,300
Wtd Avg cost 50,000 140,000 200,700
WIP - End June - Direct material: 100% complete

Conversion: 60% complete
Costs incurred during June:
Direct material $492,500
Conversion costs:
Direct labor $87,450
Applied manufacturing overhead 262,350
Total conversion costs
Required: Prepare schedules to accomplish each of the following process-
costing steps for the month of June. Use the weighted-average method of
process costing.
Trfd to FG 190,000 190,000

% completion 100.0% 100.0%
Equivalent Units 190,000 190,000
WIP 60,000 60,000

Equivalent Units 60,000 36,000

Wtd avg Unit Price 2.45 1.70
FG Trfd (No / value) 190,000 465,500 190,000 323,000 788,500

WIP - End Inv 60,000 147,000 36,000 61,200 208,200
Wtd Avg cost 250,000 612,500 250,000 384,200 996,700
Transferred to FG 190,000 190,000

% completion 100.0% 100.0%
Clo WIP 60,000 60,000


Wtd avg cost / Unit 2.45 1.70
FG Value (Trfd) 465,500 323,000 788,500

WIP value 147,000 61,200 208,200
Wtd Avg cost 250,000 612,500 250,000 384,200

physical flow of units.
n of equivalent units.
on of unit costs.
total costs.
Ontario, Inc. manufactures two products, Standard and Enhanced, and applies overhead on the basis of direct-labor
hours. Anticipated overhead and direct-labor time for the upcoming accounting period are $800,000 and 25,000
hours, respectively. Information about the company’s products follows.
Standard: Enhance
Estimated production volume, 3,000 units Estimated production v

Direct-material cost, $25 per unit Direct-material cos
Direct labor per unit, 3 hours at $12 per hour Direct labor per unit, 4 ho
Ontario’s overhead of $800,000 can be identified with three major activities: order processing ($150,000), machine
processing ($560,000), and product inspection ($90,000). These activities are driven by number of orders processed,
machine hours worked, and inspection hours, respectively. Data relevant to these activities follow.
Orders M/C Hours Inspection

Processed worked Hours
Std 300 18,000 2,000
Enahance 200 22,000 8,000
500 40,000 10,000
Top management is very concerned about declining profitability despite a healthy increase in sales volume. The
decrease in income is especially puzzling because the company recently undertook a massive plant renovation during
which new, highly automated machinery was installed—machinery that was expected to produce significant
operating efficiencies.
Required:
Assuming use of direct-labor hours to apply overhead to production, compute the unit manufacturing costs of the
Standard and Enhanced products if the expected manufacturing volume is attained.
Assuming use of activity-based costing, compute the unit manufacturing costs of the Standard and Enhanced produc
if the expected manufacturing volume is attained.
Ontario’s selling prices are based heavily on cost.
By using direct-labor hours as an application base, which product is overcosted and which product is
undercosted? Calculate the amount of the cost distortion for each product.
Is it possible that overcosting and undercosting (i.e., cost distortion) and the subsequent determination of selling
prices are contributing to the company’s profit woes? Explain.
ad on the basis of direct-labor
d are $800,000 and 25,000
Details Basis 1
O/Heads
Enhanced: Dir Lab hrs
MOH abs rate Per D/Lab Hr
Estimated production volume, 4,000 units
Direct-material cost, $40 per unit Prod volume
Direct labor per unit, 4 hours at $12 per hour Material cost/ Unit
cessing ($150,000), machine

y number of orders processed,
vities follow. Dir lab hrs
Dir lab cost Per Hour
Prime cost / unit

Prime cost (Total)
MOH cost (abs)
Total Mfg Cost/ Unit
Total cost
MOH by acticity
ease in sales volume. The

massive plant renovation during
to produce significant
Order processing
M/C processing
nit manufacturing costs of the

Prod Inspn
tandard and Enhanced products

Total O/H cost (ABC)
Total O/H cost (ABC) / unit
Unit cost (ABC)
nd which product is
total cost (By ABC)
equent determination of selling
Co -Wide /
Param 1 Std Enhanced Non -Direct
800,000
25,000
32.0
3,000 4,000
25 40 235,000
3 4
12 36 48 300,000
61 88
183,000 352,000
32 96 128 800,000
157 216
471,000 864,000 1,335,000
90,000 60,000 150,000

252,000 308,000 560,000
18,000 72,000 90,000
360,000 440,000 800,000

120 110
181 198
543,000 792,000 1,335,000

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Prob 1 Sterling auto is open from Monday to Friday

Some details are as follows :

No of cars serviced 2,080

Qns What is the incremental Revenue / Total revised Revenue

Units produced 25,000

Ingredient cost (Variable) Variable 20,000

1 Preapre a budget for May, for a sale of 30,000 units

0 Units produced 25,000 325,000

0.80 Ingredient cost (Variable) 20,000 260,000

The mgt suggested that the advt budget be increased to $ 100,000

Prepare a Revised budget based on the above

Description Budget Actual

Total 7,010,000 7,595,000

Supplies (RM) 3 5,824

Per unit Present New

Ingredient cost (Variable) 0.80 20,000

Total Cost 44,000

Unit cost Present

Ingredient cost 0.80 20,000 24,000

Rent 5,000 5,000

Total 44,000 50,400

Per unit cost 1.76 1.68

What is the Incremental cost associated with Increasing Prod/sales

375,000 325,000 375,000

Supplies 2.0 2.2

475.0 152.0 500.0 167.2

Total 478.0 503.0

Description Unit Price

Total 630.0 670.2

P&L 9,370.0 10,329.8

60,000 65,000 65,000

Diff Description Budget Rev Budget Actual Diff

pping variance 60,000 65,000

Total 7,010,000 7,595,000 7,547,500

Total Cost 11,000 13,000

Sales 10,000 15,000

A Civil contract needs to register with PWD paying Rs . 10, 000

Cost of Matl 30,000 32,000

Profit / (Loss) -6,000 ( 5, 000)

Matl cost 30,000

Net profit / Loss (10,000) (6,000)

sterling Auto workd from Monday to fridaySome details are as follows :

What is the incremental Revenue / Total revised Revenue

The mgt suggested that the advt budget be increased to $ 100,000

Prepare a Revised budget based on the above

Description Budget Actual

Total 7,010,000 7,595,000

Calculate prime cost from the following

Cost of material purchased 30,000

Dir Mat + Dir Lab +

(*) incl CEO salary

Calculate factory cost

Repair and Depreciation o

From the following

Purchases of raw material 9,200

Job cost sheets / Inv

a What are the opening and closing balances in WIP inventory

Total Job 9823 Job 9824

Crafters Cabinet has the following figures $

Raw material Inventory 32,000

Prod eqpt costs - Power

Preztel has the following figs for 2011

Prepare cost sheet upto COS