SEMESTER SPRING 2013
COST AND MANAGEMENT ACCOUNTING (MGT402)
ASSIGNMENT NO. 02
DUE DATE: 1ST JULY 2013 MARKS: 30
Learning objectives: To enable the students to prepare cost of production report along with
treatment of normal and abnormal loss.
Assignment:
Superior Products Manufacturer Limited (SPML) manufactures industrial products that go through
three processing departments – molding, assembling and finishing. The information pertains to the
operations of the molding department for May, 20X3 is as follows:
Units started in molding department 18,200
Cost incurred in molding department: Rs.
Direct material 210,000
Direct labor 077,000
Factory overhead 038,500
14,000 units were completed and transferred to the assembling department during the month of May.
There were 3,500 units as to still-in-process (completed up to 100% material and 50% conversion cost).
700 units were lost during processing and it was treated as normal loss.
Following is the information pertaining to the operations of the assembling department:
11,000 units were completed and transferred to the finishing department. 2,200 units were in process
and completed up to 100% material and 70% conversion cost. Cost incurred in the department is as
follows:
Rs.
Direct material 2,200
Direct labor 45,000
Factory overhead 33,000
During final inspection at the end of the process, it was discovered that 800 units were lost owing to
unavoidable spoilage.
9,000 units were completed in the finishing department and transferred to the store room. 1,500 units
were still in process (converted 30%) and 500 units were lost which were 70% converted but not
charged for any direct material. This loss is to treat as abnormal loss. Cost incurred in finishing
department is:
Rs.
Direct labor 52,000
Factory overhead 41,000
Required: Prepare following schedules for all three departments by using the above information:
a) Quantity Schedule (3 Marks)
b) A schedule of cost to be charged by each department (7 Marks)
c) A schedule of total cost accounted for (7 Marks)
d) A schedule of equivalent production (6 Marks)
e) Cost per unit in each department (3 Marks)
f) Working for normal and abnormal loss (4 Marks)
IMPORTANT:
24 hours extra / grace period after the due date are usually available to overcome uploading
difficulties. This extra time should only be used to meet the emergencies and above mentioned
due dates should always be treated as final to avoid any inconvenience.
OTHER IMPORTANT INSTRUCTIONS:
DEADLINE:
Make sure to upload the solution file before the due date on VULMS.
Any submission made via email after the due date will not be accepted.
FORMATTING GUIDELINES:
Use the font style “Times New Roman” or “Arial” and font size “12”.
It is advised to compose your document in MS-Word format.
You may also compose your assignment in Open Office format.
Use black and blue font colors only.
REFERENCING GUIDELINES:
Use APA style for referencing and citation. For guidance search “APA
reference style” in Google and read various website containing information for better
understanding or visit http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
RULES FOR MARKING
Please note that your assignment will not be graded or graded as Zero (0), if:
It is submitted after the due date.
The file you uploaded does not open or is corrupt.
It is in any format other than MS-Word or Open Office; e.g. PowerPoint, PDF
etc.
It is cheated or copied from other students, internet, books, journals etc.
Note related to load shedding: Please be proactive
Dear students!
As you know that Post Mid-Term semester activities have been started and load shedding
problem is also prevailing in our country now a days. Keeping in view the fact, you all are
advised to post your activities as early as possible without waiting for the due date. For your
convenience; activity schedule has already been uploaded on VULMS for the current semester,
therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.
--------------------------------------------------
SOLUTION IDEA
Cost Charged To Departement
-----------------------------------------------------------------------------
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COST AND MANAGEMENT ACCOUNTING (MGT402)
ASSIGNMENT NO. 02
DUE DATE: 1ST JULY 2013 MARKS: 30
Learning objectives: To enable the students to prepare cost of production report along with
treatment of normal and abnormal loss.
Assignment:
Superior Products Manufacturer Limited (SPML) manufactures industrial products that go through
three processing departments – molding, assembling and finishing. The information pertains to the
operations of the molding department for May, 20X3 is as follows:
Units started in molding department 18,200
Cost incurred in molding department: Rs.
Direct material 210,000
Direct labor 077,000
Factory overhead 038,500
14,000 units were completed and transferred to the assembling department during the month of May.
There were 3,500 units as to still-in-process (completed up to 100% material and 50% conversion cost).
700 units were lost during processing and it was treated as normal loss.
Following is the information pertaining to the operations of the assembling department:
11,000 units were completed and transferred to the finishing department. 2,200 units were in process
and completed up to 100% material and 70% conversion cost. Cost incurred in the department is as
follows:
Rs.
Direct material 2,200
Direct labor 45,000
Factory overhead 33,000
During final inspection at the end of the process, it was discovered that 800 units were lost owing to
unavoidable spoilage.
9,000 units were completed in the finishing department and transferred to the store room. 1,500 units
were still in process (converted 30%) and 500 units were lost which were 70% converted but not
charged for any direct material. This loss is to treat as abnormal loss. Cost incurred in finishing
department is:
Rs.
Direct labor 52,000
Factory overhead 41,000
Required: Prepare following schedules for all three departments by using the above information:
a) Quantity Schedule (3 Marks)
b) A schedule of cost to be charged by each department (7 Marks)
c) A schedule of total cost accounted for (7 Marks)
d) A schedule of equivalent production (6 Marks)
e) Cost per unit in each department (3 Marks)
f) Working for normal and abnormal loss (4 Marks)
IMPORTANT:
24 hours extra / grace period after the due date are usually available to overcome uploading
difficulties. This extra time should only be used to meet the emergencies and above mentioned
due dates should always be treated as final to avoid any inconvenience.
OTHER IMPORTANT INSTRUCTIONS:
DEADLINE:
Make sure to upload the solution file before the due date on VULMS.
Any submission made via email after the due date will not be accepted.
FORMATTING GUIDELINES:
Use the font style “Times New Roman” or “Arial” and font size “12”.
It is advised to compose your document in MS-Word format.
You may also compose your assignment in Open Office format.
Use black and blue font colors only.
REFERENCING GUIDELINES:
Use APA style for referencing and citation. For guidance search “APA
reference style” in Google and read various website containing information for better
understanding or visit http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
RULES FOR MARKING
Please note that your assignment will not be graded or graded as Zero (0), if:
It is submitted after the due date.
The file you uploaded does not open or is corrupt.
It is in any format other than MS-Word or Open Office; e.g. PowerPoint, PDF
etc.
It is cheated or copied from other students, internet, books, journals etc.
Note related to load shedding: Please be proactive
Dear students!
As you know that Post Mid-Term semester activities have been started and load shedding
problem is also prevailing in our country now a days. Keeping in view the fact, you all are
advised to post your activities as early as possible without waiting for the due date. For your
convenience; activity schedule has already been uploaded on VULMS for the current semester,
therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.
--------------------------------------------------
SOLUTION IDEA
1.Quantity Schedule
Units Started in
process 18200
Units transferred to the next
Dep
14000
Units still in process
100% material and 50%
Conversion)
3500
Units lost in
Process
700
18200
Total
Units
Rs.
Rs.
Cost Added by the departments
Direct Material
210000 12.0
Direct
Labour
77000
4.8
FOH
38500 2.4
325500 19.2
Cost Accounted For
As
Rs.
Transferred to next
department
268800
(14000 units * 19.2 Rs.)
Work in process Inventory
Rs.
Direct Material ( 3500 * 100% * 12 units)
42000
Direct Labour ( 3500 * 50% *4.8)
8400
FOH
(3500 * 50% *
2.4) 4200
51600
Total Cost Accounted
For
323400
Equivalent Production
Direct Material ( 14000 + 3500
*100%)
17500
Labour and FoH (14000 + 2500 *
50%)
15750
Unit Cost
Direct Material
210000 / 17500 = 12.0
Direct Labour
77000 / 15750 = 4.8
FOH
38500 / 15750 = 2.4
=19.2
-----------------------------------------------------------------------------
|
Quantity schedule
Unit started and process
Unit transfer to the next
department 14000
Unit still in
process
3500
Unit lost in
process
700
Cost charge to department and cost added by the department
Direct
material
210000
Direct
labor
77000
FOH
38500
Total
325500
Cost accounted for as
follows:
Transferred to next department
14000*19.2
Work in process inventory
Direct material (3500*100*12) 42000
Direct labor
(3500*50*4.8) 8400
FOH
(3500*50*2.4) 4200
Total cost accounted for as
follows:
Equivalent production
Direct material (14000+3500*100) 17500
Labor and FOH (14000+3500*50) 15750
Unit cost
210000/17500 = 12
Direct
material
77000/15750 = 4.8
Direct labor
38500/15750
= 2.4
Total
19.2
|
18200
18200
12
4.8
2.4
19.23
268800
|
-------------------------------------------------------------------------------
partment no 1:
Quantity schedule:18200
Cost charged to department:
Total cost=115500 unit cost=19.332
Total cost accounted for --------------------- 325479
Transferred to next department
14000*19.332 ------------------------------ 270648
Equivalent units produced:
Direct material= 17500
Factory over head=15750
Direct labor=15750
Cost per Units:
Direct material==12
FOH=2.444
Direct labor=4.888
Department no 02 :
Quantity schedule:14000
Cost charged to department:
Total cost=350848 unit cost=26.888
cost charged to dept---------------------------350848
Transferred to next department
295768
Total cost accounted for ----------------------------- 305711.78
Equivalent units produced:
Direct material= 13200
Factory over head=12540
Direct labor=12540
Cost per Units:
Direct material==0.1666
FOH=2.631
Direct labor=3.588
Calculations may be wrong, but the method is perfectly right. so students can get idea from here and then solve it themselves.
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