SEMESTER SPRING 2013
COST AND MANAGEMENT ACCOUNTING (MGT402) ASSIGNMENT NO. 01
DUE DATE: 2nd MAY 2013
MARKS: 30
Learning objectives: To enable the students to prepare Cost
of goods sold statement along with the adjustment for under or over-applied
factory overhead.
Assignment:
Lahore Manufacturing Ltd. (LML)
-
a famous furniture manufacture in Lahore is enjoying an established reputation in style, well-designed
and fine quality home furniture. Mr. Khan - owner of the company is behind this
success.
For the financial
year 2011-12, the company’s
accountant has
gathered following information
to prepare financial statements:
a) Sales during the
year were Rs. 590,000 (450 units);
b) Total labor hours used during the year were reported at
30,000;
c) For charging overhead, the company has estimated FOH at the
rate of Rs. 7 per labor hour. The company has the policy to charge FOH variance
to the cost of goods sold.
d) Cost incurred during the year are:
Details
|
Rs.
|
Purchases – Raw Materials
|
2,26,500
|
Direct labor
|
1,26,400
|
Indirect labor
|
70,000
|
Electricity bills
|
31,200
|
Repair & Maintenance
|
5,000
|
Salaries of sales staff
|
4,400
|
Depreciation – Factory
|
75,000
|
Depreciation – Office
|
1,000
|
Rent – Office
|
25,000
|
Advertising expenses
|
27,000
|
e) 75% of the electricity bill and 40% of repair and maintenance
is relating to factory. f) Inventories at 1st July, 2011:
Finished goods Rs.
22,000
Work in process Rs.
35,000
Raw Material Rs.
10,000
g) Inventories at 30th
June, 2012: Finished goods ?
Work in process Rs.
33,000
Raw Material Rs.
8,000
Note: Finished goods inventory at July 1st 2011 was of 25
units and at June 30th, 2012 was of 32 units.
Requirements:
1.
|
Cost of Goods Sold Statement for the year ended June 30,
2012;
|
(10 Marks)
|
2.
|
Income statement for the year ended June 30, 2012; &
|
(15 Marks)
|
3.
|
Factory overhead schedule with disposition the variance.
|
(5 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.
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 Pre 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.
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Solution Idea:
COST
AND MANAGEMENT ACCOUNTING
ASSIGNMENT # 1
ANSWERS:
1: COST OF GOODS SOLD STATEMENT
LAHORE MANUFACTURING LTD.
|
|
COST OF GOODS SOLD STATEMENT
|
|
FOR YEAR ENDING 30 JUNE 2012
|
|
RUPESS
|
|
OPENING RAW MATERIAL
|
10000
|
ADD : PURCHASES – RAW MATERIAL
|
226500
|
LESS: CLOSING RAW MATERIAL
|
(8000)
|
RAW MATERIAL CONSUMED
|
228500
|
ADD: DIRECT LABOUR
|
126400
|
ADD: FOH (APLLIED)
|
210000
|
TOTAL FACTORY COST
|
564900
|
ADD: OPENING W.I.P
|
35000
|
COST OF GOODS TO BE MANUFACTURED
|
599900
|
LESS: CLOSING W.I.P
|
(33000)
|
COST OF GOODS MANUFACTURED
|
566900
|
ADD: OPENING FINISHED GOODS
|
22000
|
COST OF GOODS TO BE SOLD
|
588900
|
LESS: CLOSING FINISHED GOODS (W1)
|
(39680)
|
COST OF GOODS SOLD (AT
|
549220
|
LESS: OVER APPLIED FOH
|
(39600)
|
COST OF GOODS SOLD (ACTUAL)
|
509620
|
WORKING 1:
COST
OF CLOSING FINISH GOODS = CLOSING FINISHED UNITS x PER UNIT COST
COST
OF CLOSING FINISH GOODS = 32 x 1240
COST OF CLOSING FINISH
GOODS = 39680
UNIT
SOLD = OPENING FINISHED UNITS + UNIT MANUFACTURED – CLOSING FINISHED UNITS
450 =
25 + X – 32
X
= 450 – 25 + 32
X = 457 (TOTAL UNIT
MANUFACTURED)
PER
UNIT MANUFACTURING COST = COST OF GOODS MANUFACTURED
TOTAL
UNIT MANUFACTURED
PER
UNIT MANUFACTURING COST = 566900 = 1240
457
|
2:
INCOME STATEMENT
LAHORE MANUFACTURING LTD.
|
||
INCOME STATEMENT
|
||
FOR
THE YEAR ENDED ON 30 JUNE 2012
|
||
PARTICULARS
|
AMOUNT
|
AMOUNT
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SALES
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590000
|
|
LESS:
COST OF GOODS SOLD
|
(509620)
|
|
GROSS
PROFIT
|
80380
|
|
LESS:
OPERATIING EXPENSE
|
||
·
ELECTRICITY BILLS(25% OF 31200)
|
7800
|
|
·
REPAIR & MAINTENANCE(60% OF 5000)
|
3000
|
|
·
DEPRECIATION-OFFICE
|
1000
|
|
·
RENT-OFFICE
|
25000
|
(36800)
|
OPERATING PROFIT
|
43580
|
|
LESS:
SELLING EXPENSES
|
4400
|
|
LESS:
MARKETING & ADVERTISING EXPENSE
|
27000
|
|
NET PROFIT
|
12180
|
|
3:
F.O.H. SCHEDULE
FOH SCHEDULE:
APPLIED F.O.H 210000
*ACTUAL F.O.H (170400)
OVER/(UNDER) APPLIED F.O.H 39600
*WORKING FOR ACTUAL F.O.H CALCULATION
INDIRECT LABOUR 70000
ELECTERCITY BILL(75%
OF 31200) 23400
REPAIR &
MAINTENANCE(40% OF 5000) 2000
ACTUAL F.O.H 170400
|
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