MGT402 Assignment # 1 solution

Semester “FALL 2010” 


“ Cost & Management Accounting (MGT402) ” 


Assignment No. 01 Marks: 15


PROBLEM: 
On March 01, 2008, FC Corporation had 250 gallons of material in store at Rs. 5.00 per gallon. 


Following were the receipt and issues during March: 
March 03: Purchased 1,200 gallons . Rs. 10 per gallon. 
March 07: Issued 650 gallons to job #2325 
March 13: 150 gallons were returned to store room. 
March 29: Returned to supplier 80 gallons which was purchased on March 3. 


Additional Information: 
During that period, factory worked for 1,000 direct labour hours. Direct labour was Rs. 9,325 
and factory overhead applied rate is Rs. 6.00 per direct labour hour. Actual factory over head 
for that period was Rs. 7,500. 
Following are the year end inventories: 
Work in process Rs. 2,450 
Finished goods Rs. 4,530 
There were no beginning inventories for Work in process and finished goods. 


Required: 
1. Prepare Material Ledger Card under FIFO costing method. (10 Marks) 
2. Prepare Cost of Goods Sold Statement under FIFO. (5 Marks) 
Note: Cost of Goods Sold for the period is adjusted for under or over applied factory overhead.

solution:


Question No 1.
date
Received
Issued
Balance
Gallons of material
Unit cost
amount
Gallons of material
Unit cost
amount
Gallons of material
Unit cost
amount
2008
Rs
Rs
Rs
Rs
Rs
Rs
MAR.1
250
5.00
1250
MAR.3
1200
10
12000
250
1200
5.00
10
1250
12000
MAR.7
250
400
650
5.00
10
1250
4000
800
10
8000
MAR13
150
10
1500
150
800
10
10
1500
8000
80
10
800
70
800
10
10
700
8000
MAR29
MAR29
870
10
8700
CLOSING INVENTORY ACCORDING TO FIFO IS RS 8700.

Question No   2

2. RUPEES
OPNING INVENTORY =250*5=1250
ADD. NET PURCHASES =(1200*10)-(80*10)
=12000-800
=11200
MATERIAL AVAILABLE FOR USE =1250+11200=12450
LESS. CLOSING INVENTORY =12450-8700
DIRECT MATERIAL CONSUMED =3750
ADD.DIRECT LABOUR COST =3750+9325
PRIME COST =13075
ADD.F.O.H =13075*(1000*6)
TOTAL FACTORY COST =19075
COST OF GOODS TO BE MANUFECTURED=19075
LESS.CLOSING WORK IN PROCESS =19075-2450
COST OF GOODS MANUFECTURED =16625
COST OF GOODS TO BE SOLD= =16625
LESS.CLOSING FINISHED GOODS =16625-4530
COST OF GOOD TO SOLD AT NORMAL=12095
ADD UNDER APPLIED FACTORY OVERHEADS=12095+1500
COST OF GOOD SOLD AT ACTUAL =13595

SUPPORTING CALCULATION
ACTUAL FACTORY OVERHEADS =7500
APPLIED FACTORY OVERHEADS =6000
UNDER APPLIED FACTORY OVERHEADS =1500