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Mgt402 Solution

Thursday, April 29, 2010 Posted In Edit This
China Toys Manufacturing Company Ltd.,
Cost of Goods Manufactured and Sold Statement.
For the period ended on 31st Dec, 2009

Particulars
Rs.
Rs.
Direct Material


Opening Material
8000

+Material Purchased
+90000

Material Available for use
98000

-Closing Inventory
-43000

Material Consumed
55000

+Direct Labour
+35000

Prime Cost 60% of C.G.M (W-3)

90000
+FOH 30% of the Conversion (W-2)

+15000
Total Factory Cost

105000
+Opening Work in Process

+70000
Cost of Goods to be Manufactured

175000
-Closing Work in Process

-25000
Cost of Goods Manufactured

150000
+Opening Finished Goods

+50000
Cost of Goods Available forSale

200000
-Closing Finished Goods

-48800
Cost of Goods Sold (W-1)

151200


China Toys Manufacturing Company Ltd.,
Income Statement.
For the period ended on 31st Dec, 2009

Particulars
Rs.
Rs.
Sale

218800
-Sales Return

-28000
Net Sale

216000
-Cost of Goods Sold

-151200
Gross Profit

64800
-Selling and Administration Expenses


Selling Expenses 5% of Net Sale(W-4)
10800

-Administration Expenses 8% of Net Sale (W-5)
17280
28080
Operating Profit

36720
-Financial Expenses

-600
Net Profit

36120

(W-1)
Net Sale = 218800-2800 = 216000
Net Sale = Cost of Gods Sold+ Gross Profit
216000= Cost of Goods Sold+30% of Sale
216000= Cost of Goods Sold+30% of 216000
216000= Cost of Goods Sold+64800
216000-64800 = Cost of Goods Sold
151200 = Cost of Goods Sold

(W-2) Reverse Calculation:-
Conversion Cost = Direct Labour + Factory Over Head
Conversion Cost =70%+30%
Conversion Cost =70%35000+30% of Conversion Cost
Total Conversion Cost = 35000*100/70
Total Conversion Cost 35000*100/70
Total Conversion Cost = 50000
Factory Overhead = 30%of 50000
Factory Overhead = 50000*30/100
Factory Overhead = 15000

Working.3:
Ending Finished Goods Inventory=?
Ending Finished Goods Inventory=
Cost of goods available for sale-Cost of Goods Sold
Ending Finished Goods Inventory= Rs.200,000-Rs.151,200
Ending Finished Goods Inventory=Rs.48800

Working.4:
Cost of Goods Manufactured=?
Cost of Goods Manufactured= Cost of goods available for sale-Opening Finished Goods Inventory
Cost of Goods Manufactured= Rs.200,000-Rs.50,000
Cost of Goods Manufactured= Rs.150,000

Working.5:
Prime Cost=?
In the given statement of Question there is Prime cost (60% of Cost of Goods Manufactured)
SO,
Prime Cost= Rs.150,000*60%
Prime Cost= Rs. 90,000

Working.6:
Total Current Factory Cost=?
Total Current Factory Cost=
Prime Cost +Factory Over Head Cost
Total Current Factory Cost= Rs.90,000+Rs.15,000
Total Current Factory Cost= Rs.105,000

Working.7:
Cost Of Goods to be Manufactured=?
Cost Of Goods to be Manufactured=
Total Current Factory Cost+ Opening Work in Process Inventory
Cost Of Goods to be Manufactured= Rs.105,000+Rs.70,000
Cost Of Goods to be Manufactured= Rs.175,000

Working.8:
Ending Work in Process Inventory=?
Ending Work in Process Inventory=
Cost Of Goods to be Manufactured-Cost Of Goods Manufactured
Ending Work in Process Inventory=Rs.175000-Rs.150,000
Ending Work in Process Inventory= Rs. 25,000

Working.9:
Direct Material used=?
Direct Material used= Prime Cost - Direct Labor
Direct Material used= Rs.90,000 – Rs.35,000
Direct Material used= Rs.55,000

Working.10:
Material Closing Inventory=?
Material Closing Inventory=
Material available for use – Total material used
Material Closing Inventory= Rs.98,000 – Rs55,00
Material Closing Inventory= Rs.43,000

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