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Mgt402 Assignment No. 1 Solution

Tuesday, October 26, 2010 Posted In Edit This


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;


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 RS8700.

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




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