SECTION B: COST ACCOUNTING
Q.6 Accounting for Manufacturing:
The following information was taken from the accounting record at Al-Rehman Industries:
Finished goods 25,000 29,001
Work in process 40,000 48,000
Material 2,000 30,000
During the year the following transactions were performed:
Material purchases 350,000
Direct labor cost 120,000
Indirect factory labour cost 60,000
Depreciation — factory building 20,000
Depreciation — salesroom & office (share equally) 15,000
Utilities (60% to factory, 20% to office & 20% to salesroom) 50,000
Other indirect manufacturing cost 40,000
Sales person’s salaries 40,000
Office salaries 24,000
Sales on account 730,000
(a) Statement of cost of goods manufactured.
(b) Income statement.
Q.7 Job Order Costing:
The following information related to Kashif Industries for the month of December 2010:
(1) Purchased materials on account Rs.90, 000.
(2) Issued material of Rs.80, 00 which includes indirect material of Rs.10, 000.
(3) Labour costs accrued: Direct Rs.45, 000 and indirect Rs.15, 000.
(4) Indirect manufacturing costs other than indirect material and indirect labour incurred on account Rs.19, 000.
(5) Factory overhead costs applied @ 90% of direct labour cost.
(6) Goods costing Rs.120, 00 were completed (finished).
(7) 80% of the completed goods were sold at 20% above cost.
Prepare journal entries for the above information including all adjusting and closing entries.
Q.8 Process Costing
The following information pertains to the goods in process No.3 for the month of December 2009. The company applies FIFO method for inventory valuation. Goods in process inventory December 1, 2010, 40,000 units 75% complete, cost of Rs.38, 000. Cost 140, 000 units transferred in from process No.2 during December Rs.840, 000.
Cost added in process No.3 during December, direct material Rs.275, 000, indirect labour Rs.82, 500 and factory overhead Rs.137, 500. On December 31, 50000 units are still in process No.3 which is 75% complete as to materials and 20% complete as to conversion cost.
Computer the following:
(1) Number of units completed.
(2) Equivalent units of production.
(3) Cost per unit.
(4) Cost of unit transferred to finished goods warehouse.