5-1 Al-Hadi Industries, Cost of Goods Manufactured and Sold Statement, For the Year Ended December 31, 20_. Rs Rs Direct materials: Materials inventory, January 1,20__ 15,000 Add materials purchased .. 240,000 Matcrials available for use 255,000 Less mate inventory, December 31, 20__ 22,000 Direct materials used... Direct labour .. Factory overhead applied (75% of direct labour cost) Total current manufacturing cost ... Add work in process inventory, Janua 233,000 20. Cost of goods available for manufacturing... Less work in process inventory, December 31, 20__ Cost of goods nanutactured ....... Add finishe | goods inventory, January |, 2 Cost of goods available for sale... Less finished goods inventory, December 31, 20, Cost of goods sold... 315,500 18.000 497,500 30,000 00 ‘anon se canter28 Pail Syste of Accounting for Costs AL-Ghanl Garments Factory Income Statement For the Month Ended Mareh 31,20 _ 5-2 Marketing expenses Ad ntinistrative expenses Rs.525.000 x 5 % : 26.250 19» Net protit... AL-Ghani Garments Factory Cost af Goods Manufactured and Sold Statement For the Month Ended Mareh 31, 20. Direct materials: "s " Raw materials inventory March 1, 20 Add purchase Rs Tess returns and allowances Cost at niatertal lable for use... Less raw materials mventory Mareh 31, 2 Direet materials consumed, Direet labor cust Factory overhead: 19,500 138,000 58,500 Power, heat and light 9,600 Depreciation of plant and machinery 4.900 Repair and maimienance of plant and mach ery. 9,000 Tool expenses. -- : 4.600 Indirect labor... - 00 Fire insurance 500 200 Miscellaneous manufacturing costs Total current manufacturing cont Add work in prosess inventors. March |, js availohl) ter manufacturing. wventory, March 31 2 18.000 Sate cat of gonds aututactured add finished greed inventory. March | a ost of guads 2) ihable for sale . ished poculeinventory, Starch 7), 0% ‘anon se canterChapter 5: Financial Staterents 29 53 Al-Ghani Garmeats Factory Income Statement For the Month Ended March 31, 20__ Sas os sseussnsenessssnssetsanneesinesanaysnevansestantnsstensastnnee Less cost of goods sold (as per statement piven below). Gross profit. sc cscs Less operating expenses Marketing expenses Rs 525,000 9 100 Administrative expenses Rs.525,000 » 5° Net profit. ccc sti 78.750 222.550 AbGhani Garments Factory Cost of Goods Manufactured and Sold St For the Month Ended March 31. 2 Rs, Rs. Direct materials: Raw materials inventory March 1. oo Add purchase. Pes. 150,000 Less returns and allowances... 3,000, _ 147,000 Cost of materials available for use Less raw materials inventory March 31,20 Direct materials consumed Direct labor cost ... Factory overhead applied (Rs $8,500 x 0%)... 19,500 138.600 38,500 Total current manufacturing cust at normal. 225.750 Add wath in process inventory, March 1, 2 __ 18,000 Cost of goods available for manufacturing 743,750 Less work in process inventory, March 31, 20 Cost of goods manufa tured at wormal.... Add finished gouds inventory, March 1,20... Cost of gouds available for sale Less finished goods inventory, March 31 Cost of goods sold at normal. Add underapplied lactory overhead, Cost of goods sold at actual .. ‘anon se canter30 Part System of Accounting for Coste Calculation of Under or Overapplied Factory Overhead, Actual factory overhead Rs. Power, heat and Ligh . 9,600 Depreciation of plant and machinery .. 4,900 Repatr and maintenance of plan 9,000 Toot expenses 4,600 Indirect labor 900 Fire insurance ...... 500, Rs. Miscellaneous manufacturing cost 700_ 30,209 Applied factory overhead (Rs.58,500 x 50%) Underapplied factory overhead 950 54 Al-Moghannl Manufacturers Cost of Goods Manufactured and Sold Statement For the Year Ended December 31, 20__ Rs. Rs. Direct materials: Matcrials inventory, January 1,20___. Add materials purchased... Materials available for us Less materials inventory, December 31, 20__. Direct materials used Direct labour ..... Factory overhead applied (50% af Rs,42,000) Total current manufacturing cost at normal Add work in process inventory, January 1, 20__ Cost of goods available for manufacturing. Less work in process inventory, December 31, 20__ Ct of goods manufactured at normal 182,000 Add finished goods inventory, January 1,20 18,000 Cost of ponds available for sale ...... 200,000 Less finished yoods inventory, December 31, 20__ 21,000 Cost of goods sald at normal 179,000 Less overapplied factory overhead 950 Cost of goods sold at actual... 178,050 ‘anon se canterChapter Financial Staternonts 34 SUPPORTING CALCULATIONS, Calculation of Under ar Overapplied Factory Overhead. Actual factory overhead. Rs, Rs. Factory office salarie 4,500 Heat and light costs.. 2,500 Power costs. 1,500 Insurance (fire & other), Indirect materials used... 2,000 Superintendence $00 Depreciation of buildin $00 Depreciation of equipment... 1,500 Factory taxes 1,000 Employer's contribution to provident fund (94% of Rs.5,000) 4,700 Tool expenses... 300 Miscellaneous factory overhead costs. TOM eee 20,050 Applied factory overhead (Rs.42,000 x 50%) 21,000 ‘Overapplied factory overhead 950 eS ‘anon se canter32 Parts System of Accounting for Costs 5-5 MST Company Limited ; Cost of Goods Manufactured and Sold Statemen! For the Year Ended June 30,2019 is Direet materials Materials inventory, July 1, 2018. a7) Add materials purchases Materials available for use ‘ Less materials inventory, June 30, 2019. Direet materials used Direct labour... Factory overhead applied (100% of Rs.16,000 Total current manufacturing cost at normal Add work in process inventory, July 1, 2018 Cost of goods available for manufacturing Less work in process inventory, June 30, 2019 Cost of goods manufactured at normal Add finished goods inventory, July 1, 2018. Cost of goods available for sale... Less finished goods inventory, June 30, 201 Cost of goods sold at normal Add underapplied factory overhead Cost of goods sold at actual... 81,280 Supporting Calculatio Distribution of Underapplied Factory Overhead. Underapplied factory overhead added to: Cost of goods sold = (RS.1,480 ~ Rs.92.500) ¥ R5.80.000 = Rs.1 989 Finished goods inventory = (Re.1,480 ~ Rs:92.500) » Rs.10.000 = Rs 169 Work in process inventory = (Rs.1,480 ~Rs.92,500) * Rs.2,500 = Re 49 ‘anon se canterChapter § Financia! Statoments 33 (b) MST Company Limited ome Statement For the Year Ended June 30,2019 : Rs Sales.. Less cast of goods sol Gross profit. Less operating expenses: Selling costs Administration costs... Net profit.. Id (as per statement given below) MST Company Limited Balance Sheet As on June 30, 2019 Capital & Liabilities Capital stock Retained carnings Rs.47,050 2 0, 2019 Assets | Rs. Cash Accounts receivable Add net profit 16,500 Notes payable Notes receivable Inventories: Accounts payable Materials Taxes payable Work in process Rs.2,500 Rent payable ‘Add underapplied FOH 49 Finished goods Rs.10,000 Add underapplied factory overhead = 160 Prepaid insurance Machinery & equip. 93,500 Less accumulated depreciation 20,000 ‘anion se canter34 Parti, System of Accounting for Costs. 5-6 AL-Qadir Industrial Works Cost of Goods Manufactured and Sold Statement For the Year Ended December 31, 20xx Direct materials: Rs. Rs. Materials inventory, January 1, 20xx 45,000 Add materials purchased Less purchases returns Net purchases... . 470,000_ Materials available for use .... 515,000 Less materials inventory, December 31, 20xx i we 474,009 Direct labor 592,200 Factory overhea 308,800 Total current manufacturing cost 1,375,000 Less increase in work in process inventory 32,400 Cost of goods manufactured ... 1,342,600 Add decrease in finished goods inventory 57,400 * Cost of goods sold .. 1,400,000 57 Al-Mugtadir Manufacturing Concern Cost’of Goods Manufactured and Sold Statement For the Six Months Ended June 30,20___ Direct materials: Rs. Rs. . Rs. Raw materials purchased... 473,300 Add transportation in x 17,700 491,000 Less purchases returns 15,300 ® Purchases discounts 8,700 24,000 Net purchases .... 467,000 Less increase in raw materials inventory 24,400 Direct materials used. 442,600 Direct labor - 316,300 Manufacturing overhead . _ 141,100 Total current manufactu 900,000 Add decrease in work in process 40,000 Cost of goods manufactured ... 940,000 Add decrease in finished goods inventory 60,000 Cost of goods sold .. 1,000,000 ee Answers: (a) Rs.900,000, (b) Rs.940,000, (c) Rs.1,000,000Chapter § Financial Statements 35 Al-Wajid Industry Cost of Goods Sold Statement For the Year Ended Cost of goods manufactured «00. (as per statement given below) .. : Add finished goods inventory — beginning. Cost of goods available for sale... Less finished goods inventory — ending Cost of goods sold AEWajid Industry Cost of Goods Manufactured Statement For the Year Ended Rs. Rs. Rs. Direct materials: Materials inventory — beginnin| Add materials purchased Add carriage inward ... Materials available for use. Less raw materials inventory — ending Direct materials used ... Loose tools: Loose tools inventory — beginning 2,720 ‘Add loose tools purchased 6,800 Loose tools available for use 9,520 Less loose tools inventory — ending 2.040 Loose tools consumed 7,480 Factory supplies: Factory supplies inventory — beginning Add factory supplies purchased Factory supplies available for use Less factory supplies inventory — ending, Factory supplies consumed. : 9.220 Indirect labour... 16.600 Electricity bill of factory Rent of factory building. ‘anon se canter36 Parti System of Accounting for Costs Factory office salaries. EE Depreciation of plant .. 13,000 Total ... oe 114150 Total current mani fact 467,050 Add work in process inventory — begin 7000 $04,050 Cast of goods available for manufacturing Less work in process inventory ~ ending Cost of goods manu factured 24.400 59 ALMajid Industry Cost of Goods Sold Statement For the Month Ended May 31, 20__ Cost of goods manufactured {as per schedule attached)... ‘Add finished goods inventory, May 1 Cost of goods available for sale Less finished goods inventory, May 31. 20 Cost of goods sold ......++ Cost of Goods Manufactured Statement For the Month Ended May 31, 20__ Rs. Rs, Rs Direct materials: Raw materials inventory, May 1, 20__ ‘Add raw materials purchased $3,000 477,000 Raw materials available for us $30,000 Less raw materials inventory, May 31 73,500 Direct materials used . 456,500 212,000 Direct labour Factory overhead: Fuel: Fuel inventory, May |, 20__ ‘Add fuel purchased .. ares Oe, - 63,300 Fuel available for use...... 68,900 Less fuel inventory, May 31, 20 7,980 Fuel consumed ., =a 60,950 Miscellancous factory overhe: 13,250 ‘annoy se canterGtatarrente 37 Chapt New Repairs to factory Factory repair parts inventory, May 1,20 2,650 Add purchase of parts aso Total to be accounted for Vaso Less factory repaw pam invenuiry May V1, 20 5,100 Net repairs to factory = 24,150 Deprechition af plant... 10,500 Supetintendetce 7,959 Indirect factory labour 700 Total Total current manufactuting cost Add work in process inventory, May 1,20 Cost of poods available for manufacturing. Leas work in process inventory, May 31, 20 Cost of poods manufactured 510 (a) Al-Kabeer Industry Cost of Goods Manufactured and Sold Stateme! For the Month Ended March 31, 20__ Rs Rs Direct materials: Materials inventory, March |, 20___ 21,000 Add materials purchased, 90,000 inn oag 19.000. Less materials inventory, March 31, 20. : 92.000 Direct materials used. Direct labour: Assembling department (600 hours x Fé 89)... $4,000 Finishing department (800 hours x Ks 100) _ 80,000 428,000 Factory overliead applied Assembling department (600 hours © RS 4D)..,.00 24,000 Finishing department (800 hours x 5,60)... 48,000 72,000 ‘Total current manufacturing cow sooreehabetin 7 292,000 Add wark in pracess inventory, Maret 1, 0 Work in process —- Materials .. 14,500 Work in process — Labour 23.400 13,100, __$2.200 Work in process — POHL Cowt of gouds available for manufacturing 397200" ‘eanney seh canter38 Paittl System of Accounting for Goats Less work in process inventory, March 31, 20. Work in process --- Materials , Work in process —- Labou Work tn process --- FOH Cost of goods manufactured . Add finished goods inventory, Mareh 1, 20__ 16,250 28,150 _12,800__ $7,209 290,000" Cost of goods available for sale 000, Less finished goods inventory, March 31 — 30,000, Cost of goods sold. 300,000 Supporting Calculation: Calculation of ¢ Labour Hours for March, 20__- Direct labour hours = Direct labour cost + Per hour rate Assembling department = Rs.48,000 + Rs.80 = 600 hours Finishing department = Rs.80,000 + Rs. 100 = 800 hours {b) Calculation of Unit Cost of Materials, Labour and Factory Overhead. Materials Labour FOH Rs. Rs. Rs. Work in process inventory, March | 18,500 23,400 13,300 Add cost put in process during month 92,000 128,000 72,000 Total cost to be accounted for 110,500 151,400 85,300 Less work in process inventory, March 31 16,250 28,150” 12,800 Cost converted into finished goods 94,250 123,250, 72,500 Units produced » 14,500 14,500 14,500 “Cost per unit: (Cost converted into finished goods + units produced) Rs.6.50 Rs.8.50 Rs.5.00 5-11 . Al-Khabeer Industry Cost of Goods Manufactured and Sold Statement For the Month Ended April 30, 20__ Rs. Rs. Direct materials: Materials inventory, April 1, 20__ 28,800 Add materials purchased 93,600 Materials available for use. 122,400 Less materials inventory, Apri 32,4000 Direct materials used... cnssmaewee 901000 ‘annoy se canter40° Part System of Accounting for Costs 512 May 20xx. (1) Number of Units Manufactured during May Units sod + ieee oe Add units in finis red goods inventory M Total units to be accounted for - 30xx Less units in finished foods inventory May 1, 2 Number of units manufactured during the month. (2) 31, 20x. Al-Alcem Engineering Works ( Cost of Goods Manufactured Statement For the Month Ended May 31, 20x Direct Materials: a Materials inventory May 1, 20x Add materials Purchased Add freight j Rs.252,900 . Rs.3,582,000 63,000 3,645,000 Less purchase discount 108,000 Net purchases + 3,537,000 Materials available for us 3,789,900 Less materials inventory May 3] Direct materials used Direct labour. Rs.3,4 04,700 2.817,000 Factory overhead Applied ( ty 1.408.500 Total current Mamufacturing cast at normal. 7,630,2000 Add work 5 72.400 8,202,600 $50,800 (3) Cost Per Unit Manufactured, Cost of goods manufactured — units Manufactured Rs.7,651,800 ~ 2.808 units = Rs.2,725 Per unit” (4) Value of Finishea Goods Inventory On 314 May, 20xx., Units in ending finished Boods inventory x Cost per unit Manufactured 36 units x Rs.2,725 = Rs.98,100 ‘anon se canterChapter S Financial Statements 39 Direct labour: Mixing department (1,000 hours x Rs.60)... 60,000 Finishing department (400 hours x Rs.120). 48,000 108,000 Factory ovethead applied Mixing department (1,000 hours x Rs.36 36,000 Finishing depariment (400 hours x Rs.72 28,800 __ 64,800 262,800 Cost of work put in process... Add work in process inventory, April Materials in process . Labour in process... Factory overhead in process. Cost of goods available for manufacturin, Less work in process inventory, April 30, 2 Materials in proces: Labour in proces Factory overhead in process... Cost of goods manufactured Add finished goods inventory, April], 20__ Cost of goods available far sale Less finished goods inventory, Apri Cost of goods soll... Calculation of Unit Cost of Materials, Labour and Factory Overhead. Materials Labour FOH Rs. Rs. Rs. Work in process inventory, April 1 10,800 14,400 9,600 Add cost put in process during month 90,000 _ 108,000 64.800 Total cost to be accounted for 122,400 74,400 Less work in process inventory, April 30 9,600 7,200 Cost converted into finished goods 112,800 67.200 Units produced 6,000 6,000 6,000 Cost per unit: (Cost converted into finished goods + units produced) Rs.14.80 Rs.18.80 Rs.11,20 ‘anon se canterGhapterS Financial Statements 41 (5) ALAleem Engineering Works Cost of Goods Sold Statement For the Month Ended May 31, 200 Cos of goods manufactured Rs. 7,651,800 Add finished goods inventory May 1. 200... 242,550_ Cost of goods available for sale . 7,894,550 Less finished goods inventory Mag3 1, 208... 98,100 Cost of goods sold (6) Gross Profit — Total and Per U Sales 2,835 units x Rs.4,300....... Less cost of goods sold Rs. 12,190,500 7.796.250. Gross profit Gross profit ~ Units sold 35 = Rs.1,550 per unit Gross profit per unit Rs, 4,394,500 ~ 2, §-13. (1) Number of Units Manufactured." Units sold 1,000 Add units in finished goods inventory, June 30, 20___ 10. 240 Total units to be accounted for Less units in finished goods inventory, June 1, ‘Units manufactured .. aeseones 280. 960 (2) Cost of Closing Work in Process Inventory. Direct materials ... = Direct labour .. Factory overhead (Rs. "54,000 Rs.72,000) \ Rs.3,600.. Total .. ‘anon se canterr ting for Costs 42 Part System of Accounting try 0) AA ee al atacturing Staten y Rs For the Month Ended Ju 90.000 72,000 54,000 Direct materials 54,000 216,000 Direct labour Factory overhead noe Total current manufacturing cost . Bs 36.0007 Add work in process inventory, JN oe 14°400 Cost of goods available for manulacturin 501 con Less work in process inventory, June 30, 20__ 201,600 Cost of goods manufactured... (4) Cost of Exch Unit Manufactured, Cost of goods manufactured = Units manufactured Rs.201,600~ 960 units = Rs.210 (6) Ending Finished Goods Inventory. " ctured Units in ending finished poade inventory x Per unit cost of goods manufa 240 units x Rs.210 Rs.S0,a90 (6) Cost of Goods Sold, Rs. Cost of, B00ds mimufactured ots » 201,600 Add finished poods inventory, June 1. 20 — 32,400. Cost of goods available for sale 234,000 Less finished 800ds inventory, June 30,20 50,400 Cost of goods sold 183,600 5-14 Calculation of Cost of Goods Sold. Total sales Of last five Years =Rs.7,760,000 Total gross Profit of last five Years = Rs.2,328,000 Gross profit Percentage = (Rs.2,39; 000 = Rs.7,760,000) * 100 = 309% Cost of goods sold Percentage = 100 39 = 70% Cost of poods Sold upto May 31, 2019 = Rs.960,000 x 70% = Rs.672,000 ‘anon se canterChapter 9 Fan Calculation of Work In Process Inventory Lost by Fire, IStaiaments 43 Direct materialy Re Rs. Rs Raw materials inventory, Jan 1, 2019 40,000, Adal raw materials purchased ve 250,000 Add freight in... . 2,000 _262,000_ Raw materials available for use .......... 302,000 Less raw materials inventory May 31,2019 65,000 Direct materials used, 237,000 Direct labor 160,000 Factory overhead Rs. 160,000 5 75% 120,000 Total current manufacturing cost Add work in process inventory, Jan, 1, 2019... Cost of goods available for manufacturing: Less work in process inventory, May 31, 201 Cost of goods manufactured 637,000 Add finished goods inventory Jan. 1, 2019 . 120,000 Cost of goods available for sale. 777,000 Less finished goods inventory May 31,2 105,000_ Cost of goods sold. 672,000 Answer: Work in process inventory lost by fire = Rs.65,000 515 Al-Haleem Industrial Co. Lid, Income Statement For the Year Ended Rs. Rs. Rs. Sales ... 675,000 Less cost of goods sold: Direct material Materials inventory at the beginning ....... 75,000 Add materials purchased 250,000 Materials available for use 325,000 Less materials inventory at the end 85,000 Direct materials used (Rs.400,000 x 60%) .. 240,000 Direct Labour sssssssssssstsscsssssssssses . 150,000 Factory overhead (Rs.150,000 x 40%). 60,000 | Total current manufacturing cost. 450,000 | Add work in process inventory al the begi 95,000 Cost of goods available for manufacturin $45,000 Less work in process inventory al the end. 130,000 a ‘eaney se cantering for Costs. 44 Pansit System of Accounting 75000" “135.000 $50,000 150.000 Cost of goods manufactured Add finished goods inventory at Cost of goods available for sale... Less finished goods inventory at the ens Cost of goods sold Gross profit er Less operatmy expenses: 67,500 Selling expenses (Rs 675,000 6 10%)... "33,750 101,259 * Administrative expenses (Rs.675,000 x 5%). SEL he profit before tan. 15.000 Income tay - Net profit after tay... ae S16. a Al-Kareem Industry Cost of Goods Manufactured and Sold Statement For the Month Ended, Rs. Rs. Direct materials: : Materials inventory beginning. 34,500 Add materials purchased .. -430.000_ Materials available for use. 484,500 Less materials inventory ending. 37,700 Direct materials used . 446,800 Direct labour 296,875 Factory overhea 178,125 Total current manufacturing cost 921,800 Add work in process inventory beginning 45,600. Cost of goods available for manufacturing "367.400" Less work in process inventory endin 48.700 Cos of goods manufactured ..... 918.700 Add finished goods inventory beginning. 56.700 Cost of goods available for sale... 05. Less finished goods inventory ending 73.400 Cost of goods sold. — 02st 007 910.000 —_ Total conversion cost = Rs.921,800 — Rs.446,800 = Rs.475,000, Proportion between direct labour and factory overhead = 100:60 Direct labour Rs. 475,000 x 100/160 = Rs.296,875 Factory overhead = Rs. 475,000 x 60/161 9.1 78,125 . ‘anon se canterChapter § Financial Statements 45 (b) Prime Cost Charged to Work in Proce Direct materials... ~ Direct labour Prime cost ....... Rs.446,800 (c) Conversion Cost Charged to Work in Process: Direet labour Factory overhea, Rs.296,875 17) Conversion cost... S47. Al-Mateen Manufacturing Co. Ltd. Income Statement For the Month Ended July 31, 20«x Rs. Rs. Sales... 5,500,000 Less cost of goods sold (as per schedule! 3,250,000 Gross profit. 2,250,000 Less operating expenses: Marketing expenses Rs.5,500,000 x 7.5% 412,500 Administrative expenses Rs.5,500,000 x 5% 275,000 Net profit.. Bolan Industrial Co. Ltd. Cost of Goods Manufactured and Sold Statement For the Month Ended July 31,2018 Rs. Rs. Direct materials: Materials inventory -— Beginnin; 190,000 Add purchases .. + 1,600,000 Materials available for use 1,790,000 Less materials inventory --- Ending. 150,000 Direct materials used. ~ 1,640,000 Direct labour .. 950,000 Factory overhead (Rs.950,000 + 125%) Total current manufacturing cost . Add work in process inventory --- Beginning Cost of goods available for manufacturing. Less work in process inventory -—- Ending. Cost of goods manufactured ‘anon se canterfor Conta 46 Pann tpptern wf Accmuribing | - Heginnling Add Nisha ponds inventory «> Hep Com th avallaite for sale ie te heal goeads inventory > Lind Cost of youde wuld ine 1 ar, de Nisione niin Hmicrondi ducer 0% oe eo) Cite ald ——-— AlN nits (0 finished gonds inventory at the end ———— — Er etal sanity y sale = . fon, ‘ goods inventory at the beginning. <= 2,200" 2,200 Hactured during the year — — —— (b) i Al-Moqeet Manufacturers Coat of Goods Manufactured Statement Vor the Year Ended December 31,20 Direct materiaty Ks Rs. Matetials purchased 390,000 Leas purchases return, —#.000_ Net Naver 482.000 Leas wittese in materials inventory. —34.000_ Ditcct materials used wm 348,000 Ditect labour a 290,000 Vactory overhead applied... 232/000 Total current Manutac tiring cost at ‘hormal 870,000" Add work in Process inventory beginning: * Materials in process Labour in Process, 20,900 rou M1500 process 1 Cost of woods available for manufacturing, 39.6000 Hess work in process inven Hory ending. “909,600 Match 1 process 15. Labour in jagcess ioe TOM in precens 9 ton Cos of pods Manufactured at nv ‘anon se canterChaptor 5 Financial Statements Supporting Calculations. Total current manufacturing cost = Cost of materials used + 40% Rs.348,000 + 40% = Rs.870,000 Total conversion cost = Rs.870,000 ~ Rs.348,000 = R Proportion between direct Labour and factory overhea Direct labour = Ry.522,000 x 100/180 = Rs. 290,000 Factory overhead = Rs.522,000 x 80/180 = Rs.232,000 522,000 (c) Cost Per Unit Manufactured during the Year, Cost of goods manufactured + units manufactured Rs.880,000 = 2,200 units = Rs.400 per unit (d) Value of Ending Finished Goods Inventory. Units in ending finished goods inventory x Per unit cost 700 units x Rs 490 = Rs.280,000 (e) Al-Moqeet Manufacturers Cost of Goods Sold Statement For the Year Ended December 31, 20__ Rs. Cos of goods manufactured at normal... Add finished goods inventory beginning Cost of goods available for sale Less fiitished goods inventory ending Cost of goods sold at normal Add underapplied factory overhead (Rs.242,000 ~ Rs.232.000) Cost of goods sold at actual... (f) Cost Per Unit Manufactured During Previous Year. Cost of finished goods beginning inventory ~ Units in beginning finished goods inventory Rs.190,000 + 500 units = Rs.380 per unit a7 880,000 190.000 1,070,000 280,000 790,000 10. 00, a ‘eaney se canter43° Pama System ot Accounting tor Costs S19 . 'y Al-Moeed Manufacturing Compan: Statement Showing Cost of avestane by Fire For the Period Ended Feb. 26, = rr Direct materials; nee Materials inventory, Jan. 1, 20xx Add purchases ...... Materials available for use Less materials inventory, Fel Direct materials used. Direct labour Factory overhead . Total current manufacturing cost Add work in process inventory, Jan. 1, 20xx. Cost of goods available for manufacturing... Less work in process inventory, Feb. 26, 20xx Cost of goods manufactured Add finished goods inventor Cost of goods available for sal: Less finished goods inventory, Feb. 26, 20xx Cost of goods sold . 770,000 875,000 Supporting Calculations, If gross profit is 40% of net sales then: Cost of goods sold = 100 ~40 = 60% of net sales Cost of goods sold = — Rs.2,600,000 x 60% = Rs. 1,560,000 Cost of goods manufactured x 80% Rs. 1,500,000 x 80% = Rs.1,200,000 Direct materials = = — Prime cost - Direct labour = Rs.1,200,000 — Rs.450,000 = Rs.730,000 If factory overhead is '/¢ of conversion cost then: Direct labour = = 1 ~ "f= %4 of conversion cost Conversion cost. = Rs,450,000 + */ = Rs.600,000 . : = Conversion cost ~ direct labour BIO ONE Neee Rs.600,000 — Rs.450,000 = Rs.150,000 Prime cost (a) Finished goods inventory lost by fire, 5.220.999 Aehswers: (b) Work in process inventory lost by fire Rs.270,009 (c) Raw materials inventory lost by fire 125,009 a ‘anon se canterGraptor Financial Biatarnents 49 §-20 Al-Momeet Manufacturers Cost of Goods Manufactured and Sold Statement For the Year Ended December 31, 20__ ; Rs. Rs. Direct materials: Materials inventory, January 1, 20. $0,000 Add purchases. — 320,000 Materials available for use 370,000 Less materials inventory, December 31,20__ Direct materials used .. 315,000 Direct labour . 90,000 Factory overheat 45,000 Total current manufacturing cost 450,000 Add work in process inventory, January 1,20__. —60,000_ Cost of goods available for manufacturing... Less work in process inventory, December 31,20___ Cost of goods manufactured ‘Add finished goods inventory, January 1, 20__ Cost of goods available for sale... Less finished goods inventory, December 31,20__..« Cost of goods sold ... 487,500 —_— Supporting Calculations. ee carve Direct labour + 20% Total current manufacturing cost = . = Rs,90,000+ 20% = Rs.450,000 If total conversion cost = 100% Less factory overhead = 33-18% Direct labour = 66-23% ion cost = Direct labour + 66-2/3% Total conversion = Rs.90,000 + 66-2/3% = Rs.135,000 ‘actory = Conversion cost — Direct labour . overeat = Rs.135,000 -Rs.90,000 = Rs.45,000 |d percent 100% — 25% = 75% of sales a Se ct uots sold = Rs.650,000 x 75% = Rs.487,500 ‘anon se canter80 Parti fyatom of Accounting for Conte 521, ‘ Income Statement For the Voor ne Sales Rs. 1,200,000 + 10% Lexs cost of goods sold ‘Girows prot 1s.12,000,000 x 40% Less operating expenses , 00,000 Marketing expenses Rs.12,000,000 » 15% Ve | 762,500 3.562 5, Administrative expenses LS 727 Net from operations yx 5% Itsy, Less interest on bonds payable Rs.2,000,000 x 37.5% x 5% mae Net income betire tax 5-22 Number of Units that Must be Sold. Number of units to be sold = — Gross profit for the last year + Expected gross profit per unit (a) If sales price is Rs.850, Number of units to be sold = Rs.7,500,000 + Rs.265 = 28,302 units (b) If sales Price is Rs,875, Number of units to be sold = Rs.7,500,000 + Rs,290 = 25,862 units in ulatio Calculation of Gross Profit of the Last Year, Sales 30,000 units x Rs.750 Rs.22,500. Less cost of goods soll Rs.22,500,000 x 667% 15.000'000 Gross profit Rs,22,500,000 x 33°%4% ——— Calculation of Unit Cost of Last Year. Total cost per unit | Rs. Nene * 30,000 units Rs.s00 Materials cost per unit Rs.500 x 50% Row Labor cost per unit Rs.500 x 40% nee Factory overhead cost per unit Rs.500 x 10% 2 ‘anon se canterChapter 5 Financsal Statements 54 Calculation of Expected Unit Cost af Coming Year. Materials cost per unit 1ts.250 4 20% Labor cost per unit Rs.200 41 Factory overhead cost per unit Rs, 504 10% Total Rs.300 20 Calculation of Expected Gross Profit Per Unit. Gross profit per unit = Sales price per unit - Total cast per unit Ifsales price is Rs.850 per unit Gross profit per unit = Rs.850— Rs.585 = Rs.265 Ifsales price is Rs.875 per unit Gross profit per unit = Rs.875 — Rs.585 = Rs.290 5-23 Number of Units to be Sold during the Next Year. Number of units to be sold = — Gross profit for the last year + Expected gross profit per unit (a) If sales price is Rs.650. Number of units to be sold = — Rs.480,000 + Rs.150 = 3,200 units (b) If sales price is Rs.700 Number of units to be sold = —_ Rs.480,000 ~ Rs.200 = 2,400 units Calculation of Gross Profit of the Previous Year. Sales 2,400 units x Rs.600 Rs.1,440,000 Less cost of goods sold 960,000 Gross profit Rs.1,440,000 x 50/150 Rs._ 480,000 Calculation of Unit Cost of the Previous Year. Total cost per unit Rs.960,000 = 2,400 units Rs.400 Materials cost per unit Rs.400 x 60% Rs.240 Labor cost per unit Rs.400 x 20% Rs. 80 Factory overhead cost per unit Rs.400 x 20% Rs 80 ‘anon se canter52 Parti System of Accounting for Costs, Calculation of Unit Cost of Next Year. Materials cost per unit Rs.240 + 30% Reaig Labor cost per unit Rs, 80+ 20% % Factory overhead cost per unit Rs. 80+ 15% ene Total E00" Calculation of Expected Gross Profit Per Unit for the Next Year. Gross profit per unit = Sales price per unit ~ Total cost perunit If sales price is Rs.650 per unit Gross profit per cane = Rs.650 -— Rs.500 = Rs,150 If sales price is Rs.700 per unit Gross profit per unit = Rs.700 — Rs,500 = Rs.200 5-24 Al-Momin Traders Income Statement . For the Year Ended Dec. 31, 20x Sales... or . Rs.1,812,500 Less cost of goods sol: Beginning inventory (at cost). Rs, 218,750 . _ 1,312,500 Cost of goods avail 1,531,250 Less ending inventory (at cost). 262,500, 1,268,750 Gross profit... eons 543,750 Less operating expenses? Marketing expenses. $1,500 Administrative expenses .. 32,250° 113,750 Net profit... .» __Rs._ 430,000 s ti jculations: Calculation of Purchases at Sales Price. Sales Rs.1,812,500 Add ending inventory (at sales price) vy 375,000, Goods available for sale (at sales price) 2,187,500 312,500 Less beginning inventory (at sales price) .. Purchases at sales price..... RS1.875,000 ‘anon se canterChaptar 8 Financial Stataments 63 © ona of Percentage af Cost to § tes Frkee. Purchases at cost price + Purchases at sales price) x 100 ao 312,500 + 1,875,000) x 100 = 70% n of Inventories at Cost, cginning inventory = Rs, 312,500 x 70% = Rs. 218,750 - Ending inventory = Rs, 375,000 x 70% Rs. 262,500 . 5:25 Al-Mobaimin Traders: Income Statement For the Year Ended Dec. 31,20__ Rs. Rs. Sales 14,445,000 Less cost of go Beginning, inventory (at cost) . 1,316,250 Add purchases .. 9,828,000 Cost of goods a ible for sale 11,144,250 Less ending inventory (at cost) 1,755,000 9,389,250 Gross profit . 5,055750 Less operating expenses: Marketing expenses Rs. 14,445,000.x 7.5% 1,083,375 Administrative expenses Rs. 14,445,000 x 2.5% __ 361,125 1,444,500 Net profit. 3,611,250 Supporting Calculations: Calculation of Purchases at Sales Price. Sales Rs.14,445,000 Add closing inventory (at sales price) . __2,700,000_ Goods available for sale (at sales price) . 17,145,000 Less beginning inventory (at sales price) __2,025,000_ Purchases at sales price Rs.15.120,000_ Calculation of Percentage of Cost to Sales Price. (Purchases at cost price + Purthases at sales price) x 100 (9,828,000 + 15,120,000) x 100 = 65% Calculation of Inventories at Cost. Beginning inventory = Rs. 2,025,000 x 65% = Rs.1,316,250 Ending inventory = Rs. 2, 700,000 x 65% = Rs.1,755,000 ‘anon seh cantaner54 Parr, System of Accounting for Costs 5.26 2) Computation of Sales Price Per Uni - fit per unit a Sales price = Total cost per unit as given + Net pro Sales price = Rs.1,400 + 30% of sales price 70% Sales price = Rs, 1,400 Sales price = Rs.1,400+ 70% Sales price = Rs.2,000 (b) : Al-Abed Industry Estimated Income Statement for New Product For the Year Rs. Sales $,000 units x Rs.2,000.. Less cost of goods sold: Direct materials $,000 units x Rs.400 2,000,000 Direct labor 5,000 units x Rs.350 1,750,000 Factory overhead 5,000 units x Rs.250 1,250,000 Gross profit Less operating expenses: Marketing expenses 5,000 units x Rs.300 1,500,000 Admin. expenses —$,000 units x Rs 100 500,000 Net profit... oe 5-27 (a) Computation of Sales Price Per Unit. Sales price = Total cost as given + Royalty + Net profit Sales price = Rs.275 + 20% of sales price + 25% of the sales price Sales price = Rs,275 + 45 % of sales price ‘ 55% Sales price = Rs.27S Rs.275 + 55% Rs.500 Sales pric (b) Computation of Royalty Payable. Royalty payable per unit = Rs.500 x 20% = Rs.100 Rs, 10,000,000 5.000.000 3,000,000 2,000,000 3,000,000 —— Royalty payable for sale of 10,000 units = Rs.100 x 10,000 units = Rs.1,000,000 ‘anon se canter() AkWahid Industry Chapter 5 Financial Statements $5 _ Estimated Income Statement For the Year Sales 10,000 units x Rs.500........... Less cost of goods sold: Direct materials .. Direct labor Factory overhead Gross profit. Less operating expenses: Marketing expenses Add royalty Administrative expenses Net profit. 1,000,000 1,600,000 ‘anon se canter