The Physio College of Rehabilitation and Sciences Multan

Class: BBA Semester: 3RD

Subject: MANAGERIAL ACCOUNTING Term: MID Term
Date: 18/01/2021 Time Allowed: 3:00 Hours
Marks: 25+5=30 Exam Session: ------------
Course Instructor: Nadeem Akhtar Bukhari
NOTE:
Dear Students
1. Paper will attempt on sheets and scan with camscanner & make PDF file and
send on Teacher's Whats App personal Number (0333-6130620)
2. Every student makes separate PDF file with properly mentioned name and roll
number or serial number & submit within time limit.
3. Attempt all questions. Each question carries equal marks.

Question No.1

Swift Company was organized on March 1 of the current year. After five months of start-up losses,
management had expected to earn a profit during August. Management was disappointed, however,
when the income statement for August also showed a loss. August’s income statement follows:

Swift Company
Income Statement
For the Month Ended August 31

After seeing the $12,000 loss for August, Swift’s president stated, Sam, a new assistant in the
controller’s office, prepared the income statement above. Sam has had little experience in
manufacturing operations. Inventory balances at the beginning and end of August were:

The president has asked you to check over the income statement and make a recommendation as to
whether the company should look for a buyer for its assets.
Required:
As one step in gathering data for a recommendation to the president, prepare a schedule of cost of
goods manufactured for August.
Question No.2

Last month Baber, a computer game retailer, had total sales of $1,450,000, selling expenses of
$210,000, and administrative expenses of $180,000. The company had beginning merchandise
inventory of $240,000, purchased additional merchandise inventory for $950,000, and had ending
merchandise inventory of $170,000.

Required:
Prepare an income statement for the company for the month.
Question No.3

Riaz Co, a Finnish company, processes wood pulp for various manufacturers of paper products. Data
relating to tons of pulp processed during June are provided below:

Required:
1. Compute the number of tons of pulp completed and transferred out during June.
2. Compute the equivalent units of production for materials and for labor and overhead for June.
Question No.4

Scribners Corporation produces fi ne papers in three production departments—Pulping, Drying, and

Finishing. In the Pulping Department, raw materials such as wood fiber and rag cotton are
mechanically and chemically treated to separate their fibers. The result is thick slurry of fibers. In the
Drying Department, the wet fibers transferred from the Pulping Department are laid down on porous
webs, pressed to remove excess liquid, and dried in ovens. In the Finishing Department, the dried
paper is coated, cut, and spooled onto reels. The company uses the weighted-average method in its
process costing system. Data for March for the Drying Department follow:

No materials are added in the Drying Department. Pulping cost represents the costs of the wet fibers
transferred in from the Pulping Department. Wet fiber is processed in the Drying Department in
batches; each unit in the above table is a batch and one batch of wet fibers produces a set amount of
dried paper that is passed on to the Finishing Department.

Required:
Prepare a cost reconciliation report for the Drying Department for March.
Question No.5

Brittin Company manufactures and sells a single product. The following costs were incurred during
the company’s first year of operations:
During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the
company’s product is $50 per unit.

Required:

1. Assume that the company uses absorption costing:

a. Compute the unit product cost.

b. Prepare an income statement for the year.