Cost Accounting Project

Name: Yousaf Muhammad Tasleem

Student ID: 20U00613

Question 1:

Identify whether inventory is Just in Time or not.

Answer: The business uses just-in-time stocking. JIT, or just-in-time, inventory management,

involves only ordering products from vendors when they are actually needed. This approach's

primary goals are to lower the cost of keeping inventory and boost inventory turnover.

Customers are asked to place their orders two days prior to when they are required so that

materials may be ordered and production can begin.

Question 2:

Does the company have any scrap, spoiled or defective goods? How are they accounted

for? (as costs or separate)

Answer: While anomalous spoiling is billed as an expense when it occurs, typical spoilage is

included in the standard expenses of products. Although spoiled or scrapped goods occur

very rarely throughout the production process, the corporation makes the following entry if it

does.

Question 3:

You can either start with the statement of CGM and CGS, and go into detail of each

component, or you can conclude the report with these statements after explaining

everything.
Answer: The total materials utilized were 3,150,000, the total labor expenses were

1,095,397, and the total factory overheads paid were 478,200 according to the statement of

costs of goods manufactured for the month of October 2022. This results in a total

manufacturing cost of 4,723,597 being transferred to work in process. The total work in

process is 4,723,597 since the work in process has no initial balance. Additionally, this sum is

added to finished goods and represents the overall costs of goods manufactured. Additionally,

finished goods had no beginning balance and a balance of 927,057 at the conclusion of the

month. Consequently, 3,796,540 was the total cost of the goods sold throughout the month.
Income statement:

Sales came to a total of 4,644,000 for the month. The gross profit is equal to 847,460 because

the total cost of the products sold was 3,796,540. Additionally, the selling and administrative

budget table was used to determine the 114,440 selling and administrative expenses that were

incurred throughout the month. Our operational income/net income is therefore 733,020.