Accounting for Manufacturing Concern

Q.1. The accounting department of Mirza Manufacturing Company provided the following data
for May 2005:

Sales Rs. 8,25,000, Marketing Expenses 10% of sales, Administrative Expenses 5% of sales:
Purchases Rs. 3,75,000: Factory Overhead 2/3 of direct labour, Direct Labour Rs. 1,56,000.

Inventories ………………………. Beginning …………………… Ending

Finished Goods …………………. Rs. 90,000 ……………….. Rs. 1,00,000
Work in Process ……………….. Rs. 80,000 ……………….. Rs. 1,05,000
Materials ………………………… Rs. 70,000 ………………… Rs. 85,000

Required:

i. Cost of goods manufactured statement.

ii. Income Statement.

Q.2. The following data relate to Waseem Co. for the year 2007.

i. Purchases of Direct Material …………………………… Rs. 88,000

ii. Direct Material Used ……………………………………. Rs. 90,000
iii. Direct Labour Paid ……………………………………… Rs. 65,000
iv. Direct Labour assigned to production ……………….. Rs. 70,000
v. Factory Overhead Cost incurred ……………………… Rs. 80,000

During the year 24,400 units were manufactured and 25,000 units were sold. Selected
information concerning inventories during the year is as follows:

……………………………………………. Jan 01, 2007 ……. Dec 31, 2007

Material ………………………………….. Rs. 10,000 …………….. ?
Work in Process…………………………. Rs. 18,000 …………. Rs. 14,000
Finished Goods 3000 units ……………. Rs. 27,000 ……………… ?

Required:

i. Cost of Goods manufactured during 2007.

ii. Average unit cost produced during 2007.
iii. Cost of Good Sold assuming FIFO basis.
iv. Cost of Ending inventories.
Q.3.Moon Co. has provided following for the year ended December 31, 2007

Sales ……………………………………………………………… 6,55,000

Advertising Expense …………………………………………….. 65,000
Direct Labour Cost incurred ……………………………………. 1,48,000
Direct Material Purchased ………………………………………. 2,25,000
Utilities – factory ………………………………………………… 50,000
Maintenance – factory ………………………………………….. 32,000
Selling and administrative salaries ……………………………… 95,000
FOH applied at the rate of 90% of direct labour
Inventories ………………………… Jan 01, 2007 …………. Dec 31, 2007
Raw Material …………………………. 21,000 ………………… 10,000
Work in Process ……………………… 28,000 ………………… 42,000
Finished Goods ……………………….. 42,000 ………………… 45,000

Required:

i. Prepare a Statement Cost of goods manufactured for the year ended Dec 31, 2007.
ii. Prepare an Income Statement

Q.4. The following information has been taken from the accounting records of LATIF
MANUFACTURING COMPANY:

Inventories (Jan. 01, 2004)

Raw Material ……………. Rs. 27,300
Goods-in-Process ……… Rs. 16,200
Finishes goods …………. Rs. 24,100

Inventories (Mar. 31, 2004)

Items ……… Raw Material …… Goods-in-Process ……. Finished Goods

Material ………. 29,050 …………….. 6,450 …………………. 21,750
Labour ………………………………… 2,100 …………………. 13,500
Overhead ……………………………….. ? ……………………. 10,800
TOTAL ……….. 29,050 ………………. ? ……………………… 46,050

Data for the three months ended on March 31, 2004

Cost of Good Manufactured ………………………. Rs. 4,06,440

Factory Overhead ………………………………….. Rs. 89,200
The company also paid transportation costs on materials purchased of Rs. 13,850 it received
credit of Rs. 8,150 for materials returned to suppliers.

Required:
On the basis of the above information and the missing data, which can be derived from it,
prepare a statement of cost of good manufactured for the three months ended on March 31, 2004.