COST AND MANAGEMENT ACCOUNTING (MGT402)
Spring Semester 2011
Assignment # 2 Marks: 20
Question:
Refresh Food Products produces “Squash Cubes” by continuous processing. During April
2011 producing department X received 8,000 cubes from the preceding department W
and after processing, transferred 5,500 cubes to next department Y. During the month
there was normal loss of 400 cubes; at the end of process, 600 cubes (75% converted)
were lost due to negligence of a worker. There was no work in process beginning
inventory, the ending inventory was estimated as 60% converted. Following product
costs were charged to the department X during April 2011:
Cost from preceding department W Rs.16,400
Direct materials 2,000
Direct labor 3,625
Factory overhead 5,075 Rs.27,100
In department X all materials are added at the start of process.
Required: Cost of production report for April 2011
Note:
Complete working is required, it carries marks.
Abnormal loss
Spring Semester 2011
Assignment # 2 Marks: 20
Question:
Refresh Food Products produces “Squash Cubes” by continuous processing. During April
2011 producing department X received 8,000 cubes from the preceding department W
and after processing, transferred 5,500 cubes to next department Y. During the month
there was normal loss of 400 cubes; at the end of process, 600 cubes (75% converted)
were lost due to negligence of a worker. There was no work in process beginning
inventory, the ending inventory was estimated as 60% converted. Following product
costs were charged to the department X during April 2011:
Cost from preceding department W Rs.16,400
Direct materials 2,000
Direct labor 3,625
Factory overhead 5,075 Rs.27,100
In department X all materials are added at the start of process.
Required: Cost of production report for April 2011
Note:
Complete working is required, it carries marks.
Solution:
Cost of Production Report (CPR)
Unit Completed 5500
Unit in Process 1500Unit Lost (Normal Loss at the end) (60% Converted Cost) 400
Unit Lost (Abnormal Loss) (75% Converted Cost) 600
8000
Cost to be accumulated for as Follow
T.C U.C
Cost Received 16400 2.05
Cost Added
Material 2000 0.25
Labor 3625 0.50
FOH 5075 0.70
27100 3.50
Cost to be accumulated for as Follow
Cost of Unit Completed (5500 x 3.5) 19250
Unit Lost (Normal Loss) (400 x 3.5) 1400
W I P Ending Inventory
Proceeding Department (1500 x 2.05) 3075
Material (1500 x .25) 375
Labor (900 x .5) 450
FOH (900 x .7) 630 1455
Abnormal loss
Proceeding Department (600 x 2.05) 1230
Material (600 x .25) 150
Labor (450 x .50) 225
FOH (450 x .70) 315 690
27100
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