Mgt402 Solution

China Toys Manufacturing Company Ltd.,

Cost of Goods Manufactured and Sold Statement.

For the period ended on 31^st Dec, 2009

Particulars	Rs.	Rs.
Direct Material
Opening Material	8000
+Material Purchased	+90000
Material Available for use	98000
-Closing Inventory	-43000
Material Consumed	55000
+Direct Labour	+35000
Prime Cost 60% of C.G.M (W-3)		90000
+FOH 30% of the Conversion (W-2)		+15000
Total Factory Cost		105000
+Opening Work in Process		+70000
Cost of Goods to be Manufactured		175000
-Closing Work in Process		-25000
Cost of Goods Manufactured		150000
+Opening Finished Goods		+50000
Cost of Goods Available forSale		200000
-Closing Finished Goods		-48800
Cost of Goods Sold (W-1)		151200

China Toys Manufacturing Company Ltd.,

Income Statement.

For the period ended on 31^st Dec, 2009

Particulars	Rs.	Rs.
Sale		218800
-Sales Return		-28000
Net Sale		216000
-Cost of Goods Sold		-151200
Gross Profit		64800
-Selling and Administration Expenses
Selling Expenses 5% of Net Sale(W-4)	10800
-Administration Expenses 8% of Net Sale (W-5)	17280	28080
Operating Profit		36720
-Financial Expenses		-600
Net Profit		36120

(W-1)

Net Sale = 218800-2800 = 216000

Net Sale = Cost of Gods Sold+ Gross Profit

216000= Cost of Goods Sold+30% of Sale

216000= Cost of Goods Sold+30% of 216000

216000= Cost of Goods Sold+64800

216000-64800 = Cost of Goods Sold

151200 = Cost of Goods Sold

(W-2) Reverse Calculation:-

Conversion Cost = Direct Labour + Factory Over Head

Conversion Cost =70%+30%

Conversion Cost =70%35000+30% of Conversion Cost

Total Conversion Cost = 35000*100/70

Total Conversion Cost 35000*100/70

Total Conversion Cost = 50000

Factory Overhead = 30%of 50000

Factory Overhead = 50000*30/100

Factory Overhead = 15000

Working.3:

Ending Finished Goods Inventory=?

Ending Finished Goods Inventory=

Cost of goods available for sale-Cost of Goods Sold

Ending Finished Goods Inventory= Rs.200,000-Rs.151,200

Ending Finished Goods Inventory=Rs.48800

Working.4:

Cost of Goods Manufactured=?

Cost of Goods Manufactured= Cost of goods available for sale-Opening Finished Goods Inventory

Cost of Goods Manufactured= Rs.200,000-Rs.50,000

Cost of Goods Manufactured= Rs.150,000

Working.5:

Prime Cost=?

In the given statement of Question there is Prime cost (60% of Cost of Goods Manufactured)

SO,

Prime Cost= Rs.150,000*60%

Prime Cost= Rs. 90,000

Working.6:

Total Current Factory Cost=?

Total Current Factory Cost=

Prime Cost +Factory Over Head Cost

Total Current Factory Cost= Rs.90,000+Rs.15,000

Total Current Factory Cost= Rs.105,000

Working.7:

Cost Of Goods to be Manufactured=?

Cost Of Goods to be Manufactured=

Total Current Factory Cost+ Opening Work in Process Inventory

Cost Of Goods to be Manufactured= Rs.105,000+Rs.70,000

Cost Of Goods to be Manufactured= Rs.175,000

Working.8:

Ending Work in Process Inventory=?

Ending Work in Process Inventory=

Cost Of Goods to be Manufactured-Cost Of Goods Manufactured

Ending Work in Process Inventory=Rs.175000-Rs.150,000

Ending Work in Process Inventory= Rs. 25,000

Working.9:

Direct Material used=?

Direct Material used= Prime Cost - Direct Labor

Direct Material used= Rs.90,000 – Rs.35,000

Direct Material used= Rs.55,000

Working.10:

Material Closing Inventory=?

Material Closing Inventory=

Material available for use – Total material used

Material Closing Inventory= Rs.98,000 – Rs55,00

Material Closing Inventory= Rs.43,000