Mgt402 Assignment No. 1 solution

PROBLEM: On March 01, 2008, FC Corporation had 250 gallons of material in store at Rs. 5.00 per gallon. Following were the receipt and issues during March: March 03: Purchased 1,200 gallons @ Rs. 10 per gallon. March 07: Issued 650 gallons to job #2325 March 13: 150 gallons were returned to store room. March 29: Returned to supplier 80 gallons which was purchased on March 3. Additional Information: During that period, factory worked for 1,000 direct labour hours. Direct labour was Rs. 9,325 and factory overhead applied rate is Rs. 6.00 per direct labour hour. Actual factory over head for that period was Rs. 7,500. Following are the year end inventories: Work in process Rs. 2,450 Finished goods Rs. 4,530 There were no beginning inventories for Work in process and finished goods. Required: 1. Prepare Material Ledger Card under FIFO costing method. (10 Marks) 2. Prepare Cost of Goods Sold Statement under FIFO. (5 Marks) Note: Cost of Goods Sold for the period is adjusted for under or over applied factory overhead.

Solution;

1.

date	received			issued			Balance
	Gallons of material	Unit cost	amount	Gallons of material	Unit cost	amount	Gallons of material	Unit cost	amount
2008		Rs	Rs		Rs	Rs		Rs	Rs
MAR.1							250	5.00	1250
MAR.3	1200	10	12000				250 1200	5.00 10	1250 12000
MAR.7				250 400 650	5.00 10	1250 4000	800	10	8000
MAR13	150	10	1500				150 800	10 10	1500 8000
				80	10	800	70 800	10 10	700 8000
MAR29
MAR29							870	10	8700

CLOSING INVENTORY ACCORDING TO FIFO IS RS8700.

2.

RUPEES

OPNING INVENTORY =250*5=1250

ADD. NET PURCHASES =(1200*10)-(80*10)

=12000-800

=11200

MATERIAL AVAILABLE FOR USE =1250+11200=12450

LESS. CLOSING INVENTORY =12450-8700

DIRECT MATERIAL CONSUMED =3750

ADD.DIRECT LABOUR COST =3750+9325

PRIME COST =13075

ADD.F.O.H =13075*(1000*6)

TOTAL FACTORY COST =19075

COST OF GOODS TO BE MANUFECTURED=19075

LESS.CLOSING WORK IN PROCESS =19075-2450

COST OF GOODS MANUFECTURED =16625

COST OF GOODS TO BE SOLD= =16625

LESS.CLOSING FINISHED GOODS =16625-4530

COST OF GOOD TO SOLD AT NORMAL=12095

ADD UNDER APPLIED FACTORY OVERHEADS=12095+1500

COST OF GOOD SOLD AT ACTUAL =13595

SUPPORTING CALCULATION

ACTUAL FACTORY OVERHEADS =7500

APPLIED FACTORY OVERHEADS =6000

UNDER APPLIED FACTORY OVERHEADS =1500