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Assessment I

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583 views2 pages

Assessment I

fghgfhfhgggggeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

Uploaded by

Ali Optimistic
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Question Paper

Section: All
Total marks: 39
Subject: CAF-8 CMAC
Time allowed: 75 minutes
Teacher: Sir Nasir Abbas
Assessment I Date: May 20, 2021

Name: _________________________________ Rise ID:______________

Question – 1
Eastern Limited (EL) purchases product Shine for resale. Total sales made during 2020 were 15,000 units. Closing
inventory for 2020 was 2,000 units. The purchase cost per unit was Rs. 160. Order cost per order was Rs. 800. Holding
cost comprised of finance cost of 10% p.a. and storage cost of Rs. 4 per unit per month.
EL is finalizing inventory policy for the year ending December 31, 2021. In this respect following information is available:
1) Total sales will be increased by 20% as compared to 2020.
2) Closing inventory will be increased by 100% as compared to 2020.
3) Order cost and holding costs are expected to remain same for 2021.
4) EL’s supplier has offered bulk discount as follows:
Order quantity Discount
Upto 999 units -
1,000 to 1,999 units 1%
2,000 to 3,999 units 2%
4,000 or more units 4%

Management of EL is willing to avail bulk discount.

Required:
Advise EL about the best choice of bulk discount available to them. (10)

Question – 2
Mars Manufacturing Limited (MML) factory consists of two manufacturing departments and one service departments.
The company applies FOH to production as follows:
MD-A: 70% of direct labor cost
MD-B: Rs. 40 per direct labor hour

Following information relates to the month of May 2020:


MD-A MD-B Maintenance
Direct materials (Rs.) 433,800 313,800 -
Direct labor cost (Rs.) 388,800 259,200 -
Direct labor hours 3,500 4,000 -
Number of employees 140 220 40
Floor space (Sq. ft.) 1,500 1,500 750
NBV of assets (Rs.) 250,000 250,000 100,000

Overheads for the month:


Rs.
Indirect labor (directly proportional to direct labor cost) 217,400
Depreciation 43,200
Food expenses 45,000
Factory building expenses 54,000
Other overheads of Maintenance department 112,800

Maintenance department’s support is proportional to direct labor hours.


Required:
Calculate under/over applied overheads for each department for the month of May 2020. (10)
Question – 3
Following information relates to Process 1 for the month of May 2020:
Opening work-in-process
4,000 liters [70% complete]
Cost:
Direct material Rs. 80,000
Direct labor Rs. 90,000

Current period:
Direct material cost Rs. 540,000 [15,000 liters]
Direct labor cost Rs. 800,000
Actual FOH Rs. 620,000
FOH is always applied at 75% of direct labor cost.

Process losses are expected to be 5% of inspected units. However actual loss for the period was 5% of output. Losses
are inspected when process is 80% complete. Each unit of defective units is converted into a solid of 0.8Kg which is sold
at a scrap value of Rs. 8 per Kg.

Closing work-in-process
2,200 units [60% complete]

Required:
(a) Calculate abnormal loss or abnormal gain for the month of May 2020. (04)
(b) Using FIFO method, prepare statement of evaluation for the month of May 2020.
(10)

Question – 4
Following information relates to two processes for the month of June 2020:

Process I Process II
Opening WIP (60% complete) 4,000 2,000
Closing WIP (75% complete) 2,500 3,000
Normal loss 500 ??
Abnormal loss/(gain) 200 (190)

Output of Process I is considered as input of Process II. Losses are inspected when production processes are 50% and
80% complete for Process I and Process II respectively. Normal loss is estimated at 5% of input for each process.

Required:
Calculate Input and output quantities of both processes for the month of June 2020.
(05)

**********

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