(Cost C G S) Lahore Commerce Academy By: - Prof: M.

Waqas
Question # 1 Saleem Manufacturing Co. submits the following information:
Jan. Dec.
Material Rs.7500 Rs.6000
Work in process Rs.3000 Rs.2550
Finish goods Rs.4500 Rs.7500
Material purchased during the year was Rs.114750 Freight and carriage incurred Rs.2500
and return and allowances were Rs.1500. Direct labour cost incurred during the year
Rs.6000 and Factory overhead cost Rs.45000.
Required: Prepare a cost of goods manufactured and sold statement.

Question#2 Draw up a cost of goods manufactures & sold statement of Sevengees, an

industrial undertaking, for the year ending June 30, 1990 by using figures of your
own choice. Sevengees uses two different Raw Materials viz. ‘X’ and ‘Y’ and
manufactures goods through a continuous process.

Question #3 Saleem manufacturing company submits the following information on December 31,
2009.
Inventories
Beginning Ending
Rs. Rs.
Finished goods 220000 190000
Work in Process 140000 160000
Direct Materials 180000 190000
Cost incurred during the period:
Rs.
Cost of goods available for sale 1368000
Total manufacturing cost 1168000
Factory overhead 334000
Direct material used 386000
Required: Prepare a Cost of goods sold statement.

Question #4 Assume in Question No.1. Saleem manufactured Co. applies factory over head 50%
of direct labour cost. You are required to prepare a cost of goods and sold statement
indicating their in cost of goods sold at normal as well as at actual.

Question # 5 Umer Manufacturing Company gives you the following data:

Inventories:
Jan 1st Dec 31st
Rs. Rs.
Finished goods 15000 10000
Work in process 6000 5500
Materials 8000 5000
Raw material purchase during the year were Rs.21500. Return and allowances Rs.5000.
Direct labour cost incurred Rs.95000. Factory overhead is applied @ 50% of direct labour
cost. The actual FOH cost was Rs.50000. Sales during the year Rs.500000; sales return
Rs.3000. Selling expenses Rs.20000. Office expenses Rs.25000. Non operating expenses
Rs.2000 and non operating income Rs.3500.
Required: a). Cost of goods sold statement & Income statement.
b). Income Statement.

2 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question # 6 Umer manufacturing company presents the following information on 31st December,
2008:

Rs. Rs.
Sales 450000 Indirect material 9000
Raw material (1.1.1996) 15000 Fire insurance 300
Raw material (31.12.1996) 22500 Factory taxes 525
Finish goods (1.1.1996) 60000 Miscellaneous F.O.HN cost 600
Finish goods (31.12.1996) 72000 Selling expenses 90000
Purchases of raw material 168000 Administration expenses 45000
Purchases return & allowances 3000 Commission received 900
Direct labour cost 60000 Interest on loan paid 1500
Power, heat & light 3000 Work in process (1.1.1996) 12000
Indirect material consumed 5250 Work in process (31.12.1996)21000
Depreciation of plant 4500 Depreciation of equipment 7500
Depreciation of factory building 6000 Tool expenses 3300

Required: 1). Prepare cost of good s manufactured and sold statement.

2). Prepare an Income statement for the period ended December, 31, 2008.
Question # 7 The Shahzad manufacturing company submits the following information on
December 31, 2009.
Rs. Rs.
Sales for the year 3,50,000 Indirect Labour 600
Raw material (January 1 )
st
13,000 Fire insurance 350
Finished goods Inventory (January 1st) 58,000 Tool expenses 3,100
Raw material (December 31st) 19,000 Miscellaneous manufacturing cost 500
Purchases 100,000 Work in process (January 1st) 12,000
Purchases returns & allowances 2,000 Work in process (December 31st) 16,000
Direct labour cost 39,000 Tool expenses 56,500
Power, heat & light 2,400 Other expenses for the year:
Indirect material consumed 3,800 Selling expenses 10% of Sales
Depreciation of plant 6,200 Administrative exp 7½% of sales
Depreciation of Machinery 3,300

Required: Prepare an Income statement for the year ended December 31, 2009.

3 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question #8: The following information has been extracted from the books and records of Star
Manufacturing Company, Lahore.
Material Purchased Rs.120, 000
Total Payroll Rs. 50, 000
Direct Labour Rs. 42, 000
Factory Office Salaries Rs.5,000
Heat and Light Cost Rs.2,500
Power Cost Rs.1,500
Insurance (fire and other) Rs. 500
Indirect materials purchased and used Rs.4,000
Superintendence Rs. 500
Depreciation of Plant Rs. 500
Depreciation of Equipment Rs.1,500
Factory Taxes Rs.1,000
Employer’s provident fund contribution
(94% factory, 4% selling and 2% administrative) Rs.5,000
Tool expenses Rs.300
Miscellaneous Factory overhead costs Rs.550 Rs.22,850
Predetermined overhead rate: 50% of direct labour
The beginning and ending inventories were: January 1 December 31
Materials Rs.12,000 Rs.15,000
Work in process Rs.6,000 Rs.4,000
Finished Goods Rs.18,000 Rs.21,000
Required: From the foregoing information prepare the cost of goods manufactured and sold
statement. On the statement the cost at normal should be indicated with adjustment
of over or under applied overhead.

Question # 9 The Ali manufacturing company submits the following information on July 31, 2009.
Direct labour cost Rs. 30000
Cost of goods sold Rs.111000
Factory overhead is applied at the rate of 150% of direct labour cost.
Inventories accounts showed these beginning and ending balances:
July 31st July 1st
Rs. Rs.
Finish goods 17500 15000
Work in process 13000 9600
Materials 7400 7000
Other data:
Marketing expenses Rs. 14100
General and Administrative expenses Rs. 22900
Sales for the month Rs.182000
Required: An income statement with schedule showing cost of goods manufactured and sold.

4 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question # 10 Rizwan Manufacturing Company gives you the following data:
Cash Rs.240000 Account Receivable Rs. 384000
Inventories: Dec 31st Jan 1st
Rs. Rs.
Finished goods 66000 44200
Work in process 38800 29800
Materials 64000 88000
Rs.
Material purchase 366000
Sales Discount 8000
Factory overhead (excluding depreciation) 468400
Marking and Administrative expenses (excluding depreciation) 344200
Depreciation (90%Manufacturing, 10%Marking&Admin) 1,16,000
Sales 1844000
Direct Labour 523600
Freight on Material Purchased 6600
Rental Income 64000
Interest on bond payable 16000
Required: Prepare a Cost of goods sold statement & Income statement.
Question # 11 The following Informations were taken from the cost records of the Irfan
manufacturing company, Lahore:
2006 2006
Inventories: May 1 st
May 31st
Rs. Rs.
Raw Materials 32000 30000
Work in process 10000 12000
Fuel 1600 4400
Factory repair Parts 2000 3000
Finished goods 12400 11200
Rs.
Raw Material purchased 60000
Fuel Purchased 4000
Direct Labour 100400
Miscellaneous Factory overhead costs 2400
Repair to Factory parts (Including Purchases of parts) 2800
Depreciation of Plant 3000
Superintendence 600
Indirect Factory Labour 2800
Transportation out 1400
Purchased discount Lost 600

Required: Prepare a Cost of Goods Sold Statement.

5 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question # 12 The following are the information derived from the books of Qasim Manufacturing
Company:

Inventories on 1-1-2009 Other Informations:

Rs. Rs.
Raw material 40000 Raw material purchases 200000
Work in process 16000 Fuel purchases 10000
Fuel 6000 Factory repair parts purchased 8000
Factory repair parts 4800 Direct labour cost 240000
Finished goods 28000 Misc. factory overhead cost 4000
Inventories on 31-12-2009 Depreciation of plant 8000
Raw material 48000 Depreciation of factory building 4000
Work in process 24000 Tool expenses 2800
Fuel 800 Heat , light & power 2000
Factory repair parts 4000 Superintendence 600
Finished goods 22000 Transportation inward 500
Purchase discount lost 3000
Transportation outward 600
Office salaries 6000
Indirect labour 2500
Required:
Prepare a Cost of Goods Sold Statement.

Question # 13 The cost department of the Ch. Manufacturing Company made the following data and
costs available for the year 2006:
Jan 1st Dec 31st
Rs. Rs.
Raw material 34200 49300
Work in process 81500 43350
Finished goods 48600 ?

Depreciation F. equipments 21350

Interest earned 6300
Raw material purchases 364000
Direct labour 162500
Indirect labour 83400
Freight in 8600
Misc. factory overhead 47900
Purchases discount 5200

Finished goods inventory on 1st Jan: 300 units; 31st Dec: 420 units: All from current year’s
production.
Sold during 2006: 3800 units at Rs.220 per unit.
Required:
i. The unit cost of finished goods inventory December 31.
ii. The total volume of finished goods inventory December 31.
iii. The cost of goods sold.
iv. The gross profit total and per unit.

6 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question # 14 The cost of Razi manufacturing company made the following data and the cost
available for the year 2009:
Rs.
Raw material (01-01-2009) 70000
Raw material (01-31-2009) 90000
Work in process (01-01-2009) 150000
Work in process (01-31-2009) 75000
Finished goods (01-01-2009) 95000
Finished goods (01-31-2009) ?
Interest earned 13000
Depreciation of factory equipments 38000
Raw material purchases 745000
Direct labour cost 335000
Indirect labour cost 72000
Freight inward 16000
Misc. factory overhead 98000
Purchase discount 7000
Selling expenses 28000
Office expenses 23000
Interest on loan paid 1900
Finished goods inventory on 1st Jan 2009 was 720 units and on 31st Dec 2009 was 1200.
Units sold during 2009 were 8220 @ Rs.580 each.
Required:
i. Per unit cost of finished goods closing inventories.
ii. Finished goods closing inventories in terms of rupees.
iii. Cost of goods sold. iv. Total gross profit.
v. Per unit gross profit vi. Total operating profit
vi. Operating profit per unit viii. Net profit (Total)
ix. Net profit per unit

Question # 15 The books of Zaria manufacturing company are engaged in assembling “Radios”. Show
the following information for the six months ended 31st Dec,2009.
Material purchases Rs. 1082500
Inventories July 1 2009.
st

Material 250000
Finished goods (100 Radios) 25000
Direct labour 1050000
Factory overhead 470000
Marketing expenses 284000
General & Administrative Expenses 226000
Financial Management Expenses 72500
Sales (1200 Radios) 36,00,000
Inventories December 31, 2009
Material 150000
Finished Goods (500 Radios) ?
No Unfinished Work on hand
Required:  An Income Statement for the period supported by schedule which indicate:
a). The number of units manufacture
b). The Unit cost of radio manufactured
c). The gross profit and net profit per unit sold.

7 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question#16: The records of the Bel Cold Refrigerator Company shows the following
information for three months ended March 31, 2009.
Rs.
Material purchased 19,46,700
Inventory, January 1, 2009
Materials 2,68,000
Finished goods (100 Refrigerators) 43,000
Direct Labour 21,25,800
Factory Overheads 7,64,000
Marketing Expenses 5,16,000
General & Administrative Expenses 4,61,000
Sales (12400 Refrigerators) 66,34,000
Inventory March 31, 2009
Materials 1,67,000
Finished goods (200 Refrigerators) ?
Required: (i). An Income Statement of the period.
(ii). The number of units manufactured. (iii). The unit cost of refrigerators
manufactured.
(iv). The Gross profit for units sold. (v). The Net Income for units sold.
(vi). The ratio of gross profit to sales. (vii). The income to sales percentage.

Question # 17 From the following information extracted from the records of Nisar Corp. for the year
ending 31st Dec.2008.
Calculate: (1) Prime cost (2) Conversion cost
(3) Cost of goods sold at normal and at actual
(4) G.P rate on sales (5) G.P rate on cost
Data: Direct Material A Rs.
Opening Inventory 15000
Purchases 80000
Closing inventory 7000
Direct Material B Rs.
Opening inventory 3000
Purchases 67000
Closing inventory 8000
Direct labour cost 70000
Factory overhead applied @ 100% of direct labour cost.
Factory overhead actual Rs.80000
Increase in work in process inventory during year Rs.40000
Decrease in finished goods inventory during year Rs.30000
Sales Rs.400000

8 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question#18: The Sialkot Company began business on April 1 and produced by the end of
the month of June 40,000 units of its single product. The product requires
three basic raw materials. ‘A’, ‘B’ and ‘C’ which were purchased during the
first three months at the following prices and quantities:
Purchase Quantities Quantities on
Price Purchased hand June-30
(Rs.) (Units) (Units)
Material ‘A’ 0.35 per unit 35,000 4,000
Material ‘B’ 0.30 per unit 10,000 6,000
Material ‘C’ 0.60 per unit 8,000 5,000
Factory wages and other salaries paid and outstanding were:
Paid Outstanding
Direct Labour 18,000 750
Indirect Labour 2,625 175
Supervision 3,000 ----
Marketing and Admin Salaries 18,200 1,800
Overhead Consisted of: Factory Overhead Marketing and Adm.
Expenses
Rs. Rs.
Supplies 1,400 800
Repair & Maintenance 900 400
Depreciation 1,000 350
Utilities 1,740 310
Insurance 560 280
Delivery Expenses --- 2,460
At the end of the three months, finished goods inventories contained 1,500 units,
38,500 units were sold at an average sale price of Rs.2.25 per unit.
Required: An Income Statement
Question#19 The MST Company manufactures a product which sells for Rs.100. The
patent for the product is held by PCSIR who is paid a royalty of Rs.5 on
each unit sold. The Royalty is considered marketing expenses. The data
taken from the books of the Company on December 31, 2007 are shown
below:
Inventories January 1 December 31
Finished Goods Rs.4,584 Rs.7,518
Work in process Rs.8,159 Rs.4,002
Materials Rs.3,420 Rs.7,130
Rs. Rs.
Material purchased 90,563 Sales 3,87,000
Carriage inwards 477 Rent 5,000
Depreciation Factory Equipment 2,135 Bad debts 280
Factory overhead 17,908 Interest (Cr.) 130
Carriage outwards 1,860 Sales Salaries 28,000
Administrative expenses 8,700 Office Salaries 24,790
Purchases discount 840 Royalty Paid 19,350
Marketing expenses 11,380 Direct Labour 62,522
Indirect Labour 5,026
There were 120 units in the inventory of finished goods on January 1 and 179 in the
inventory on December 31. All units held on Jan-1 were sold during the year. Rent is to
be apportioned 80% to manufacturing, 10% to marketing and 10% to administration.
Required: An Income Statement for the year ended December 31, 2007, supported by a
schedule of cost of goods sold.
9 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).
 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question#20:
The following information was taken from the books and records of the Star
Manufacturing Corporation for the year ended December 31, 1985.

Units Cost (Rs.)

Sales during the year 8,000 ?
Opening Inventories: Work in process - -
Finished Goods 1,800 14,580
Closing Inventories: Work in process 100 ?
Finished goods 2,000 ?
Manufacturing Cost: Direct Material 30,000
Direct Labour 20,000
Factory Overhead 16,000
The foreman has submitted the following cost estimates for the closing Work in Process
inventories material cost Rs.2700, direct labour cost Rs.1000.
The company’s past experience showed that factory overhead cost tends to fluctuate
closely in proportion to direct labour cost.
Required:
i. Determine the number of units that were manufactured during the year.
ii. Complete the Foreman’s estimate of the cost of work in process.
iii. Determine the cost of each unit manufactured during the year.
iv. Assume the first cost recorded in the Finished goods account are the first costs to be
credited to the account, determine the ending Inventory of Finished Goods and the cost of
sales.
Question#21 Imran Engineering Work is engaged in the production of lawn mowers. During
the accounting year ended on October 31, 200B they sold 1,600 lawn mowers.
Manufacturing costs for the year are as follows:
Direct materials Rs.25,10,400
Direct Labour Rs.638,800
Factory overhead applied (50% of direct labour cost) Rs.319,400
Total Rs.34,68,600
Inventories of finished goods are as follow:
Units Cost
November 1, 200A 75 Rs.161,250
October 31, 200B 55 ?

Cost of beginning work in process inventory is Rs.37,000. Partly finished units in ending work
in process inventory are composed of direct materials worth Rs.22,400 and direct labour
Rs.4,800.
Required:
(a). Number of units manufactured.
(b). Work in process inventory, October 31, 200B.
(c). A manufacturing statement for the year.

10 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question#22 The following data pertain to the operation of Ali & Co. from May 1. 19A,
to April 30, 19B.
Changes in Inventories: Rs.
Finished goods decreased by 19,453
Goods in process decreased by 3,410
Raw materials increased by 10,541
Purchases-Raw materials 92,596
Purchases Returns and allowances 1,380
Purchases discounts 2,631
Direct Labour costs 1,29,667
Manufacturing overhead incurred 56,619
From the above information, compute the following:
a) Cost of manufacturing. b) Cost of goods manufactured.
c) Cost of goods sold.

Question#23:
During the month of May the MST Co. put in to process Rs.50,000 of raw
materials. The mixing department used 12,000 labour hours at a cost of
Rs.30,000 and the Finishing department used 2,100 labour hours at a cost of
Rs.9.50 per hour.
Factory overhead is applied at a rate of Rs.3.00 per labour hour in the mixing
department and Rs.4.00 per labour hour in the finishing department.
Inventories on May 1, were:
Materials Rs.16,000, Material in process Rs.6,000, Labour in process Rs.6,000,
Factory overhead in process Rs.7,700 and Finished Goods Rs.12,400.
Inventories On May 31, were:
Materials Rs.18,000, Material in process Rs.7,000, Labour in process Rs.5,000,
Factory Over Head in process Rs.6,000 and Finished Goods Rs.14,000.
The company produced 25,000 units during the month.
Required: (i). A schedule showing the cost of work put in process, the cost of goods
manufactured and cost of goods sold.
(ii). The unit cost of materials, labour and overhead for the May
production.

11 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question#24 Siraj Manufacturers provides you the following data for the month of June,
2006.
Inventories: June 1 June 30
Materials Rs.9,000 Rs.10,000
Work in process – Materials Rs.8,000 Rs.9,000
Work in process – Labour Rs.4,000 Rs.5,200
Work in process – Factory Overhead Rs.4,500 Rs.4,000
Finished Goods Rs.11,250 Rs.13,750
Manufacturing costs for the month are as follow:
Direct materials used Rs.43,000
Direct Labour:
Assembling department @ Rs.6.00 per hour 10,200
Finishing Department @ Rs.7.50 per hour 15,000
Factory overhead is applied according to following rates:
Assembling department @ Rs.5.00 per direct labour hour
Finishing Department @ Rs.4.50 per direct labour hour
Required: (a). Prepare a cost of goods manufactured and sold statement for the
month.
(b). Calculate unit cost of materials, labour and factory overhead for the
production of June assuming that 12,000 units were produced during the
month.

12 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question#25: The Pak products Company produce a highly flammable cleaning fluid. On
31st May the Co. had a fire, which completely destroyed, the processing
building and the in process inventories; some of the equipment was saved.
After the fire a physical inventory was taken. Raw materials were valued at
Rs.30, 000 finished goods at Rs.60, 000 and supplies at Rs.5, 000.
The inventories on January, 19F consisted of:
Rs.
Raw materials 15,000
Work in process 50,000
Finished goods 70,000
Supplies 2,000
Total 1, 37,000
A review of the accounts showed that the sales and gross profit for the five last years were:
Sales Gross Profit
Rs. Rs.
19A 3,00,000 96,200
19B 3,20,000 1,12,400
19C 3,30,000 1,18,900
19D 2,50,000 68,500
19E 2,70,000 94,000
The sales for the first five months of 19F were Rs.1,50,000. Raw materials purchases were
Rs.50,000. Freight on purchases was Rs.5,000. Direct labour for the five months was
Rs.40,000 for the past five years, factory overhead was at 50% of direct labour.
Required: Compute the value of the work in process Inventory Lost by Fire.
Question#26: A distraught employee put a torch to a factory on blustery February 26. The
resulting blaze completely destroyed the plant and its contents. Fortunately, certain accounting
records were kept in another building. They revealed the following for the period December
31, 19A to February 26, 19B.
Prime costs average 70 percent of goods manufactured.
Gross profit percentage based on net sales, 20 percent.
Cost of goods available for sales Rs.4,60,000
Direct Material purchased, Rs.1,70,000.
Work in process, December 31, 19A Rs.34,000.
Direct materials, December 31, 19A Rs.16,000.
Finished Goods, December 31, 19A Rs.30,000.
Factory overhead, 40 percent of conversion costs.
Sales, Rs.5,00,000
Direct labour, Rs.1,80,000
The loss was fully covered by Insurance; the insurance company wants to know the
approximate cost of the inventories as a basis for negotiating a settlement, which is really to be
based on replacement costs, not historical costs.
Required:
Calculate the cost of:
1- Closing inventory of finished goods lost by fire.
2- Closing inventory of work-in-process lost by fire.
3- Closing inventory of materials lost by fire.

13 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question #27:
Ali Manufacturing Company had a fire that completely destroyed the factory
premises. Only few accounting records could be saved which revealed following
information:
Sales Rs.6,50,000
Purchases of direct materials Rs.320,000
Direct Labour Rs.90,000
Cost of goods available for sale Rs.530,000
Balance sheet of the company prepared at the end of previous accounting year
contains following inventory balances:
Direct materials inventory Rs.50,000
Work in process inventory Rs.60,000
Finished goods inventory Rs.65,000
Company’s experience over past ten years showed following percentage
relationships:
Direct labour 20% of total current manufacturing cost
Factory overhead 33-1/3% of total conversion cost
Gross profit 25% of sales

The factory was covered by a comprehensive insurance policy. The insurance

company wants to know approximate value of inventories lost for settlement of the
claim.
Required:
Estimated cost of (a) materials (b) work in process and (c) finished goods inventories destroyed by
fire.

Question#28 A client has recently leased manufacturing facilities for the production of a
new product. Based on the studies made by his staff, the following data have
been made available to you:
Estimated Annual Sales 24,000 units

Amount Per Unit Cost

Rs. Rs.
Estimated Cost:
Direct Material 96,000 4.00
Direct Labour 14,400 0.60
Factory Overhead 24,000 1.00
Administrative Expenses 28,800 1.20
1,63,200 6.80
Marketing expenses are expected to 15% of Sales and the profit is to Rs.1.02 per unit.
Required:
a) Compute the sale price per unit.
b) Project a profit & loss statement for the year.

14 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question#29 A client has recently leased manufacturing facilities for the production of a
new product based on the studies made by his staff. The following data have
been made available to you:

Amount Per Unit Cost

Rs. Rs.
Estimated Cost:
Material 96,000 6.00
Labour 14,400 0.90
Factory Overhead 24,000 1.50
Administrative Expenses 28,800 1.80
1,63,200 10.20
Marketing expenses are expected to be 10% of Sales and the profit is to Rs.2.04 per unit.
Required:
a) Compute the sale price per unit.
b) Project a Profit & Loss Statement for the year.

Question#30 The president of Star Company presents to you the following FACTS
concerning the Company’s operation for the year 2007:

Rs.
Beginning inventory (at sales price) 30,000
Purchases (at cost) 42,000
Sales (at sales price) 60,000
Ending inventory (at sales price) 40,000
Marketing expenses 16,000
Administrative expenses 6,000

Required:
An Income Statement for the year 2007.

Question#31: The president of Rizwan Company presents to you the following FACTS
concerning the Company’s operation for the year 2008:

Rs.
Beginning inventory (at sales price) 37,500
Purchases (at cost) 52,500
Sales (at sales price) 75,000
Ending inventory (at sales price) 50,000
Marketing expenses 14,000
Administrative expenses 7,000

Required: An Income Statement for the year 2008.

15 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question#32 The five brothers corporation submits the following information and asks
you to prepare a simple income statement for the year ended Dec 31, 2009:

Rs.
Beginning inventory (at sales price) 9,000
Purchases (at cost) 105,000
Closing Inventory (at sales price) 7,000
Sales (at sales price) 152,000
Selling expenses amounted to 10% of the selling prices, and the general administrative
expenses amounted to 5% of the selling price.
Required: An Income Statement for the year 2009.

Question#33:
The consistent controller of a participating firm provided the following
data:
Gross profit on sales 40%
Rate of Marketing expenses to net sales 15%.
Inventory turn over 6 times per year
5% Bond payable represent 37.5% of the total liabilities of Rs.20, 00,000.
Net income for the year Rs.12, 00,000.
Net profit rate on net sales 10%.
Required: Prepare an income statement for the year based on the above figures.

Question#34:
In an accounting conference, discussion turned to be possibility of preparing
financial statement from a few accounts together with financial ratios.
The Assistant Controller provided the following data:
Net Income before tax for the year Rs.36, 00,000.
Rate of Income 30% on sales.
Gross profit Rate 40% of sales.
Rate of Marketing expenses 10% sales.
10% Bond payable represent 40% of the total liabilities of Rs.30, 00,000 (Three
Million).
Required:
An income statement for the year based on the above information.

Question#35: Saleem & Co. has the following data:-

Material purchased during March Rs.1,10,000

Cost of goods sold for March Rs.3,45,000
F.O.H. was 50% of direct labour cost. Inventories were as follows:
Beginning Ending
Finished goods Rs.1,02,000 Rs.1,05,000
Work in process Rs. 40,000 Rs. 36,000
Material Rs. 20,000 Rs. 26,000

Required:
a) Prepare a schedule of cost of goods manufactured.
b) Compute the prime cost charged to work-in-process.
c) Compute the conversion cost charged to work-in-process.

16 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question 36:
Assume sales for a period of Rs.1, 00,000. What is the cost of goods sold under each
assumption below:
a) Gross profit on sales is 20%.
b) Gross profit on cost of sales is 60%.
c) Goods are marked up ¼ above cost.
d) Gross profit on cost of sales is 150%.
e) Goods are marked up 200% above cost.
f) Gross profit on sales is 18%.
g) Gross profit on cost is 18%.

Question 37:
The sale price of a home appliance is Rs.280. The company is realizing a gross profit
to 25% of cost of goods sold. The cost of goods sold comprises 40% Material and
Factory overhead 15%. The company sold 2000 of these appliances last year.
During coming year, it is expected that material and labour costs will each increase by 12½%.
To meet the rising costs, a new selling price must be set.
Required:
Compute the number of units that must be sold out to realize the same total gross profit in
the coming year as was realized last year, if the new price per unit is set at (a) Rs.325 and (b)
Rs.350.

Question 38:
During the last year Mubasher Mashroob Company sold 1,200 canes of Mashroob at
a price of Rs.800 per cane and earned a gross profit of 25% of sales. The cost of
goods sold was composed of 50% materials, 30% labour and 20% overhead.
For the coming year it is expected that materials, labour and overhead costs will increase by 20%,
10% and 10% per unit respectively.
Required:
Estimate the sales volume, in terms of number of canes that must be achieved to earn the
same gross profit as was earned during the last year if the new sales price is fixed at: (a)
Rs.850 (b) Rs.890.
Question 39:
A company submits the following information on December 31, 2001.
Total cost of goods soled was Rs.18,000
Sales for the year was Rs.29,240
The inventories at the beginning of the year were:
Work in process Rs.4,200
Finished goods Rs.6,800

Purchase of material for the year was equal to 60% of the cost of goods sold. Material inventory
at the beginning of the year was Rs.3, 500 and at the end of the year was Rs.3, 750.
Direct labour cost was Rs.6,450
Manufacturing expenses were 2/3rd of direct labour cost.
Inventories at the end of the year were:
Work in process Rs.5,800
Finished goods Rs.8,500
Other expenses for the year were:
Marketing expenses 5% of sales
General & Administrative Expenses 3% of sales
Required:
An Income Statement along with cost of goods sold statement for the year ended December
2001.
17 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).
 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question#40 The following trial balance has been extracted from the books of Star & Co.
on June, 2008:

Debit Credit
Rs. Rs.
Cash 28,200 Notes payable 3,200
Account Receivable 41,000 Accounts payable 12,350
Notes Receivable 23,000 Taxes payable 2,000
Material 31,800 Rent payable 1,020
Work in process 4,000 Sales 1,00,000
Finished goods 11,700 Capital Stock 1,00,000
Prepaid Insurance 200 Retained Earnings 47,050
Machinery & Equipment 93,500 Accumulated Dep. 20,000
Materials Purchases 16,520
Direct Labour Costs 16,000
Factory Overhead costs 17,480
Selling Costs 1,200
Administrative Costs 1,020
2,85,620 2,85,620

The following further information are also available:

Inventories as on June 30, 2008:
Materials Rs.3,520
Work in process Rs.2,500
Finished goods Rs.10,000

There was a debit balance of Rs.1480 representing the difference between actual Factory
overhead costs of Rs.17,480 and the factory overhead costs applied to production at the rate of
100% of direct labour costs Rs.16,000. The variance was analysed and it was found to be due
to an increase overhead application rate. This variance is to be charged to the entire
production of the period.
Required:
a. Statement of cost of goods manufactured and sold on June 30, 2008 at Normal as
well as at actual.
b. Profit & Loss statement for the year ended June 30, 2008 and Balance Sheet as on
that date.

18 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question#41 The Balance Sheet of Saleem & Co. as on 31 st December, 1993 was as
follows:

Liabilities & Capital Rs. Assets Rs.

Paid-up Capital Cash 5,000
3,000 ordinary shares of Rs.10 each 30,000 Accounts Receivable 10,000
Retained Earning 10,000 Materials 4,000
Current Liabilities 17,500 Work-in-progress 2,000
Finished goods 6,000
Prepaid Expenses 500
Fixed Assets (Net) 30,000
57,500 57,500
During the year 1994, the retained earning increased 50% as a result of year’s business.
Dividend paid during the year at the rate of Rs.1.50 per share. Balancing of Accounts
Receivables, Prepaid expenses, current liabilities and paid-up capital were the same on
31st December, 1994 as they had been on December 31st December, 1993.
Inventories were reduced as follows:
Material 50%
Work-in-progress 50%
Finished goods 33 1/3%
Fixed assets were reduced of Rs.4,000, charged 3/4 to factory overhead and 1/4th to
administrative expenses. Sales were made of Rs.60,000 on account of Finished goods costing
Rs.38,000. Direct labour cost was Rs.9,000. Factory overhead was applied at a rate of 100%
of Director labour cost, leaving Rs.2,000 under applied which was closed to cost of goods sold
account. Total marketing & administrative expenses amounted to 10% and 15% respectively
of the Gross Sales.
Required:
1. An Income Statement for 1994, along with details of the cost of goods
manufactured and sold.
2. A Balance Sheet as on 31st December, 1994.

Question 42:
The Alpha Company submits the following information and asks you to prepare a simple
statement of the cost of goods sold, for the year.
Total cost of goods sold was Rs. 1, 10,000. Materials purchased during amount to Rs.55000.
Material inventory on hand at beginning of the year was Rs.5500. Material Inventory at the end of
the year was Rs.4,000. Direct labour costs incurred during the period amounted to Rs.32000. The
work in process at the beginning of the period was Rs.11000.The opening finished goods
inventory was Rs.15000.The ending work-in-process and Finished goods inventories were
Rs.8000 and 190 units respectively. Manufacturing Expenses under applied were Rs.1500.
One thousand one hundred twenty five Units were manufactured during the period of which one
hundred and ninety units were in finished goods ending inventory. One thousand ninety units
were sold at a unit price of Rs.160 each. Selling expenses amount to 10% of the selling price and
general and administrative expenses amount to 8% of the selling price.

19 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question 43: The following data are for three companies at the end of their fiscal year:

Company A:
Finished goods inventory Rs. 600000
Cost of goods manufactured Rs.3800000
Sales Rs.4000000
Gross profit on sales 20%
Finished goods inventories Dec 31st ?

Company B:
Freight in Rs.20,000
Purchases return & allowances Rs.80,000
Marketing expenses Rs.2, 00,000
Finish goods December 31st Rs.1,90,000
Cost of goods sold Rs.13,00,000
Cost of goods available for sale ?

Company C:
Gross profit Rs. 96000
Cost of goods manufactured Rs.340000
Finish goods January 1st Rs. 45000
Finish goods December 31 st
Rs. 52000
Work in process January 1st Rs. 28000
Work in process December 31 st
Rs. 38000
Sales ?
Required:
Determine the amount indicated by the question marks.

20 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question 44: The following Informations are derived from the Books of Saleem Manufacturing
Company.

Inventories 31-12-2009 1-1-2009

Rs. Rs.
Material 40000 25000
Work in process 15000 12000
Finished goods 18000 15000
Fuel 3000 4000
Factory Repair Parts 2000 3000
Other Informations
Rs.
Raw material purchased -------------------------------------------- 82000
Prime Cost ---------------------------------------------------- 180000
Depreciation on equipments
(90% on manufacturing) & (10% on admin)-------------------------- 6000
Tools expenses ----------------------------------------------------- 2000
Fuel purchased ----------------------------------------------------- 4000
Carriage & Freight ----------------------------------------------------- 5000
Transportation out ------------------------------------------------------ 8000
Indirect Labour ------------------------------------------------------- 4000
Office Salaries ------------------------------------------------------- 6000
Superintendence ------------------------------------------------------- 4000
Heat, Light & Power ---------------------------------------------------- 1800
Indirect Material ------------------------------------------------------- 8000
Purchase discount Lost ------------------------------------------------- 600
Factory repair Parts purchased ---------------------------------------- 3500
Depreciation on office building --------------------------------------- 8000
Miscellaneous FOH cost ----------------------------------------------- 2000
Salesmen Commission ----------------------------------------------- 8000
Factory overhead applied (50% of prime cost)
Sales ---------------------------------------------------------------------- 250000
Rental income ------------------------------------------------------------ 5000
Interest on Mortgage ---------------------------------------------------- 4500
Return inward and discount --------------------------------------------- 5000
Return outward ------------------------------------------------------------ 2000
Required:
1. Cost of goods sold statement at normal as well as at actual.
2. Income statement.

21 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).

 (Cost C G S) Lahore Commerce Academy By: - Prof: M.Waqas
Question 45:
The Umer manufacturing Co. produces one product which sells for Rs.200. The
patent of the product is held by PCSIR who is paid a Royalty Rs.10 per unit sold.
The Royalty is considered marketing expense. The data taken from the books of the
Co. as on Dec.31, 2009 are shown below:

Inventories Jan.1st Dec 31st

Rs. Rs.
Finished goods 6495 ?
Work in process 5325 6402
Material 3500 ?

Other Informations: Rs.

Material Purchased 80500
Administrative Expenses 5800
Depreciation on Equipments
(60% to Mfg., 20% to selling and 20% to Admin.) 2500
Carriage in 586
Direct Material Put into process 80000
Factory Overhead 15600
Carriage Out 1560
Marketing Expenses 5700
Indirect Labour 8500
Indirect Material 3000
Sales 400000
Prime Cost 135000
Office Salaries 24570
Royalties 18000
Salas Salaries 5780
Bad Debts 400
Rent 8000
Purchase discount 840
Insurance 5400
Interest (Cr.) 450
Books Debts 95000
Bought Ledger Balance 92000

There are 200 units of finished goods and 325 units at the end of the year. All the units held on
January are sold during the year. Rent and Insurance are to be apportioned 80% to
Manufacturing, 5% to Marketing and Balance to Administrative expenses.
Required
An income statement supported by a schedule of cost of goods Manufactured and sold
statement.

22 114-Allama Iqbal Road, Ghari Shahu, Lahore. (In-front of Warid Franchise).