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Cost and Management Accounting Assessment

The document contains calculations of prime cost, factory cost, overhead, and cost of sales using direct and indirect expenses. It also contains calculations of labor turnover rates using separation, replacement, and flux methods given employee data. Finally, it shows income statements for two years using absorption and variable costing methods.

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sumanrock9040
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29 views6 pages

Cost and Management Accounting Assessment

The document contains calculations of prime cost, factory cost, overhead, and cost of sales using direct and indirect expenses. It also contains calculations of labor turnover rates using separation, replacement, and flux methods given employee data. Finally, it shows income statements for two years using absorption and variable costing methods.

Uploaded by

sumanrock9040
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Ans-1):

(a) Prime Cost:

Prime Cost = Direct Materials + Direct Wages

Prime Cost = 12,48,000 + 3,57,600

Prime Cost = 16,05,600

(b) Factory Overhead:

Factory Overhead = Indirect Wages + Rent, Rates and Taxes of Factory + Depreciation W/Off:
Plant and Machinery + Electricity Charges: Factory + Fuel Charges: Boiler

Factory Overhead = 24,000 + 18,000 + 42,600 + 72,000 + 96,000

Factory Overhead = 2,52,600

(c) Factory Cost:

Factory Cost = Prime Cost + Factory Overhead

Factory Cost = 16,05,600 + 2,52,600

Factory Cost = 18,58,200

(d) Overhead:

Overhead = Salaries for Administrative Staff + Freights: Inwards + Freights: Outwards + Cash
Discount Allowed + Bad Debts W/Off + Repairs to Plant and Machinery + Travelling Expenses
+ Salesmen's salaries and commission + Depreciation W/Off: Furniture + Director's fees +
General Charges

Overhead = 60,000 + 48,000+30.000+21.000+28.200+63.600+18.600+50.400+3.600+36.000+37.200

Overhead=3 ,97 ,800

(e) Cost of Sale:

Cost of Sale = Factory Cost + Office Overheads

Cost of Sale=18 ,58 ,200+3 ,97 ,800

Cost of Sale=22 ,56 ,000


Ans 2:

To compute the labor turnover using different methods, we can use the following formulas:

1. Separation Method:

Labor Turnover Rate = (Number of separations / Average number of employees) x 100

2. Replacement Method:

Labor Turnover Rate = (Number of replacements / Average number of employees) x 100

3. Flux Method:

Labor Turnover Rate = ((Number of separations + Number of replacements) / Average number


of employees) x 100

First, let's calculate the average number of employees for the month:

Average number of employees = (Total workers in the beginning + Total workers at the end) / 2

= (3800 + 4200) / 2

= 8000 / 2

= 4000

Now, let's calculate the labor turnover using different methods:

1. Separation Method:

Number of separations = Number of workers who left on their own + Number of workers discharged

= 50 + 80

= 130

Labor Turnover Rate (Separation Method) = (130 / 4000) x 100

≈ 3.25%

2. Replacement Method:

Number of replacements = Number of workers appointed

= 60

Labor Turnover Rate (Replacement Method) = (60 / 4000) x 100

≈ 1.5%

3. Flux Method:

Labor Turnover Rate (Flux Method) = ((130 + 60) / 4000) x 100

≈ (190 / 4000) x 100 ≈4.75%


So, the labor turnover rates using different methods are approximately as follows:

- Separation Method: ~3.25%

- Replacement Method: ~1.5%

- Flux Method: ~4.75%


Ans 3- a):

Absorption Costing Income Statement:

Year 1:

Sales Revenue:

1500 units * Rs. 3 = Rs. 4500

Cost of Goods Sold:

Variable Manufacturing: Rs. 1050

Fixed Manufacturing Overhead: (1050/2100) * 2100 = Rs. 1050

Total Cost of Goods Sold: Rs. 2100

Gross Profit: Rs. 2400

Operating Expenses:

Variable Marketing and Administration: Rs. 1500

Fixed Marketing and Administration: Rs. 600

Total Operating Expenses: Rs. 2100

Net Income: Rs. 300

Year 2:

Sales Revenue:

1800 units * Rs. 3 = Rs. 5400

Cost of Goods Sold:

Variable Manufacturing: Rs. 750

Fixed Manufacturing Overhead: (1050/1500) * 1500 = Rs. 1050

Total Cost of Goods Sold: Rs.1800

Gross Profit: Rs.3600

Operating Expenses:

Variable Marketing and Administration:Rs.1800

Fixed Marketing and Administration :Rs .600

Total Operating Expenses :Rs .24000


Net Income :Rs .12000

Ans 3- b):

Variable Costing Income Statement:

Year1 :

Sales Revenue :15000 units *Rs .3 =Rs .45000

Variable Cost of Goods Sold :

Variable Manufacturing :Rs .10500

Variable Marketing and Administration :Rs .15000

Total Variable Costs :Rs .25500

Contribution Margin :Rs .19500

Fixed Manufacturing Overhead : (10500/21000) *21000 =Rs .10500

Fixed Marketing and Administration :Rs .600

Net Income :Rs .850

Year2 :

Sales Revenue

18000 units *Rs .3 =540000

Variable Cost of Goods Sold :

Variable Manufacturing :750*150=112500

Variable Marketing and Administration=180000

Total Variable Costs=292500

Contribution Margin=247500

Fixed Manufacturing Overhead=(105000/150000)*150000=105000

Fixed Marketing and Administration=600

Net Income=142900

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