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
