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Problem Set 2

A manufacturing plant was destroyed by fire on February 26th after being torched by an unsatisfied employee. Accounting records from January 1st to February 28th provide information on direct materials purchased, beginning work-in-process, direct materials, finished goods, revenues, direct labor costs, production costs, cost of goods available for sale, and gross margin percentage. The summary asks to calculate ending balances for work-in-process, direct materials, and finished goods inventories on February 28th.

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Rithesh K
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422 views

Problem Set 2

A manufacturing plant was destroyed by fire on February 26th after being torched by an unsatisfied employee. Accounting records from January 1st to February 28th provide information on direct materials purchased, beginning work-in-process, direct materials, finished goods, revenues, direct labor costs, production costs, cost of goods available for sale, and gross margin percentage. The summary asks to calculate ending balances for work-in-process, direct materials, and finished goods inventories on February 28th.

Uploaded by

Rithesh K
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Problem set 2 Q1

A distraught employee, Mr. Unsatisfied, put a torch to a manufacturing plant on a


blustery February 26. The resulting blaze destroyed the plant and its contents.
Fortunately, certain accounting records were kept in another building. They reveal
the following from Jan 1 to Feb 28, current year
DM purchased Rs 16 lacs;
WIP , Jan 1 Rs. 3.4 lacs;
DM , Jan 1 Rs. 1.6 lacs;
FG, Jan 1 Rs. 3.0 lacs;
Revenues Rs 50.0 lacs;
DL Rs 18.00 lacs;
PC Rs 29.40 lacs;
Indirect factory costs - 40% of Conversion cost;
COG available for sale - Rs 45.00 lacs;
Gross margin %age based on revenue – 20%
Calculate the FG stock, WIP stock and DM stock on FEB 28

Problem set 2 Q2
ABC manufactures and sells metal shelving. It began operations on Jan 01. Costs
incurred for the current year are as follows:
DM Rs 1.4 lacs V
DL Rs 0.3 lacs V
PLANT ENERGY COSTS Rs 0.05 lacs V
IND L Rs 0.1 lacs V Rs 0.16 lacs F
IND other Rs 0.08 lacs V Rs 0.24 lacs F
MKT. DIST and Cust OH Rs 1.2285 lacs V Rs 0.4 lacs F
Admn OH Rs 0.5 lacs F
Variable manufacturing costs are with respect to units produced; variables MDC
are wrt to units sold
Inventory data: begin Jan 01 and ending Dec 31
DM 0 kg 2000 kg
WIP 0 units 0 units
FG 0 units ? units
Production in the current year was 1 lac units; 2 kg of DM is used to make 1 unit of
FG. Revenue were Rs 436800. The FG inventory ending is at average unit
manufacturing cost for the current year and was Rs 20970. Calculate period ending
DM inventory cost; period ending FG inventory in units; SP per unit; operating
income
Problem set 2 Q3

If in the above problem, Indirect other manufacturing costs are not inventoriable
cost and there are 9000 units of FG inventory on Dec 31. Then, calculate FG
inventory ending total cost, and operating income of the year

Problem set 2 Q4

ABC’s selected data for the month of September 2014 related to current year are as
follows (in Rs Mio):
Begin WIP inventory 2000
Begin DM inventory 900
DM purchased 3600
DM used 3750
Variable manufacturing OH 2500
Total manufacturing OH 4800
Total manufacturing costs 16000
Cost of goods manufactured 16500
COGS 17000
End FG inventory 1250
Calculate DM inventory, WIP inventory and FG inventory as on 30 Sept 2014;
fixed manufacturing OH, and DL for Sept; Goods available for sale in September

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