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Monday 4 June 2012

Cost & Management Accounting (MGT-402) Assignment No. 02 Spring 2012 Idea Solution


Cost & Management Accounting (MGT-402) Assignment No. 02 Due Date: 4th June 2012 -- 7th June 2012 Marks: 30 Topic: Process Cost Accounting - FIFO Costing Method Learning Objectives: The learning objective of this Assignment No. 02 is to encourage the students for applying their knowledge about FIFO costing, which they have learned during lesson No. 01 to 27. This will enhance the understanding of the students about FIFO costing method. Learning Outcomes: After solving this Assignment No. 02 the learners (students) are well aware about the FIFO costing techniques used for calculating the closing WIP cost and the finished goods inventory. The Case Science Developers – a lab instruments manufacturing and marketing company is working in far flung hilly areas of world renowned Scientific Country. At present, the company is involved in manufacturing and marketing of one of its famous chemical brand – Chemical. The Country’s Government has recently given the company an order for delivering Chemical in 500,000 lbs. The Company has started its work on the project on 1st February, 2012. The company has the policy to cost material and units on the FIFO method. On 30th April, 2012, Mr. Processor – In-charge of processing department, presented following monthly report to Mr. Chief. This report contains information about inventories, costs and production as under: March 30 April 30 Materials 100,000 lbs 80,000 lbs Materials cost Rs. 100,000 ---- Work In Process Inventories: All Materials, 40% completed as to labor and FOH 20,000 units Cost Rs. 84,000 All Materials, 331/3% completed as to labor & FOH 30,000 units Finished goods inventory 40,000 units 24,000 units Cost Rs. 448,000 Purchase of Materials 440,000 lbs @ Rs. 1.10 per lb Transferred to production 460,000 lbs Production ratio – 2 lbs: 1 of Chemical Completed during the month 220,000 units Direct Labor Rs. 1,198,800 Factory Overhead Rs. 421,800 Requirement: Calculate the following: (6 marks each) a) Equivalent production units of material, labor and FOH b) Unit costs of three cost elements c) Cost of units transferred to finish goods inventory, using FIFO costing method. d) Cost of the ending Work in process inventory e) Number of units sold and the cost of the finished goods inventory on April 30, 2012 using the FIFO method. Instructions: Please read the following instructions carefully before preparing the assignment solution:  All Supporting Formulas and calculations are required as they carry marks. Note: Only in the case of Assignment, 24 hours extra / grace period after the due date is usually available to overcome uploading difficulties which may be faced by the students on last date. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience. Important Instructions: Please read the following instructions carefully before attempting the assignment solution. Deadline:  Make sure that you upload the solution file before the due date. No assignment will be accepted through e-mail once the solution has been uploaded by the instructor. Formatting guidelines:  Use the font style “Times New Roman”/ “Arial” and font size “12”.  It is advised to compose your document in MS-Word 2003.  Use black and blue font colors only. Solution guidelines:  Every student will work individually and has to write in the form of an analytical assignment.  Give the answer according to question.  For acquiring the relevant knowledge don’t rely only on handouts but watch the video lectures and use other reference books also. Rules for Marking Please note that your assignment will not be graded or graded as Zero (0) if:  It has been submitted after due date  The file you uploaded does not open or is corrupt  It is in any format other than .doc (MS. Word) It is cheated or copied from other students, internet, books, journals etc… Important Note for those courses where calculations and graphs are