Cost and Management Accounting - May 2022

(a) A Limited a toy company purchases its requirement of raw material from S Limited at ` 120 per kg. The company incurs a handling cost of ` 400 plus freight of ` 350 per order. The incremental carrying cost of inventory of raw material is ` 0.25 per kg per month. In addition the cost of working capital finance on the investment in inventory of raw material is ` 15 per kg per annum. The annual production of the…

(a) In a manufacturing company, the overhead is recovered as follows: Factory Overheads: a fixed percentage basis on direct wages and Administrative overheads: a fixed percentage basis on factory cost. The company has furnished the following data relating to two jobs undertaken by it in a period. Job 1 Job 2 Direct materials 1,08,000 75,000 Direct wages 84,000 60,000 Selling price 3,33,312 2,52,000 12% 20% Profit percentage on total cost PAPER – 3 : COST AND MANAGEMENT ACCOUNTING 7 You…

(a) SR Ltd. is a manufacturer of Garments. For the first three months of financial year 2022-23 commencing on 1st April 2022, production will be constrained by direct labour. It is estimated that only 12,000 hours of direct labour hours will be available in each month. For market reasons, production of either of the two garments must be at least 25% of the production of the other. Estimated cost and revenue per garment are as follows: Sales price Raw Materials…

(a) STG Limited is a manufacturer of Chemical 'GK', which is required for industrial use. The complete production operation requires two processes. The raw material first passes through Process I, where Chemical 'G' is produced. Following data is furnished for the month April 2022: 16 INTERMEDIATE EXAMINATION: MAY, 2022 Particulars (in kgs.) Opening work-in-progress quantity (Material 100% and conversion 50% complete) 9,500 Material input quantity 1,05,000 Work Completed quantity 83,000 Closing work-in-progress quantity (Material 100% and conversion 60% complete) 16,500…

(a) Star Limited manufacture three products using the same production methods. A conventional product costing system is being used currently. Details of the three products for a typical period are: Product Labour Hrs. per unit Machine Hrs. per Materials per Volume in Units 1.00 0.90 2.00 1.50 35 25 7,500 12,500 1.50 2.50 45 25,000 Direct Labour costs ` 20 per hour and production overheads are absorbed on a machine hour basis. The overhead absorption rate for the period is…