mgt402 assignment 1 solution fall 2019

mgt402 assignment 1 solution fall 2019

 

Topics to be covered: Inventory Costing Method, Cost of Goods Sold Statement

 

Learning Objective:  

After going through this assignment, the students should be able to prepare:

  • Store ledger card under FIFO perpetual inventory valuation method   Cost of goods sold statement

 

Assignment Question

ABC is a manufacturing concern of leather products. Management manufactured 500 leather bags to fill an order by incurring following costs.

 

Following information has been extracted the books of company to prepare material ledger card for the month of December

 

December 01: Company had 1,500 kg material @ Rs. 10 per kg
December 04: Purchased material of 2,000 kg @ Rs. 11 per kg
December 13: Issued 2,500 kg material
December 19: Purchased material of 500 kg @ Rs. 12 per kg
December 29: Issued 900 kg material    

 

Additional Information 

  • Direct labor cost incurred during the period was Rs. 50,000. Factory overhead applied rate was Rs. 50 per direct labor hour and direct labor hours were 800.
  • Ending inventory in finished goods and work in process were Rs. 10,000 and Rs.15, 000 respectively. There was no beginning inventory in finished goods and work in process.

 

Required: 

  1. Prepare Material Ledger Card by using first in first out (FIFO) inventory valuation method under perpetual inventory system.
  2. Prepare Cost of Goods Sold Statement for the month of December.

Note: Provide working in proper format otherwise marks will be deducted. 

  

Important Instructions:

24 hours extra / grace period after the due date is usually available to overcome uploading difficulties. 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.

 

DEADLINE:

  • Make sure to upload the solution file before the due date on VULMS.
  • Any submission made via email after the due date will not be accepted.

 

FORMATTING GUIDELINES:

  • Use the font style “Times New Roman” or “Arial” and font size “12”.
  • It is advised to compose your document in MS-Word format.
  • You may also compose your assignment in Open Office format.
  • Use black and blue font colors only.

 

RULES FOR MARKING

   Please note that your assignment will not be graded or graded as Zero (0), if:

  • It is submitted after the due date.
  • Provide complete working and formulas where necessary.
  • The file you uploaded does not open or is corrupt.
  • It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
  • It is cheated or copied from other students, internet, books, journals etc.

 

QUESTION#1(A)

SOLUTION:



DATE RECEIPTS ISSUES Value of Stock
Units Rate Total Units Rate Total Units Rate Total
01 Dec 1500 10 15,000 1500 10 15,000
04 Dec 2000 11 22,000 1500 10 15,000
2000 11 22,000
37,000
13 Dec 1500 10 15,000
1000 11 11,000 1000 11 11,000
11,000
19 Dec 500 12 6,000 1000 11 11,000
500 12 6,000
17,000
29 Dec 900 11 9,900 100 11 1,100
500 12 6,000
7,100

 

QUESTION#1(B)

SOLUTION:



Opening stock Raw Material 15,000
Purchases 28,000
Closing stock Raw Material (7,100)
Cost of material consumed 35,900
Labor Cost 50,000
Prime Cost 85,900
FOH 40,000
Total Factory Cost 125,900
Closing work in progress (15,000)
Cost of good manufactured 110,900
Closing finishing goods (10,000)
Cost of goods sold 100,900

 

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