Au 2011
Au 2011
Au 2011
Suggested Answers
Intermediate Examinations – Autumn 2011
Cost Allocated
Machine M1 cost 2,207,166 3,842,834 6,050,000
Machine M2 cost 1,899,355 1,780,645 3,680,000
Inspection department cost 579,310 620,690 1,200,000
Packing department cost 708,861 791,139 1,500,000
5,394,692 7,035,308 12,430,000
A.3 (a) (i) Standard quantity for actual production at standard price:
Materials Quantity (kg) Price Per Kg(Rs.) Amount
A (30/400 × 192) 14.4 240 3,456
B (25/400 × 192) 12 320 3,840
26.4 7,296
W-1:
The labour hours will increase by 10%. Also there will be increase in labour hours as
production efficiency has decreased by 4%. Therefore, increased total labour hours will
be:
110 104
(75,000 ÷ 4) = 18,750 × × = 21,450
100 100
Rate is decreased to Rs. 3. Therefore, direct labour cost will be 21,450 x 3 = Rs. 64,350.
(Sq. ft.)
Maximum Leather available 3,840
Less: Leather allocated to confirmed order:
Football (800 x 0.4 ) (320)
Basketball (1,300 x 0.7 ) (910)
Rugby ball (400 x 0.5 ) (200)
Unused balance of leather 2,410
COST ACCOUNTING
Suggested Answers
Intermediate Examinations – Autumn 2011
Contribution
Product Units Contribution per unit
margin
Rugby ball 2,000 125 250,000
Football 4,825 92 443,900
Basketball 1,300 84 109,200
Total Contribution 803,100
Less: Fixed costs (Note 1) (66,000)
Profit 737,100
Fixed costs
Product Units Direct labour Hour Fixed costs
per D.L Hour
Rugby ball 2,000 (2,000×1.5)=3,000 4 12,000
Football 5,000 (5,000×2)=10,000 4 40,000
Basketball 3,500 (3,500×1)=3,500 4 14,000
Total Fixed Costs 66,000
(240,040
Cost of goods sold W-1 ) (338,040) (422,040) (496,040)
Contribution 59,960 84,460 105,460 123,960
Less: inventory carrying cost @
8% (2,400) (3,863) (5,627) (7,937)
Profit before tax 57,560 80,597 99,833 116,023
Tax @ 30% (17,268) (24,179) (29,950) (34,807)
Profit after tax 40,292 56,418 69,883 81,216
Incremental profit - 16,126 29,591 40,925
Incremental investment - 18,286 40,335 69,203
Incremental return - 88% 73% 59%
(THE END)