MGT402 Cost & Management Accounting Assignment No.1 Solution Spring Semester 2013

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[SIZE="3"]MGT402 Cost & Management Accounting Assignment No.1 Solution Spring Semester 2013[/SIZE]



Learning objectives: To enable the students to prepare Cost of goods sold statement along with
the adjustment for under or over-applied factory overhead.

Assignment:
Lahore Manufacturing Ltd. (LML) - a famous furniture manufacture in Lahore is enjoying an
established reputation in style, well-designed and fine quality home furniture. Mr. Khan - owner of the company is behind this success.

For the financial year 2011-12, the company’s accountant has gathered following information to
prepare financial statements:

a) Sales during the year were Rs. 590,000 (450 units);
b) Total labor hours used during the year were reported at 30,000;
c) For charging overhead, the company has estimated FOH at the rate of Rs. 7 per labor hour. The
company has the policy to charge FOH variance to the cost of goods sold.
d) Cost incurred during the year are:

e) 75% of the electricity bill and 40% of repair and maintenance is relating to factory.
f) Inventories at 1st July, 2011:
Finished goods Rs. 22,000
Work in process Rs. 35,000
Raw Material Rs. 10,000
g) Inventories at 30th June, 2012:
Finished goods ?
Work in process Rs. 33,000
Raw Material Rs. 8,000
Note: Finished goods inventory at July 1st 2011 was of 25 units and at June 30th, 2012 was of 32 units.
Requirements:
1. Cost of Goods Sold Statement for the year ended June 30, 2012; (10 Marks)
2. Income statement for the year ended June 30, 2012; & (15 Marks)
3. Factory overhead schedule with disposition the variance. (5 Marks)