Online Final Assessment Spring 2020

Course: Cost & Managerial Accounting Date of Submission: 19th May, 2020

Teacher Name: Rais Ahmad Maximum Marks: 40

Student ID: Student Name:

Email ID: Program: Weekend - Hyderi

Instructions (Important):
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 Student MUST attach the Screenshot Image of the
online Admit Card (Cleared) as Cover Page of Final
Assessment. Without the Admit Card Image, the Final
Assessment WILL NOT be graded.
 Student MUST submit the Final Assessment in the
Google Classroom by the above-mentioned DUE DATE.
Late submission of Final Assessment WILL NOT be
graded.
 Final Assessment WILL ONLY be submitted in the
Google Classroom.
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 Type your Student ID, Student Name, & KASBIT Email ID in
the above given boxes
 Read the given case/questions carefully
 All questions are compulsory.
 Show all necessary calculations

Q.1 A) Describe how the income statement of a manufacturing company differs from
the income statement of a merchandising company. M-02

Q.1 B) "The variable cost per unit varies with output, whereas the fixed cost per unit is
constant." Do you agree? Explain. M-03

Q.2 V. Corporation, a manufacturing company, produces a single product. The following

information has been taken from the company's production, sales, and cost records
for the just completed year.
Production in units 29,000
Sales in units ?
Ending finished goods inventory in units ?
Sales in dollars $1,300,000
Costs:
 Direct labor $90,000
Raw materials purchased $480,000
Manufacturing overhead $300,000
Selling and administrative expenses $380,000

Inventories: Beginning of End of the Year

Year
Raw materials $20,000 $30,000
Work in $50,000 $40,000
process
Finished goods $0 ?
The finished goods inventory is being carried at the average unit production cost for
the year.
The selling price of the product is $50 per unit.
Required: M-08
1) Prepare a schedule of cost of goods manufactured for the year.
2) Compute the following:
a. The number of units in the finished goods inventory at the end of the year.
b. The cost of the units in the finished goods inventory at the end of the year.
3) Prepare an income statement for the year.

Q.3 Silk Company makes super-premium cake mixes that go through two processing
departments, Blending and Packaging. The following activity was recorded in the
Blending Department during July:
Production data:
Units in process, July 1 (materials 100% & conversion 30% complete) 10,000
Units started into production 170,000
Units in process, Jul 31 (materials 100% & conversion 40% complete) 20,000
Cost data:
Work in process inventory, July 1:
Materials cost $8,500
Conversion cost $4,900
Cost added during the month:
Materials cost $139,400
Conversion cost $244,200
All materials are added at the beginning of work in the Blending Department. The
company uses the FIFO method in its process costing system.
Required: M-06
1) Determine the equivalent units for July for the Blending Department.
2) Compute the costs per equivalent unit for July for the Blending Department.
3) Determine the total cost of ending work in process inventory and the total cost
of units transferred to the next process for the Blending Department in July.
4) Prepare a cost reconciliation report for the Blending Department for July.

Q.4 Feather Friends, Inc. distributes a high-quality wooden birdhouse that sells for $20
per unit. Variable costs are $8 per unit, and fixed costs total $180,000 per year.
Required: M-08
 Answer the following independent questions:
1) What is the product's CM ratio?
2) Use the CM ratio to determine the break-even point in sales dollars.
3) Due to an increase in demand, the company estimates that sales will increase by
$75,000 during the next year. By how much should net operating income
increase (or net loss decrease) assuming that fixed costs do not change?
4) Refer to the original data. Assume that the company sold 18,000 units last year.
The sales manager is convinced that a 10% reduction in the selling price,
combined with a $30,000 increase in advertising, would cause annual sales in
units to increase by one-third. Prepare two contribution format income
statements, one showing the results of last year's operations and one showing
the results of operations if these changes are made. Would you recommend that
the company do as the sales manager suggests?

Q.5 Royal Company is preparing budgets for the quarter ending June 30, 2018.
Budgeted sales for the next five months are:
 April 20,000 units
 May 50,000 units
 June 30,000 units
 July 25,000 units
 August 15,000 units.
The selling price is Rs.100 per unit.
 Royal Company wants ending inventory to be equal to 20% of the following
month’s budgeted sales in units.
 On March 31, ___?___ units were on hand.
 At Royal Company, five pounds of material are required per unit of product.
 Management wants materials on hand at the end of each month equal to 10% of
the following month’s production.
 On March 31, __?___ pounds of material are on hand. Material cost Rs.5.00 per
pound.
Required: M-06
Prepare Sales Budget, Production Budget and Direct Material Budget (in pounds and
Rupees both) for the quarter ending June 30, 2018.

Q.6 Xavier Company produces a single product. Variable manufacturing overhead is

applied to products on the basis of direct labor-hours. The standard costs for one unit
of product are as follows:
Direct material: 6 ounces at Rs.0.50 per ounce Rs. 3
Direct labor: 1.8 hours at Rs.10 per hour 18

During June, 2,000 units were produced. The costs associated with June’s operations
were as follows:

Material purchased 18,000 ounces at Rs 0.60 per ounce Rs 10,800

Material used in Production: 14,000 ounces
Direct Labor: 4,000 hours at Rs 9.75 per hour Rs 39,000
Required: M-06
a) Compute the direct materials price variance (at the time of purchase & at the time
of usage both) and direct material quantity variances.
b) Compute direct labor rate variance and direct labor efficiency variance. Give
general journal entry.

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