cost accounting question solution required plus time value of money questions needed to be answered

compute the cost at initial recognition of factory

On 1 October 2016, Omega began the construction of a new factory. Costs relating to the factory, incurred in the year ended 30 September 2017, are as follows (figures in thousands) Purchase of the land 10,000, Costs of dismantling existing structures on the site 500. Purchase of materials to construct the factory 6,000, Employment costs (Note 1) 1,800, Production overheads directly related to the construction (Note 2) 1,200 Allocated general administrative overheads 600. Architects and consultants' fees directly related to the construction 400, Costs of relocating staff who are to work at the new factory 300, Costs relating to the formal opening of the factory 200, Interest on loan to partly finance the construction of the factory (Note 3) 1,200 Note 1: The factory was constructed in the eight months ended 31 May 2017. It was brought into use on 30 June 2017. The employment costs are for the nine months to 30 June 2017 Note 2: The production overheads were incurred in the eight months ended 31 May 2017. They included an abnormal cost of Rs 200,000, caused by the need to rectify damage resulting from a gas leak Note 3: Omega received the loan of Rs.12m on 1 October 2016. The loan carries a rate of interest of 10% per annum Note 4: The factory has an expected useful economic life of 20 years. At that time the factory will be demolished and the site returned to its original condition. This is a legal obligation that arose on signing the contract to purchase the land. The expected costs of fulfilling this obligation are Rs.2m. An appropriate annual discount rate is 8% Required: Compute the cost at initial recognition of the factory. EXERCISE 102: FUTURE VALUE - ANNUITIES al Compute the future value of Rs.300 invested every year if the appropriate rate is G and you Invest the money for 4 years with the first payment is made at the end of year. Answer: 1312 bi Usman plans to buy a motorcycle and can attard to set aside Rs 500 toward the purchase every year for the next 7 years, the annual interest rate is 11% how much can ho spend in 7 years on the purchase? Answw4.10 c) Jones proposes to set aside Rs.11,000 towards retirement every year for the next 12 years the annuni interest rate is 13%. how much wilJones have in the retirement account in 12 years? Antwerf.,15 di You want to have Rs.600,000 for your retirement in 20 years. You can com 11% How much do you have to deposit annually to achieve this? Answer: 3015yaratmeter You have plan to save As.5.000 per year for next 5 years on 31st December in a bank account that earns 12% interest. What will be the value in your bank account atter 5 years? Answer R9:31,7141 + You need to have Rs.50,000 at the end of 10 years. To accumulate this sum, you have decided to save a certain amount at the end of each of the next 10 years and deposit in the bank. The barik payn 8% interest compounded annually for long term posts. How much will you have to save onoh your Anww year to low al Mr. Akram has just bought a house. He estimates that the root will have to be renewed at a cost of Rs. 25,000 after 20 years to cover these costs, he intends to save an equal amount of money At the end of each your camning 8% annual interest How much is such a yearly anruty? www. EXERCISE #04: PRESENT VALUE - ANNUITIES al Amy Brown has just won the lottery and will receive an annual payment of Rs.15.000 every year for the next 18 years starting one year from today. If the annual interest rate is 9%, what is the presunt valuun of the winnings? Answer: 135 DI Compute the present value at Rs.4,000 invested every year it the appropriate rate is 10% and you invest the money for years with the first payment made one year from now. ANIMAI 21.00H c) Gomez has just retred and plans to consume As 25.000 from the retirement account every year for the next 10 years starting one year from today meeting the rest of the expenses from other resources, the annual interest rate is 13%, how much does Zachery Gomez have in the retirement account today? Anwwer: 1173,448 di Janet plans to buy a personal computer today and can afford to make payments of Rs. 5,000 toward the purchase every year for the next 2 years. If the annual interest rate is B. bow much can Janet Gains spend today on the purchase? Anwar You have estimated your ducational expenses will be Rs 13,000 per year for rent 3 years. How much money you must have in your account now in order to withdraw the required funds each year? Assume 10% interest rate Anal 2014 You borrow Rs.10,000 at 14% for four years. The loan is repayable in our equal instaliments at the year ends. What is the annual payment required to amortize your loan? Answer4 P. al You plan to purchase a Honda Civic now. The tul payment price is Rs.2.749,000 Meezan bank has offered 10 years las plan that offers 40% down payment and remaining in 10 annual payments of equal amount. How much money you need to pay every year to finance your car Interest rate is 13% A0610 EXERCISE # 01: FUTURE VALUE - SINGLE AMOUNT 1 you deposit Rs.100 in the bank today and it cams % interest, how much will you get after 10 years? Aw210 2. A lot of bread costs Rs 8 today. If this price nercases by El per year, how much this cat will cost in 20 years? Anwer: 2 3 Your current salary is Rs.55.000 You anticipate receiving a 4 percent pay raise each year, What wil your salary be in 5 years? Answer: A 2.383 4 Mr Javed will retire in 20 years. Today, he wants an amount of 9.15.000 at the time of retirement. How much does he have to deposit now into a pension plan carning 7 armually? Answers EXERCISE 1 02: PRESENT VALUE - SINGLE AMOUNT V How much money must you deposit in a saving bank account today to recove Rs.20,000 in 20 years it the interest rate is compounded analy? Anwar. 21 Turgut in to receive Rs.6,000 trom an inheritance in two years, the appropriate discount rato 13 7%, what is the present value of the hero? Anwwer P5.241 5 Yanal plans to buy a fax machine for Rs.9.000 after three year. If the annual interest rate is 8% how much money should he set aside today for the purchase? Awww 7.14 4 Your best friend won the battery and promised you to give Rs.10,000 in 5 years. You have an investment opportunity that yields 125 annual return. What is the value of your friend's grow? Anawet 5.74 EXERCISE # 01: FUTURE VALUE - SINGLE AMOUNT 1 you deposit Rs.100 in the bank today and it cams % interest, how much will you get after 10 years? Aw210 2. A lot of bread costs Rs 8 today. If this price nercases by El per year, how much this cat will cost in 20 years? Anwer: 2 3 Your current salary is Rs.55.000 You anticipate receiving a 4 percent pay raise each year, What wil your salary be in 5 years? Answer: A 2.383 4 Mr Javed will retire in 20 years. Today, he wants an amount of 9.15.000 at the time of retirement. How much does he have to deposit now into a pension plan carning 7 armually? Answers EXERCISE 1 02: PRESENT VALUE - SINGLE AMOUNT V How much money must you deposit in a saving bank account today to recove Rs.20,000 in 20 years it the interest rate is compounded analy? Anwar. 21 Turgut in to receive Rs.6,000 trom an inheritance in two years, the appropriate discount rato 13 7%, what is the present value of the hero? Anwwer P5.241 5 Yanal plans to buy a fax machine for Rs.9.000 after three year. If the annual interest rate is 8% how much money should he set aside today for the purchase? Awww 7.14 4 Your best friend won the battery and promised you to give Rs.10,000 in 5 years. You have an investment opportunity that yields 125 annual return. What is the value of your friend's grow? Anawet 5.74 On 1 October 2016, Omega began the construction of a new factory. Costs relating to the factory, incurred in the year ended 30 September 2017, are as follows (figures in thousands): Purchase of the land 10.000. Costs of dismantling existing structures on the site 500. Purchase of materials to construct the factory 6,000. Employment costs (Note 1) 1.800. Production overheads directly related to the construction (Note 2) 1,200, Allocated general administrative overheads 600, Architects and consultants' fees directly related to the construction 400, Costs of relocating staff who are to work at the new factory 300, Costs relating to the formal opening of the factory 200. Interest on loan to partly finance the construction of the factory (Note 3) 1,200 Note 1: The factory was constructed in the eight months ended 31 May 2017. It was brought into use on 30 June 2017. The employment costs are for the nine months to 30 June 2017 Note 2: The production overheads were incurred in the eight months ended 31 May 2017. They included an abnormal cost of Rs.200,000, caused by the need to rectify damage resulting from a gas leak. Note 3: Omega received the loan of Rs.12m on 1 October 2016. The loan carries a rate of interest of 10% per annum. Note 4: The factory has an expected useful economic life of 20 years. At that time the factory will be demolished and the site returned to its original condition. This is a legal obligation that arose on signing the contract to purchase the land. The expected costs of fulfilling this obligation are Rs.2m. An appropriate annual discount rate is 8%. Required: Compute the cost at initial recognition of the factory. On 1 October 2016, Omega began the construction of a new factory. Costs relating to the factory, incurred in the year ended 30 September 2017, are as follows (figures in thousands) Purchase of the land 10,000, Costs of dismantling existing structures on the site 500. Purchase of materials to construct the factory 6,000, Employment costs (Note 1) 1,800, Production overheads directly related to the construction (Note 2) 1,200 Allocated general administrative overheads 600. Architects and consultants' fees directly related to the construction 400, Costs of relocating staff who are to work at the new factory 300, Costs relating to the formal opening of the factory 200, Interest on loan to partly finance the construction of the factory (Note 3) 1,200 Note 1: The factory was constructed in the eight months ended 31 May 2017. It was brought into use on 30 June 2017. The employment costs are for the nine months to 30 June 2017 Note 2: The production overheads were incurred in the eight months ended 31 May 2017. They included an abnormal cost of Rs 200,000, caused by the need to rectify damage resulting from a gas leak Note 3: Omega received the loan of Rs.12m on 1 October 2016. The loan carries a rate of interest of 10% per annum Note 4: The factory has an expected useful economic life of 20 years. At that time the factory will be demolished and the site returned to its original condition. This is a legal obligation that arose on signing the contract to purchase the land. The expected costs of fulfilling this obligation are Rs.2m. An appropriate annual discount rate is 8% Required: Compute the cost at initial recognition of the factory. EXERCISE 102: FUTURE VALUE - ANNUITIES al Compute the future value of Rs.300 invested every year if the appropriate rate is G and you Invest the money for 4 years with the first payment is made at the end of year. Answer: 1312 bi Usman plans to buy a motorcycle and can attard to set aside Rs 500 toward the purchase every year for the next 7 years, the annual interest rate is 11% how much can ho spend in 7 years on the purchase? Answw4.10 c) Jones proposes to set aside Rs.11,000 towards retirement every year for the next 12 years the annuni interest rate is 13%. how much wilJones have in the retirement account in 12 years? Antwerf.,15 di You want to have Rs.600,000 for your retirement in 20 years. You can com 11% How much do you have to deposit annually to achieve this? Answer: 3015yaratmeter You have plan to save As.5.000 per year for next 5 years on 31st December in a bank account that earns 12% interest. What will be the value in your bank account atter 5 years? Answer R9:31,7141 + You need to have Rs.50,000 at the end of 10 years. To accumulate this sum, you have decided to save a certain amount at the end of each of the next 10 years and deposit in the bank. The barik payn 8% interest compounded annually for long term posts. How much will you have to save onoh your Anww year to low al Mr. Akram has just bought a house. He estimates that the root will have to be renewed at a cost of Rs. 25,000 after 20 years to cover these costs, he intends to save an equal amount of money At the end of each your camning 8% annual interest How much is such a yearly anruty? www. EXERCISE #04: PRESENT VALUE - ANNUITIES al Amy Brown has just won the lottery and will receive an annual payment of Rs.15.000 every year for the next 18 years starting one year from today. If the annual interest rate is 9%, what is the presunt valuun of the winnings? Answer: 135 DI Compute the present value at Rs.4,000 invested every year it the appropriate rate is 10% and you invest the money for years with the first payment made one year from now. ANIMAI 21.00H c) Gomez has just retred and plans to consume As 25.000 from the retirement account every year for the next 10 years starting one year from today meeting the rest of the expenses from other resources, the annual interest rate is 13%, how much does Zachery Gomez have in the retirement account today? Anwwer: 1173,448 di Janet plans to buy a personal computer today and can afford to make payments of Rs. 5,000 toward the purchase every year for the next 2 years. If the annual interest rate is B. bow much can Janet Gains spend today on the purchase? Anwar You have estimated your ducational expenses will be Rs 13,000 per year for rent 3 years. How much money you must have in your account now in order to withdraw the required funds each year? Assume 10% interest rate Anal 2014 You borrow Rs.10,000 at 14% for four years. The loan is repayable in our equal instaliments at the year ends. What is the annual payment required to amortize your loan? Answer4 P. al You plan to purchase a Honda Civic now. The tul payment price is Rs.2.749,000 Meezan bank has offered 10 years las plan that offers 40% down payment and remaining in 10 annual payments of equal amount. How much money you need to pay every year to finance your car Interest rate is 13% A0610 EXERCISE # 01: FUTURE VALUE - SINGLE AMOUNT 1 you deposit Rs.100 in the bank today and it cams % interest, how much will you get after 10 years? Aw210 2. A lot of bread costs Rs 8 today. If this price nercases by El per year, how much this cat will cost in 20 years? Anwer: 2 3 Your current salary is Rs.55.000 You anticipate receiving a 4 percent pay raise each year, What wil your salary be in 5 years? Answer: A 2.383 4 Mr Javed will retire in 20 years. Today, he wants an amount of 9.15.000 at the time of retirement. How much does he have to deposit now into a pension plan carning 7 armually? Answers EXERCISE 1 02: PRESENT VALUE - SINGLE AMOUNT V How much money must you deposit in a saving bank account today to recove Rs.20,000 in 20 years it the interest rate is compounded analy? Anwar. 21 Turgut in to receive Rs.6,000 trom an inheritance in two years, the appropriate discount rato 13 7%, what is the present value of the hero? Anwwer P5.241 5 Yanal plans to buy a fax machine for Rs.9.000 after three year. If the annual interest rate is 8% how much money should he set aside today for the purchase? Awww 7.14 4 Your best friend won the battery and promised you to give Rs.10,000 in 5 years. You have an investment opportunity that yields 125 annual return. What is the value of your friend's grow? Anawet 5.74 EXERCISE # 01: FUTURE VALUE - SINGLE AMOUNT 1 you deposit Rs.100 in the bank today and it cams % interest, how much will you get after 10 years? Aw210 2. A lot of bread costs Rs 8 today. If this price nercases by El per year, how much this cat will cost in 20 years? Anwer: 2 3 Your current salary is Rs.55.000 You anticipate receiving a 4 percent pay raise each year, What wil your salary be in 5 years? Answer: A 2.383 4 Mr Javed will retire in 20 years. Today, he wants an amount of 9.15.000 at the time of retirement. How much does he have to deposit now into a pension plan carning 7 armually? Answers EXERCISE 1 02: PRESENT VALUE - SINGLE AMOUNT V How much money must you deposit in a saving bank account today to recove Rs.20,000 in 20 years it the interest rate is compounded analy? Anwar. 21 Turgut in to receive Rs.6,000 trom an inheritance in two years, the appropriate discount rato 13 7%, what is the present value of the hero? Anwwer P5.241 5 Yanal plans to buy a fax machine for Rs.9.000 after three year. If the annual interest rate is 8% how much money should he set aside today for the purchase? Awww 7.14 4 Your best friend won the battery and promised you to give Rs.10,000 in 5 years. You have an investment opportunity that yields 125 annual return. What is the value of your friend's grow? Anawet 5.74 On 1 October 2016, Omega began the construction of a new factory. Costs relating to the factory, incurred in the year ended 30 September 2017, are as follows (figures in thousands): Purchase of the land 10.000. Costs of dismantling existing structures on the site 500. Purchase of materials to construct the factory 6,000. Employment costs (Note 1) 1.800. Production overheads directly related to the construction (Note 2) 1,200, Allocated general administrative overheads 600, Architects and consultants' fees directly related to the construction 400, Costs of relocating staff who are to work at the new factory 300, Costs relating to the formal opening of the factory 200. Interest on loan to partly finance the construction of the factory (Note 3) 1,200 Note 1: The factory was constructed in the eight months ended 31 May 2017. It was brought into use on 30 June 2017. The employment costs are for the nine months to 30 June 2017 Note 2: The production overheads were incurred in the eight months ended 31 May 2017. They included an abnormal cost of Rs.200,000, caused by the need to rectify damage resulting from a gas leak. Note 3: Omega received the loan of Rs.12m on 1 October 2016. The loan carries a rate of interest of 10% per annum. Note 4: The factory has an expected useful economic life of 20 years. At that time the factory will be demolished and the site returned to its original condition. This is a legal obligation that arose on signing the contract to purchase the land. The expected costs of fulfilling this obligation are Rs.2m. An appropriate annual discount rate is 8%. Required: Compute the cost at initial recognition of the factory