Production in units

100,000

Sales in units

?

Ending finished goods Inventory in units

?

Sales in Rupees

Rs 2,000,000

Costs :

Other selling and administrative expenses

Rs 40,000

Other factory overhead costs

Rs 22,000

Selling and administrative salaries

Rs 240,000

Maintenance Factory

Rs 50,000

Utilities factory

Rs 60,000

Building Rent (Production Uses 80% of the Space; administrative and sales

offices use the rest)

Rs 100,000

Royalty paid for use of Production patent, Rs 0.5 per unit produced)

?

Rent for special production equipment, Rs 5000 per year plus Rs 0.2 per

unit produced)

?

Insurance factory equipment

Rs 20,000

Cleaning supplies, factory

Rs 10,000

Depreciation Factory

Rs 18,000

Advertising cost

Rs 600,000

Direct labor

Rs 80,000

Indirect labor

Rs 20,000

Property taxes, factory

Rs 10,000

Raw material purchased

Rs 200,000

Karachi

Inventories

Beginning of year

End of year

Finished goods

Rs. 0

?

Work in process

Rs 50,000

Rs 60,000

Raw materials

Rs 20,000

Rs 10,000

The finished goods inventory is being carried at the average unit production cost for the year. The selling price of the product is Rs 32 per unit.

Required:

Prepare a Cost of Goods Manufactured Statement for the year. (2.5 Marks)

Compute the number of units and cost of units in the finished goods inventory at the end of the year.

(2 Marks)

Prepare an Income Statement for the year under Absorption costing Method. (2.5 Marks)

Compute the following cost: (2 Marks)

Prime cost

Conversion cost

Inventoriable cost

Non-Manufacturing cost

Prepare T accounts of the following (1 Marks)

Work in process

Finished goods