Question No. 1:

MS KP MM Corporation is a manufacturer that produces cosmetics. The following information has been taken from the company's production, sales, and cost records for the just completed year:

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

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:

A. Prepare Cost of Goods Manufactured Statement for the year.

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

C. Prepare Income Statement for the year under Absorption costing Method.

D. Compute the following cost:

i. Prime cost

ii. Conversion cost

iii. Inventoriable cost

iv. Non-Manufacturing cost

E. Prepare T accounts of the following

i. Work in process

ii. Finished goods