Assignment 01 10 Marks

Ray Corp. provides the following data for the year 20X7:

Direct Labor Cost Rs. 130, 000

Indirect Labor Cost 60,000
Indirect Material Cost 13,400
Freight-in 6,000
Miscellaneous Factory Overhead Costs 5,000
Purchases 210, 000

Factory overhead is applied at the rate of 75% of direct labor cost. 3,900 units were sold during
20X7 at Rs. 200 per unit. Inventory accounts showed following opening and closing balances:

Jan. 1 Dec. 31
Raw Materials Rs. 27,000 Rs. 17,000
Work in Process 29,500 13,000
Finished Goods 25,000 ?
Finished Goods (units) 200 300

Required:
Using the above data, determine following for the year 20X7:
1. Number of units manufactured (1 Point)
2. Unit cost of finished goods (1 Point)
3. Value of finished goods (2 Points)
4. Cost of goods sold statement at normal and at actual (5 Points)
5. Gross profit (1 Point)

Note: Please follow proper format and provide complete working and formulas where
necessary
Solution:

1. Units sold 3,900

(+) Closing Finished Goods Unit + 300
(-) Opening Finish Goods Units - 200
Number of Units Manufactured 4,000

2. Cost per unit = Cost of goods manufactured (at normal) / No of units manufactured
= 470, 000 / 4,000
= Rs. 117.5
Or

Cost per unit = Cost of goods manufactured (at actual) / No of units manufactured

= 450,900/ 4,000

= Rs. 112.72

3.
Cost of Finished Goods Inventory = Closing finished goods x per unit cost
= 300 x 117.5
= Rs. 35, 250

4. Cost of Goods Sold statement (at normal)

Opening raw material inventory 27,000

(+) Net purchase* 216,000
Raw material available for consumption 243,000
(-) Closing raw material inventory 17,000
Raw material Consumed 226,000
(+) Direct Labor 130,000
Prime Cost 356,000
(+)Applied Factory Overhead Cost 97,500
Total Factory Cost 453,500
(+) Opening work in process inventory 29,500
Cost of goods to be manufactured 483,000
(-) Closing work in process inventory 13,000
Cost of Goods manufactured 470,000
(+) Opening finished goods inventory 25,000
Cost of goods available for sale 495,000
(-) Closing finished goods inventory 35,250
Cost of goods Sold 459,750
 Net Purchases*
Purchases 210, 000
Add Freight in 6,000
216,000

Cost of Goods Sold statement (at actual)

Opening raw material inventory 27,000

(+) Net purchase 216,000
Raw material available for consumption 243,000
(-) Closing raw material inventory 17,000
Raw material Consumed 226,000
(+) Direct Labor 130,000
Prime Cost 356,000
(+) Factory Overhead Cost
Indirect labor 60,000
Indirect material 13,400
Miscellaneous FOH 5,000 78,400
Total Factory Cost 434,400
(+) Opening work in process inventory 29,500
Cost of goods to be manufactured 463,900
(-) Closing work in process inventory 13,000
Cost of Goods manufactured 450,900
(+) Opening finished goods inventory 25,000
Cost of goods available for sale 475,900
(-) Closing finished goods inventory 35,250
Cost of goods Sold 440,650
Or

Cost of goods sold at normal 459,750

(-) over applied FOH 19,100
Cost of goods sold at actual 440,650

5. Sales 780,000
(-) Cost of goods sold 440,650
Gross profit 339,350