Methods & Formulas Lahore Commerce Academy: BY SIR IRFAN AHMED 03217601935

METHODS & FORMULAS LAHORE COMMERCE ACADEMY
BY SIR IRFAN AHMED 03217601935
FINANCIAL STATEMENTS
Company Name Cost of Goods Manufactured and sold statement For the Year Ended December Rs.
Direct Materials: Material inventory, January 1, Add: Purchases Add: Freight in Less: Purchase discount Less: Purchase Return & Allowance Net Purchases . Material Available for use Less: Material inventory, December 31, Total Material used Less: Indirect Material Purchased & used Cost of Direct Material used .. Direct Labor . Factory over head ._ Total Current Manufacturing cost/Total Factory Cost . Add: Work in Process Inventory, January1,.. __ Cost of Goods available for manufacturing . Less: Work in Process Inventory, December 1,.. __ Cost of Goods Manufactured Add: Finished Goods inventory, January 1,.. ._ Cost of Goods available for sale .
Rs.
. _ ----------------------
Less: Finished Goods inventory, December 1,.. _ Cost of Goods sold at normal Add: Under Applied F.O.H Less: Over Applied F.O.H __ Cost of Goods sold at actual ._
Income statement For the Year Ended December Rs Rs.

Sale Less: Cost of Goods sold Gross Profit Less: Operating expenses: Selling expenses Marketing expenses Administrative Expenses Operating Profit Add: Other incomes Net Profit/Net Income .. . .. . . .
MOST COMMON ITEMS OF FACTORY OVER HEAD

Indirect Materials: Cotton waste Factory office supplies Fuel, oil, coal etc. Lubricants Perishable tools Repair & maintains stores Indirect Labor: Cleaners, janitors, helpers, etc Factory office staff Foreman supervisors etc Idle time wages Overtime premiums Payroll contribution and taxes Paid leaves Quality inspectors Other Indirect Expenses: Depreciation Electricity and gas bills Insurance
Normal rework on defective production Normal spoilage Property taxes Service departments expense
SOME CALCULATIONS RELATED TO FINANCIAL STATEMENTS PRIME COST

DIRECT MATERIAL USED + DIRECT LABOUR USED
CONVERSION COST AT NORMAL CONVERSION COST AT ACTUAL TOTAL FACTORY COST
DIRECT LABOUR COST + F.O.H APPLIED COST
DIRECT LABOUR COST + F.O.H ACTUAL COST
DIRECT MATERIAL COST + DIRECT LABOUR COST + F.O.H COST
CALCULATION OF UNDER OR OVER APPLIED FACTORY OVER HEAD ACTUAL FACTORY OVER HEAD ---------------APPLIED FACTORY OVER HEAD ---------------(+) UNDER APPLIED (-) OVER APPLIED ---------------CALCULATION OF DIRECT LABOUR HOURS DIRECT LABOUR COST PER HOUR RATE CALCULATION OF UNIT COST OF MATERIAL, LABOUR AND F.O.H MATERIAL LABOUR WORK IN PROCESS OPENING INVENTORY --------------------------ADD COST PUT INTO PROCESS ------------ ---------TOTAL COST TO BE ACCOUNTED FOR --------------------LESS WORK IN PROCESS CLOSING INVENTORY--------------------COST CONVERTED INTO FINISHED GOODS ------------ ---------UNITS PRODUCED COST PER UNIT COST CONVERTED INTO FINISHED GOODS UNITS PRODUCED NUMBER OF UNITS MANUFACTURED UNIT SOLD -------ADD: UNITS IN CLOSING FINISHED GOOD INVENTORY -------F.O.H -------------------------
TOTAL UNITS TO BE ACCOUNTED FOR -------LESS: UNITS IN OPENING FINISHED GOOD INVENTORY-------UNITS MANUFACTURED -------NUMBER OF UNITS PUT INTO PRODUCTION UNITS MANUFACTURED ADD: UNITS IN CLOSING W-I-P INVENTORY TOTAL UNITS TO BE ACCOUNTED FOR LESS: UNITS IN OPENING W-I-P INVENTORY UNITS PUT INTO PRODUCTION ------------------------------------
COST OF CLOSING WORK IN PROCESS INVENTORY DIRECT MATERIALS ------DIRECT LABOR ------FACTORY OVER HEAD [% OF DIRECT LABOR OR F.O.H X 100] ------DIRECT LABOR TOTAL WORK IN PROCESS INVENTORY ------COST OF EACH UNIT MANUFACTURED COST OF GOODS MANUFACTURED UNITS MANUFACTURED ENDING FINISHED GOODS INVENTORY UNITS IN ENDING FINISHED GOOD INVENTORY X PER UNIT COST OF GOODS MANUFACTURED
GROSS PROFIT SALE COST OF GOODS SOLD GROSS PROFIT PER UNIT SOLD GROSS PROFIT UNITS SOLD THE INCOME PER UNIT SOLD NET INCOME UNITS SOLD THE RATIO OF GROSS PROFIT TO SALES (GROSS PROFIT SALE) X 100 THE INCOME TO SALE PERCENTAGE (NET INCOME SALE) X 100 CALCULATION OF PURCHASE AT SALE PRICE SALE --------
ADD ENDING INVENTORY (AT SALE PRICE) -------GOODS AVAILABLE FOR SALE (AT SALE PRICE) -------LESS BEGNING INVENTORY (AT SALE PRICE) -------PURCHASE AT SALE PRICE -------CALCULATION OF PERCENTAGE OF COST TO SALE PRICE (PURCHASE AT COST PRICE PURCHASE AT SALE PRICE) X 100
THE END
MATERIAL
MATERIAL CONTROL-DETERMINIZING COSTS
INVENTORY LEVEL
ORDER POINT/REORDER LEVEL = Maximum Usage x Lead Time OR Average Usage x Lead Time + safety stock MINIMUM LEVEL = Re-order level (Average usage x lead time)
MAXIMUM LEVEL OR ABSOLUTE MAXIMUM LEVEL = Re-order level + EOQ (minimum usage x lead time) NORMAL MAXIMUM LEVEL = Re-order level + EOQ (Average usage x lead time) DANGER LEVEL = Average usage x emergency lead time AVERAGE INVENTORY LEVEL = Minimum Inventory level + Maximum Inventory level 2
Note:INVENTORY AND LEAD TIME MUST BE SAME Maximum stock = Maximum lead time Minimum Stock = Minimum Lead Time Average Stock = Average lead time Danger level = Danger lead time
___________
ECONOMIC ORDER QUANTITY
EOQ = 2 X AR X OC C.C + I AR= ANNUAL REQUREMENT O.C=ORDERIND COST C.C= CARRYING COST I= INTEREST RATE NOTE IF CARRYING COST IN % THEN CALCULATE ON UNIT COST & IF THERE IS INTEREST THEN CALCULATE ON UNIT COST AND ADD IN CARRYING COST. NUMBER OF ORDER IN A YEAR = AR EOQ FREQUENCY OF AN ORDER = 360 NO. OF ORDER
PROFF OF E.O.Q 1 2 ANNUAL ORDER REQUIREMAN SIZE

T
3 NO. OF ORDER
4 ORDERING COST
5 AVERAGE INVENTOR Y
6 CARRYING COST
7 TOTAL COST
1) 2) 3) 4)
ANNUAL REQUIREMANT= GIVEN ORDER SIZE = ASSUMED NO. OF ORDERS = ANNUAL REQUIREMENT ORDER SIZE ORDERING COST = NO. OF ORDERS X ORDERING COST PER UNIT 5) AVERAGE INVENTORY = ORDER SIZE 2 6) CARRYING COST = AVERAGE INVENTORY X C.C PER UNIT 7) TOTAL COST = ORDERING COST + CARRYING COST
MATERIAL TURNOVER RATIO

MATERIAL TURNOVER RATIO = Cost/Units of material consumed Average inventory Cost of Material Used = Opening inventory + Purchase - Closing inventory
Average Inventory = Opening Inventory + Closing Inventory

2 DAYS REQUIREMENT IN AVERAGE INVENTORY = Days of year (360) Material Turnover Ratio
THE END
MATERIAL CONTROL-STORING & ISSUING

Three Major Method to Storing & Issuing
FIFO METHOD (First in First Out) LIFO METHOD (Last in First Out) WEIGHTED/MOVING/AVERAGE COSTING METHOD
STORE LEDGER ACCOUNT

Dat e
Received
Units Unit Cost Amount Units
Issued
Unit Cost Amount
Balance
Units Unit Cost Amount
COST OF MATERIAL USED = SUM OF ISSUED AMOUNT COST OF ENDING INVENTORY = SUM OF LEFT BALANCE AMOUNT MAJOR ISSUES RELATING TO MATERIAL COSTING RETURN TO SUPPLIER/ RETURN TO VENDOR
TREATMENT ISSUE THAT UNITS AND LESS FROM BALANCE ACCORDING TO GIVEN DATE IF DATE NOT MENTION THEN TREAT AS THE LATEST RECEIVED UNITS RATE.
RETURN TO STOREROOM/RETURN FROM FACTORY TO STORE ROOM/ EXCESS MATERIAL FOUND IN STOCK
TREATMENT PLACE IN RECEIVED AND IN BALANCE ACCORDING TO GIVEN DATE IF DATE NOT MENTION THEN TREAT AS THE LATEST ISSUED UNITS RATE. IN FIFO METHOD PLACE AT FIRST IN BALANCE COLUMN IN LIFO METHOD PLACE AT LAST IN BALANCE CLOUMN IN AVERAGE COSTING ADD UNITS IN UNITS BALANCE AND ADD AMOUNT IN BALANCE AMOUNT.
UNITS DETERIORATED/SPOILED AND TRANSFERRED TO ABSOLETE STOCK

TREATMENT ISSUE THAT UNITS AND LESS FROM BALANCE UNITS ACCORDING TO MOST RECENT RECEIVE RATE.
THE END
ACCOUNTING FOR SCRAP,SPOILED AND DEFECTIVE UNITS
DEFECTIVE AND SPOILED PRODUCTION ENTRIES WITH SINGLE W-I-P BY SIR IRFAN AHMED 03217601935
COST OF REWORK AND SPOILAGE CHARGED TO SPECIAL JOB

TO RECORD INITIAL COST W-I-P TO MATERIALS TO PAYROLL TO FOH APPLIED TO RECORD COST OF REWORK W-I-P TO MATERIALS TO PAYROLL TO FOH APPLIED TO RECORD SPOILAGE SPOILED GOODS INVENTORY TO W-I-P TO RECORD COMPLETION OF ORDER FINISHED GOODS TO W-I-P TO RECORD SALE OF COMPLETED ORDER COST OF GOODS SOLD TO FINISHED GOODS ACCOUNT RECEIVABLE TO SALE TO RECORD SALE OF SPOILED UNITS CASH TO SPOILED GOODS INVENTORY
COST OF REWORK AND SPOILAGE CHARGED TO FOH/ENTIRE PRODUCATION/NOT SO CHARGED

TO RECORD INITIAL COST W-I-P TO MATERIALS TO PAYROLL TO FOH APPLIED TO RECORD COST OF REWORK FOH CONTROL A/C TO MATERIALS TO PAYROLL TO FOH APPLIED TO RECORD SPOILAGE SPOILED GOODS INVENTORY FOH CONTROL A/C TO W-I-P TO RECORD COMPLETION OF ORDER FINISHED GOODS TO W-I-P TO RECORD SALE OF COMPLETED ORDER COST OF GOODS SOLD TO FINISHED GOODS ACCOUNT RECEIVABLE TO SALE TO RECORD SALE OF SPOILED UNITS CASH TO SPOILED GOODS INVENTORY
CALCULATION OF COST PER UNIT FINISHED GOODS/COST OF GOODS MANUFACTURED UNITS MANUFACTURED
DEFECTIVE AND SPOILED PRODUCTION ENTRIES WITH THREE W-I-P

COST OF REWORK AND SPOILAGE CHARGED TO SPECIAL JOB
TO RECORD INITIAL COST W-I-P MATERIAL W-I-P LABOUR W-I-P FOH TO MATERIALS TO PAYROLL TO FOH APPLIED TO RECORD COST OF REWORK W-I-P MATERIAL W-I-P LABOUR W-I-P FOH TO MATERIALS TO PAYROLL TO FOH APPLIED TO RECORD SPOILAGE SPOILED GOODS INVENTORY TO W-I-P MATERIAL TO W-I-P LABOUR TO W-I-P FOH TO RECORD COMPLETION OF ORDER FINISHED GOODS TO W-I-P MATERIAL TO W-I-P LABOUR TO W-I-P FOH TO RECORD SALE OF COMPLETED ORDER ACCOUNT RECEIVABLE TO SALE COST OF GOODS SOLD TO FINISHED GOODS TO RECORD SALE OF SPOILED UNITS CASH TO SPOILED GOODS INVENTORY
COST OF REWORK AND SPOILAGE CHARGED TO FOH/ENTIRE PRODUCATION/NOT SO CHARGED

TO RECORD INITIAL COST W-I-P MATERIAL W-I-P LABOUR W-I-P FOH TO MATERIALS TO PAYROLL TO FOH APPLIED TO RECORD COST OF REWORK FOH CONTROL A/C TO MATERIALS TO PAYROLL TO FOH APPLIED TO RECORD SPOILAGE SPOILED GOODS INVENTORY FOH CONTROL A/C TO W-I-P MATERIAL TO W-I-P LABOUR TO W-I-P FOH TO RECORD COMPLETION OF ORDER FINISHED GOODS TO W-I-P MATERIAL TO W-I-P LABOUR TO W-I-P FOH TO RECORD SALE OF COMPLETED ORDER ACCOUNT RECEIVABLE TO SALE COST OF GOODS SOLD TO FINISHED GOODS TO RECORD SALE OF SPOILED UNITS CASH TO SPOILED GOODS INVENTORY
CALCULATION OF COST PER UNIT FINISHED GOODS/COST OF GOODS MANUFACTURED UNITS MANUFACTURED
THE END
PROCESS COSTING
1st DEPARTMENT CPR SEHEDULE WITHOUT LOSS COMPANY NAME COST OF PRODUCTION REPORT FOR THE PERIOD ENDED ON -------------
Quantity Schedule Units
Units
Units started in process ------Units completed & transferred out Units still in Process ---------------
Cost charged to Department P.U

Cost added by the department: Direct Material -----Direct Labor -----Factory over Head -----Total Cost to be accounted for -------
T.C
----------------------Sub Cost -
Cost Accounted for as follow

Total Cost Cost of units completed & transferred out -----Cost of units still in process: Direct Material Direct Labor Factory over Head ------_
----------------
Total Cost Accounted for -------
EQUIVALENT PRODUCTION REPORT

MATERIAL F.O.H Units completed & transferred out Units still in process ---------------LABOR ------ -----------
---------------
----------
CALCULATION OF PER UNIT COST
MATERIAL =COST OF MATERIAL EQUIVALENTUNITS LABOR = COST OF LABOUR EQUIVALENTUNITS = COST OF FACTORY OVER HEAD EQUIVALENTUNITS
F.O.H
1st DEPARTMENT CPR SEHEDULE NORMAL LOSS COMPANY NAME COST OF PRODUCTION REPORT FOR THE PERIOD ENDED ON -------------
Units
Units started in process ------Units completed & transferred out Units still in Process Units lost in process ------
----------
Cost charged to Department P.U

Cost added by the department: Direct Material -----Direct Labor -----Factory over Head -----Total Cost to be accounted for -------
T.C
----------------------Sub Cost Total

Cost Cost of units completed & transferred out
-----Cost of units still in process: Direct Material Direct Labor Factory over Head ------_ ----------------

MATERIAL F.O.H Units completed & transferred out -----Units still in process -----------------------------_ LABOR --------------------

F.O.H
2ND DEPARTMENT CPR SEHEDULE WITHOUT LOSS COMPANY NAME COST OF PRODUCTION REPORT FOR THE PERIOD ENDED ON ------------Quantity Schedule Units
Units received from previous department ------Units completed & transferred out Units still in Process
Units
------
----------
Cost charged to Department P.U Cost received from previous department -----Cost added by the department: Direct Material -----Direct Labor -----Factory over Head -----Total cost added by the department -----Total Cost to be accounted for -------
T.C -------------------------------Sub Cost Total -

Cost Cost of units completed & transferred out -----Cost of units still in process:
Cost received from previous department

Direct Material Direct Labor Factory over Head ----------------
-----------
Total Cost Accounted for ------

MATERIAL F.O.H Units completed & transferred out -----Units still in process ----------------------_ LABOR --------------------

MATERIAL =COST OF MATERIAL EQUIVALENTUNITS
--------
LABOR F.O.H
= COST OF LABOUR EQUIVALENTUNITS = COST OF FACTORY OVER HEAD EQUIVALENTUNITS
2ND DEPARTMENT CPR SEHEDULE NORMAL LOSS COMPANY NAME COST OF PRODUCTION REPORT FOR THE PERIOD ENDED ON -------------
Units
Units received from previous department ------Units completed & transferred out Units still in Process Units lost in Process (normal loss) ------
----------
T.C -------------------------------Sub Cost Total -

Cost Cost of units completed & transferred out ----Cost of units still in process:

Direct Material Direct Labor -----------
------
Factory over Head ------_
------
CALCULATION OF ADJUSTED PER UNIT COST IN CASE OF NORMAL LOSS

Cost received from previous department Units received-Units lost (normal loss)

MATERIAL ------------------------_ F.O.H Units completed & transferred out Units still in process ------
LABOR ------ --------------------
MATERIAL =COST OF MATERIAL EQUIVALENTUNITS LABOR = COST OF LABOUR EQUIVALENTUNITS F.O.H = COST OF FACTORY OVER HEAD EQUIVALENTUNITS
2ND DEPARTMENT CPR SEHEDULE NORMAL LOSS COMPLETED UNITS ON HAND COMPANY NAME COST OF PRODUCTION REPORT FOR THE PERIOD ENDED ON -------------
Units
Units received from previous department ------Units completed & transferred out Units completed but in hands Units still in Process Units lost in Process (normal loss) ------
----------
Cost charged to Department P.U Cost received from previous department ------
T.C -----
Cost added by the department: Direct Material -----Direct Labor -----Factory over Head -----Total cost added by the department -----Total Cost to be accounted for -------
---------------------------Sub Cost

Total Cost Cost of units completed & transferred out Units completed but in hand ------Cost of units still in process:

Direct Material Direct Labor Factory over Head ----------------
-----------
CALCULATION OF ADJUSTED PER UNIT COST IN CASE OF NORMAL LOSS

Cost received from previous Department Units received-Units lost (Normal loss)
MATERIAL ------------------------_

F.O.H Units completed & transferred out -----Units completed but in hand Units still in process ------
LABOR --------------------
2ND DEPARTMENT CPR SEHEDULE NORMAL LOSS AT THE END MATERIAL ARE ADDED AT THE END COMPANY NAME COST OF PRODUCTION REPORT FOR THE PERIOD ENDED ON -------------
Units
Units received from previous department ------Units completed & transferred out Units still in Process 0% Material -----Units lost in Process (normal loss) ------
-----
T.C -------------------------------Sub Cost

Total Cost Cost of units completed & transferred out Cost of units lost in process -----Cost of units still in process:

Direct Material Direct Labor Factory over Head ------_ -----------
-----------

MATERIAL -----0 0__ --------------F.O.H Units completed & transferred out Units lost in process Units still in process ------
LABOR ------ --------------------
2ND DEPARTMENT CPR SEHEDULE NORMAL LOSS AT THE END COMPANY NAME COST OF PRODUCTION REPORT FOR THE PERIOD ENDED ON -------------
Units
Units received from previous department ------Units completed & transferred out Units still in Process Units lost in Process (normal loss at the end) ------
----------
Cost charged to Department P.U Cost received from previous department -----Cost added by the department: Direct Material -----Direct Labor -----Factory over Head -----Total cost added by the department ------
T.C -------------------------
Total Cost to be accounted for -------
-------Sub Cost Total

Cost Cost of units completed & transferred out Cost of Units lost in process ------Cost of units still in process:

-----------

MATERIAL F.O.H Units completed & transferred out -----Units loss in process Units still in process -----------------------------_ LABOR --------------------

2ND DEPARTMENT CPR SEHEDULE INCREASE NUMBER OF UNITS COMPANY NAME COST OF PRODUCTION REPORT FOR THE PERIOD ENDED ON ------------BY SIR IRFAN AHMED 03217601935

Units received from previous department . Units added in the department ------Units completed & transferred out Units still in Process ------
Units
----------
T.C -------------------------------Sub Cost Total -

Cost Cost of units completed & transferred out -----Cost of units still in process:

-----------

MATERIAL F.O.H Units completed & transferred out ----------LABOR ------
Units still in process -------------
-------------
---------------
F.O.H
CPR SEHEDULE ABNORMAL LOSS COMPANY NAME COST OF PRODUCTION REPORT FOR THE PERIOD ENDED ON -------------
Units
Units received from previous department _____ Units completed & transferred out Units still in ProcessUnits lost in Process (abnormal loss) _____
_____
Cost charged to Department P.U Cost received from previous department ____
Cost added by the department: Direct Material Direct Labor Factory over Head Total cost added by the department _____ Total Cost to be accounted for _____
T.C ____
______ ______ Sub Cost

Total Cost Cost of units completed & transferred out Cost of abnormal loss Cost of units still in process:
Direct Material Direct Labor Factory over Head _____
Total Cost Accounted for _____
CALCULATION OF ABNORMAL LOSS Rs Cost from preceding department Units lost x Per unit cost ------Units Lost x Total Per units Cost ____ Total cost -----EQUIVALENT PRODUCTION REPORT
MATERIAL LABOR F.O.H Units completed & transferred out Units loss Units still in process ______ ______
__________ __________
_______ _______
F.O.H
TWO DEPARTMENTS CPR SEHEDULE COMPANY NAME. COST OF PRODUCTION REPORT FOR THE PERIOD ENDED ON ------------Department B
Department A
Quantity Schedule
Units started in process Units from preceding department -------Units transferred to next department Units transfer to finished goods Units still in Process ------- ----------------
--------------------- --
Cost charged to Department Total Unit Rs

Cost from preceding department Cost added by the department: Direct Material Direct Labor Factory over Head ------- -----Total Cost added by the department -------------Total Cost to be accounted for --------------
Total Rs
-----
Unit Rs Rs
-------- ------ ------
------ -------- ------ ----------- -------- ------ ----------- -------------- ------------- ---------
Cost Accounted for as follow Rs

Cost of transferred to next department Cost transfer to finished good ------Cost of units still in process:
Rs
Rs
--------
Rs
Cost received from previous department ----Direct Material Direct Labor Factory over Head ------- -------------------------------- ------__
-------_
EQUIVALENT PRODUCTION REPORT OF DEPARTMENT A

MATERIAL F.O.H Units transferred to next department -----Units still in process ----------------------- _ -------LABOR -----------------------
CALCULATION OF PER UNIT COST OF DEPARTMENT A BY SIR IRFAN AHMED 03217601935
MATERIAL =COST OF MATERIAL EQUIVALENTUNITS LABOR F.O.H = COST OF LABOUR EQUIVALENTUNITS = COST OF FACTORY OVER HEAD EQUIVALENTUNITS
EQUIVALENT PRODUCTION REPORT OF DEPARTMENT B

MATERIAL ------------------------_ LABOR F.O.H Units transferred to finished good Units still in process ----------- --------------------
CALCULATION OF PER UNIT COST OF DEPARTMENT B

MATERIAL =COST OF MATERIAL EQUIVALENTUNITS LABOR F.O.H = COST OF LABOUR EQUIVALENTUNITS = COST OF FACTORY OVER HEAD EQUIVALENTUNITS
THE END
FACTORY OVERHEAD VARIANCE ANALYSIS

Step No. 1 Fixed Rate = Fixed F.O.H /Estimated capacity or normal capacity
Step No. 2 Variable Rate = Variable F.O.H/Estimated capacity or normal capacity Step No. 3 F.O.H applied Rate = Fixed Rate + Variable rate F.O.H Applied = Applied Rate x Actual capacity Budget F.O.H = Fixed F.O.H + (variable Rate x Actual Capacity) 1. Calculation of under or over Applied F.O.H / Over all variance Actual F.O.H Applied F.O.H
(-) over applied (+) under applied ______
2. Calculation of Budgeted Variance / Spending variance Budgeted F.O.H Actual F.O.H ..

(+) Favorable (-) Unfavorable _________
3. Calculation of Ideal capacity Variance/ Volume variance Applied F.O.H .. Budget F.O.H ..
(+) Favorable (-) Unfavorable _______
In case of High/Low method Variable rate = High budgeted F.O.H Low budgeted F.O.H High out put Low out put Fixed Rate = Applied rate variable rate Budgeted Fixed F.O.H = Budgeted F.O.H at level....... -----Less: Variable F.O.H (Output level X Variable Rate) -----Budgeted Fixed F.O.H ----- Estimated capacity/Normal capacity = Fixed FOH Fixed Rate
PREDETERMINED CAPACITY
OVERHEAD
RATE
BASE
ON
EXPECTED
ACTUAL
ESTIMATED FOH ON EXPECTED ACTUAL CAPACITY ESTIMATED HOURS AT EXPECTED ACTUAL CAPACITY
PREDETERMINED OVERHEAD RATE BASE ON NORMAL CAPACITY

ESTIMATED FOH ON NORMAL CAPACITY ESTIMATED HOURS AT NORMAL CAPACITY ESTIMATED FOH AT NORMAL CAPACITY = FIXED FOH + (VARIABLE RATE X NORMAL CAPACITY)
FOR CHECKING
IN CASE OF UNDER APPLIED FOH AND FAVOURABLE BALANCES
UNDER OR OVER APPLIED = SPENDING VARIANCE ANSWER + IDLE CAPACITY

VARIANCE ANSWER SPENDING VARIANCE = CAPACITY VARIANCE ANSWER + UNDER/OVER APPLIED FOH ANSWER CAPACITY VARIANCE = SPENDING VARIANCE ANSWER + UNDER/OVER APPLIED FOH ANSWER
IN CASE OF OVER APPLIED FOH AND UNFAVOURABLE BALANCES
UNDER OR OVER APPLIED = SPENDING VARIANCE ANSWER IDLE CAPACITY VARIANCE

ANSWER SPENDING VARIANCE = CAPACITY VARIANCE ANSWER UNDER/OVER APPLIED FOH ANSWER CAPACITY VARIANCE = SPENDING VARIANCE ANSWER UNDER/OVER APPLIED FOH ANSWER
THE END
REMEMBER ME IN YOUR GOOD WORDS *******BEST OF LUCK*******

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METHODS & FORMULAS LAHORE COMMERCE ACADEMY

BY SIR IRFAN AHMED 03217601935

BY SIR IRFAN AHMED 03217601935

Income statement For the Year Ended December Rs Rs.

MOST COMMON ITEMS OF FACTORY OVER HEAD

BY SIR IRFAN AHMED 03217601935

SOME CALCULATIONS RELATED TO FINANCIAL STATEMENTS PRIME COST

CONVERSION COST AT NORMAL CONVERSION COST AT ACTUAL TOTAL FACTORY COST

DIRECT LABOUR COST + F.O.H APPLIED COST

DIRECT LABOUR COST + F.O.H ACTUAL COST

DIRECT MATERIAL COST + DIRECT LABOUR COST + F.O.H COST

BY SIR IRFAN AHMED 03217601935

BY SIR IRFAN AHMED 03217601935

BY SIR IRFAN AHMED 03217601935

ECONOMIC ORDER QUANTITY

PROFF OF E.O.Q 1 2 ANNUAL ORDER REQUIREMAN SIZE

BY SIR IRFAN AHMED 03217601935

MATERIAL TURNOVER RATIO

Average Inventory = Opening Inventory + Closing Inventory

MATERIAL CONTROL-STORING & ISSUING

STORE LEDGER ACCOUNT

UNITS DETERIORATED/SPOILED AND TRANSFERRED TO ABSOLETE STOCK

COST OF REWORK AND SPOILAGE CHARGED TO SPECIAL JOB

COST OF REWORK AND SPOILAGE CHARGED TO FOH/ENTIRE PRODUCATION/NOT SO CHARGED

BY SIR IRFAN AHMED 03217601935

DEFECTIVE AND SPOILED PRODUCTION ENTRIES WITH THREE W-I-P

COST OF REWORK AND SPOILAGE CHARGED TO FOH/ENTIRE PRODUCATION/NOT SO CHARGED

Quantity Schedule Units

Cost charged to Department P.U

Cost Accounted for as follow

Total Cost Accounted for -------

EQUIVALENT PRODUCTION REPORT

BY SIR IRFAN AHMED 03217601935

CALCULATION OF PER UNIT COST

Quantity Schedule Units

Cost charged to Department P.U

Cost Accounted for as follow

BY SIR IRFAN AHMED 03217601935

Total Cost Accounted for -------

EQUIVALENT PRODUCTION REPORT

CALCULATION OF PER UNIT COST

BY SIR IRFAN AHMED 03217601935

T.C -------------------------------Sub Cost Total -

Cost Accounted for as follow

Cost received from previous department

Total Cost Accounted for ------

EQUIVALENT PRODUCTION REPORT

CALCULATION OF PER UNIT COST

BY SIR IRFAN AHMED 03217601935

= COST OF LABOUR EQUIVALENTUNITS = COST OF FACTORY OVER HEAD EQUIVALENTUNITS

Quantity Schedule Units

T.C -------------------------------Sub Cost Total -

Cost Accounted for as follow

Cost received from previous department

BY SIR IRFAN AHMED 03217601935

Factory over Head ------_

Total Cost Accounted for -------

CALCULATION OF ADJUSTED PER UNIT COST IN CASE OF NORMAL LOSS

EQUIVALENT PRODUCTION REPORT

LABOR ------ --------------------

CALCULATION OF PER UNIT COST

Quantity Schedule Units

BY SIR IRFAN AHMED 03217601935

Sub Cost

REMEMBER ME IN YOUR GOOD WORDS BEST OF LUCK