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Part-C (10 Mark Standard Questions)Ex-15.

Part-C (10 Mark Standard Questions)Ex-15.

Part-C (10 Mark Standard Questions)Ex-15.
Part-C (10 Mark Standard Questions)Ex-15.

Part-C
(10 Mark Standard Questions)Ex-15. You are supplied with the following data of Moon Company Ltd. for first-year operation:
Production 3,000 units
Sales 2,000 units
Selling price Tk.10 per units
Costs :
Direct material Tk. 1.00 per unit
Direct labor Tk. 2.00 per unit
Variable factory overhead Tk. 1.50 per unit
Fixed factory overhead Tk. 6,240
Administrative and Marketing overhead:
Fixed Tk. 1,500
Variable 5% on sales
Required:
Prepare comparative income statement under:
a) Direct Method
b) Absorption Costing.
c) Reconciliation statement.
Ans:-Req-(a) Operating Income Tk.2,260; Req-(b) Operating Income Tk.4,340. Req – (c) 2080.

Part-C (10 Mark Standard Questions)Ex-15.

Ex-16. You are supplied with the following data of Rakib Company Ltd. for first-year operation:
Production 2,800 units
Sales 1,800 units
Selling price Tk.12 per units
Costs :
Direct material Tk. 2.00 per unit
Direct labor Tk. 1.00 per unit
Variable factory overhead Tk. 1 per unit
Fixed factory overhead Tk. 5,600
Administrative and Marketing overhead:
Fixed Tk. 1,500
Variable 4% on sales
Required:
Prepare comparative income statement under:
a) Direct Method
b) Absorption Costing.
c) Reconciliation statement.
Ans:-Req-(a) Operating Income Tk.5860; Req-(b) Operating Income Tk.7860. Req – (c) 2000.

Part-C (10 Mark Standard Questions)Ex-15.
Part-C (10 Mark Standard Questions)Ex-15.

Part-C (10 Mark Standard Questions)Ex-15.

Ex-17.You are supplied with the following data of Sathi Chemical Co Ltd. for the year ended December 31st, 2013:
Opening inventory 1,000 units
Ending inventory 1,500 units
Production during the year 5,000 units
Normal Plant capacity 5,000 units
Cost analysis: Selling price Tk.20
Direct Materials (per unit) Tk.10
Direct labor (per unit) Tk.3
Variable Factory overhead (per unit) Tk.2
Fixed Factory overhead Tk.5,000
Administrative and selling overhead:
Variable Tk.2,000
Fixed Tk.5,000
Unfavorable variance from standard variable manufacturing cost Tk. 500
You are asked to prepare an income statement under.
(i) Direct costing and
(ii) absorption costing.
(iii) Reconciliation statement.
Also, prepare a statement showing the reconciliation of both profits.
Ans:-(i) Net Income Tk.10,000, (ii) Net Income Tk.10,500 (iii) 500.

Part-C (10 Mark Standard Questions)Ex-15.

Ex-18.You are supplied with the following data of Sathi Chemical Co Ltd. for the year ended December 31st, 2013:
Opening inventory 1,000 units
Ending inventory 1,500 units
Production during the year 4,000 units
Normal Plant capacity 4,000 units
Cost analysis: Selling price Tk.22
Direct Materials (per unit) Tk.8
Direct labor (per unit) Tk.4
Variable Factory overhead (per unit) Tk.2
Fixed Factory overhead Tk.7,000
Administrative and selling overhead:
Variable Tk.3,000
Fixed Tk.6,300
Unfavorable variance from standard variable manufacturing cost Tk. 700

Part-C (10 Mark Standard Questions)Ex-15.

You are asked to prepare an income statement under.
(i) Direct costing and
(ii) absorption costing.
(iii) Reconciliation statement.
Also, prepare a statement showing the reconciliation of both profits.
[ Ans:-(i) Net Income Tk.11,000 (ii) Net Income Tk.11,875 (iii) 875 ]
Ex-19. Master Ltd. uses an absorption costing system. The president has recently heard about direct costing. However, he supplies you with the following data:
Normal capacity 2,000 units
Opening stock 400 units
Production 1,800 units
Sales 2,000 units @ Tk 20 per unit.
Material costs 4 per unit
Labor 4 per unit
Variable overhead 2 per unit
Fixed Manufacturing expense 5,400
Fixed selling expense 2,600
Unfavorable variable cost variance 400.

Part-C (10 Mark Standard Questions)Ex-15.
Part-C (10 Mark Standard Questions)Ex-15.

Part-C (10 Mark Standard Questions)Ex-15.

Required :
(i) Income statement under :
(a) Absorption costing.
(b) Direct costing.
(ii) Reconcile both the profits.

Ex-20. Master Ltd. uses an absorption costing system. The president has recently heard about direct costing. However, he supplies you with the following data:
Normal capacity 2,100 units
Opening stock 500 units
Production 1,850 units
Sales 2,100 units @ Tk 18 per unit.
Material costs 5 per unit
Labor 4 per unit
Variable overhead 1 per unit
Fixed Manufacturing expense 5,500
Fixed selling expense 2,145
Unfavorable variable cost variance 500.

Part-C (10 Mark Standard Questions)Ex-15.

Required :
(i) Income statement under :
(a) Absorption costing.
(b) Direct costing.
(ii) Reconcile both the profits.

Ex-21. Abc Ltd. produces a product whose related information for the year ended December 31 2014 is as follows :
Particulars Data
Beginning inventory 20,000 units
Normal capacity 1,00,000 units
Production during the year 90,000 units
Ending inventory 30,000 units
Direct material cost per unit Tk 20
Direct labor cost per unit Tk 6
Variable factory overhead per unit Tk 5
Selling price per unit Tk 40
Annual fixed factory overhead Tk 1,00,000
Fixed administrative and marketing exp Tk 60,000
Variable administrative and marketing exp Tk 40,000

Part-C (10 Mark Standard Questions)Ex-15.

Required: Prepare an income statement for the year using direct costing and absorption costing methods.

Ex-22. Ahmed Ltd. uses an absorption costing system. The president has recently heard about variable costing. However, he supplies you with the following data:-

Normal Capacity                            1,000 units

Beginning inventory                          200 units

Production                                         900 units

Sales                                               1,000 units @ Tk 10,000 per unit

Materials cost Tk 2.00 per unit

Labour                                        Tk 2.00

Variable overhead                      Tk 1.00

Fixed manufacturing expenses  Tk 2,700

Fixed selling expense                 Tk 1,300

Unfavorable variable cost variance from standard. Tk 200

Part-C (10 Mark Standard Questions)Ex-15.

Income statement under:-

  • Absorption costing method.
  • Variable costing method.

Ex-23. Nabid Company is comparing its present absorption costing practice with the variable costing – method. An examination of its records produced the following information.

Budgeted production 40,000 units
Budgeted fixed factory overhead Tk 80,000
Fixed marketing and administrative expense Tk 20,000
Sales price per unit 12
Standard variable manufacturing cost per unit 5
Variable marketing expense per unit 1

 

Part-C (10 Mark Standard Questions)Ex-15.

For the year the following data are variable :

Actual production 32,000 units
Actual sales units 29,000 units
Finished goods inventory (opening) 1,000 units
Unfavorable cost variance from standard cost Tk 5,000

Required :

  • Prepare a variable costing income statement.
  • Prepare an absorption costing income statement.

Part-C (10 Mark Standard Questions)Ex-15.

 

Ex- 24. The following data is available for April.

Tk

Beginning finished goods unit                                     4,000

Sales unit                                                                    20,000

Actual production unit                                               24,000

Sales price per unit                                                            30

Variable manufacturing cost:                                Tk ( per unit )

Direct material                                                                  4

Direct labor                                                                       3

Variable production overhead                                          2

Total                                                                                 9

Fixed production overhead                                         50,000

Normal production overhead                                      25,000

Normal production units

Commercial expenses ( fixed) Tk 10,000 and variable 10,000 administrative expenses ( fixed) Tk 50,000.

Required :

Part-C (10 Mark Standard Questions)Ex-15.

  • Prepare income statement applying direct costing and absorption costing.
  • Prepare reconciliation statement.

Ex-09. Graphic Inc. Produces 2000 units and sells 1600 units @ Tk.20 per unit. The other information related to production and

sales is given below Tk. Raw Materials12,000Direct Labour10,000Variable factory overhead4,000Fixed Factory overhead4,000Fixed

selling and Adm. overhead1,000Variable selling and Adm. overhead800Ending Inventory 400 units. Required: 1. Prepare income

statement under. Absorption costing.Under direct costing2.Reconcile the difference in profit, if any.Ans:-1. (a) Net income Tk.6,200

(b) Net Income Tk. 5,400

Part-C (10 Mark Standard Questions)Ex-15.

Exercise-10Omega corporation produced 12,000 units (normal capacity) of the product during the year 2013.10,000 units were

sold @ Tk. 12 per unit. The cost of his production was as follows: Tk. Direct Materials24,000Direct Labour18,000Factory overhead:

Variable 36,000Fixed30,000Selling and administrative expenses for the year total Tk. 40,000 out of which Tk. 12,000 was variable.

You are required to prepare: I. An income statement using absorption costing. ii.An income statement using direct costing. iii.A

statement reconciling both the profit.Ans:-(i) Net Loss Tk. 10,000(ii) Net Loss Tk. 15,000.

Part-C (10 Mark Standard Questions)Ex-15.

Exercise-11The following information refers to the operations of Ronaldo corporations during 2013. Standard variable

manufacturing cost per unit: Tk.Materials4.00Labour2.00Factory overhead2.00Fixed costs :(Budgeted and Actual)Production

3,00,000Marketing and administrative 1,00,000 4,00,000Other data :Plant capacity (Normal)1,00,000

UnitsSales90,000UnitsProduction 80,000UnitsTotal Unfavourable variable cost variance from standard was Tk.5,000. Selling price

per unit Tk. 12. All variances are written off directly at year-end as an adjustment to the cost of goods sold. Requited:1)Prepare an

Income statement for 2013:a)Under Absorption costing b)Under Direct costing.2)Provide computations explaining the difference

in operating income between the two methods. Ans:-Req-1 (a) Net Loss Tk.75,000(b) Net Loss Tk.45,000.

Part-C (10 Mark Standard Questions)Ex-15.

Exercise-12The Mass company manufactures and sells a single product. The following data cover the two latest operation years

:20122013Sales in units25,00025,000Operating Inventory in unit1,0001,000Closing Inventory in unit1,0005,000Fixed Manufacturing

cost1,20,0001,20,000Fixed selling and administrative cost90,00090,000Selling Price per unit4040Standard variable cost per

unit:Materials10.50Direct labour9.50Variable factory overhead4.00Variable selling and admin.1.20The denominator activity is

30,000 Units per year. Mass company accounting records produce direct costing information and year-end adjustments are made

to produce external reports showing absorption costing data. There were no variances from the standard variable cost. Any under

or over-applied overhead is changed to the cost of goods sold. Required:1)Ignoring income taxes, Prepare comparative income

statements for 2012 and 2013 under a)Absorption costing)Direct costingPresent your answer in a good format.Ans:-Req-1 (a) Net

income:2012= Tk. 1,60,000;2013=Tk. 1,76,000;(b) Net income: 2012=Tk. 1,60,000;2013=Tk. 1,60,000

Part-C (10 Mark Standard Questions)Ex-15.

Exercise-13The following particulars are available from the books of a company for the year 2012:Sales in Kg: 75,000Finished

goods inventory (January-1, 2012): 12,000 kg.Finished goods inventory (Dec-31, 2012) : 17,000 Kg.Sales Price per unit: Tk.

10.Manufacturing cost: Variable cost per kg. of production: Tk. 4.00 Fixed Factory overhead: Tk. 1,60,000 (Normal capacity: 80,000

kg)Marketing and Administrative Expenses: Variable cost per kg. of sales: Tk. 1.00FixedMarketing and administrative expenses: Tk.

1,50,000 a standard costing system is used. Required: i.Income statement for 2012 under absorption costing and direct costing.

ii.An account showing the difference in net operating income under the two methods.Ans:-Direct costing income = 65,000 ;

Absorption costing income = 75,000.

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