Question

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 a Cost of Goods Manufactured Statement for the year. (2.5 Marks) B. Compute the number of units and cost of units in the finished goods inventory at the end of the year. C. Prepare an Income Statement for the year under Absorption costing Method. (2.5 Marks) 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

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Answer 1

Dear student, we cannot able to post solution more than four sub-parts of the question as per our policy.

Part 1

MS KP MM Corporation
Cost of goods manufactured Schedule
For the year ended Month, Date, Year
Materials inventory at beginning	20,000
Add: purchase of material	200,000
Material available for use	220,000
Less: material inventory at ending	10,000
Direct material consumed		210,000
Direct labor		80,000
Manufacturing overhead
Other factory overhead costs	22,000
Maintenance Factory	50,000
Utilities factory	60,000
Building Rent (100000*80% used for production)	80,000
Royalty paid for use of Production patent (100000 units * 0.5)	50,000
Rent for special production equipment ((100000 units*0.2)+5000)	25,000
Insurance factory equipment	20,000
Cleaning supplies, factory	10,000
Depreciation Factory	18,000
Indirect labor	20,000
Property taxes, factory	10,000	365,000
Total manufacture cost		655,000
Add: work in process inventory at beginning		50,000
Total cost to be accounted for		705,000
Less: work in process inventory at ending		60,000
Cost of goods manufactured		645,000

Part 2

Cost of goods manufactured	645,000
Divided by: Units produced	100,000
Unit product cost	6.45
beginning innventory (if any)	0
Add: Units produced	100,000
Less:Units sold (2000000/32)	(62,500)
Units in finished goods inventory	37,500
Multiply: Unit product cost	6
Cost of units in the finished goods inventory	241,875

Part 3

MS KP MM Corporation
Income statement
For the year ended Month, Date, Year
Sales		2,000,000
Less : Cost of Goods sold
Beginning Finished Goods Inventory	-
Add : Cost of goods manufactured	645,000
Cost of goods available for sale	645,000
Less: Ending Finished Goods Inventory	241,875
Cost of Goods sold		403,125
Gross Profit		1,596,875
Less : Operating Expense
Other selling and administrative expenses	40,000
Selling and administrative salaries	240,000
Building Rent (100000-80000)	20,000
Advertising cost	600,000
Total Operating Expense		900,000
Net income		696,875

Part 4

Direct material consumed		210,000
Direct labor		80,000
Prime cost		290,000
Direct labor		80,000
Total manufacture overhead		365,000
Conversion cost		445,000
Direct material consumed		210,000
Direct labor		80,000
Total manufacture overhead		365,000
Inventoriable cost		655,000
Other selling and administrative expenses		40,000
Selling and administrative salaries		240,000
Building Rent (100000-80000)		20,000
Advertising cost		600,000
Non-Manufacturing cost		900,000