R Manufacturing Company, Lahore

Cost of Goods Sold

For the year ended 31st December, 2002
particulars Amount
Direct Materials
Beginning Raw Materials Inventory
Add: Purchases of raw materials 120,000
Add: fright in
120,000
Less: purchase return
Net purchase
Material available for use
Less: Ending Raw Materials Inventory
Material consumed

Add: Direct Labor

Prime Cost
Add: Appliied F.O.H (42000*50%)
Total factory cost

Add: Beginning WIP Inventory

Cost of goods available for manufacturing
Less: Ending WIP Inventory

Cost of Goods Manufactured

Add: Beginning Finished Goods Inventory

Cost of goods available for sale
Less: Ending Finished Goods Inventory
Cost of Goods Sold at normal

Add: Under applied F.O.H (w-1)

cost of good sold at actual
hore (w-1)overapplied or under applied calculatio
Particulars
2002 factory office salaries
Amount heat and light costs
power cost
12,000 insurance (fire and others)
indirect material used
superintendence
depriciation of building
depriciation of equipment
120,000 factory taxes
132,000 Employer's priovident fund contribution (5000*94%)
15,000 total expenses
117,000 misc. factory overhead cost
Total
42,000 Less: appllied F.O.H (42,000 *50%)
159,000 under applied F.O.H
21,000
180,000
Gross profit total
6,000 sales (4800*350)
186,000 Less: CGS
4,000 Gross profit total
182,000 GP per unit = Gross profit /units sold

18,000
Per unit cost of finished goods inv. On dec 31
200,000
21,000
per unit cost = cost of goods manufactured / no of units
179000 manufactured
1,550
180550
 No. of units manufactured = units sold + finished goods
closing units - finished goods opening units

Total cost of finshed goods inventory on december 31.

Finished goods ending units * Per unit cost

lied calculation Answers
Req.1 cost of good sold at actual

Amount Req.2 over / under applied F.O.H

5,000
2,500
1,500
500
4,000
500
500
1,500
1,000
4,700
300
550
22,550
21,000
1,550

Amount

Amount
Amount
180,550
1,550
 R Manufacturing Company, Lahore
Cost of Goods Sold
For the year ended 31st December, 2002
particulars Amount
Direct Materials

Beginning Raw Materials Inventory

Add: Purchases of raw materials ( 18000 * 60%) 10,800
Add: fright in
Add: transportation in

Add: carriage in

10,800
Less: purchase return
10,800
less: purchase discount
Add: Net purchase
Material available for use
Less: Ending Raw Materials Inventory
Material consumed
Add: Direct Labor
prime cost
Add: Appliied F.O.H (6450*2/3)
Total factory cost/ total manufacturing cost
W.I.P. inventory
Add: W.I.P opening inventory
cost of goods available for manufacturing
Less: W.I.P closing inventory
Cost of goods manufactured
Finished Goods Inventory
Add: Beginning Finished Goods Inventory
 Cost of goods available for sale
Less: Ending Finished Goods Inventory
Cost of Goods Sold at normal
Add: Under applied F.O.H (w-1)
Less: over applied F.O.H (w-1)
Cost of Goods Sold at actual

R Manufacturing Company, Lahore

income statement
For the year ended 31st December, 2002
particulars Amount
sales 29,240.00
Less: sales return / allownces
net sales
Less: Cost of goods sold
gross profit
Less: operating profit / commercial expenses
selling exp. (29250*5%) 1,462.00
general exp. (29250*3%) 877.20
total operating expenses
total operating profit
Add: other income
internal earned / received -
gain of sale of fixed assets -
interest on investment -
total other income

less: other expenses

loss on sale of assets -
interest paid -
total other expenses
income before taxation
less: reserve / provision of taxation
net income / net profit
hore Answ
Particulars
2002 Cost of goods sold
Amount net income / net profit
Appliied F.O.H (6450*2/3)
3,500

10,800
14,300
3,750
10,550
6,450
17,000
4,300
21,300

4,200
25,500
5,800
19,700

6,800
 26,500
8500
18,000

18,000

hore

2002
Amount

29,240.00
18,000.00
11,240.00

2,339.20
8,900.80

-
8,900.80

-
8,900.80
8,900.80
 Answers
Particulars Amount
18,000
et profit 8,901

(6450*2/3) 4,300
 R Manufacturing Company, Lahore
Cost of Goods Sold
For the year ended 31st December, 2002
particulars Amount
Direct Materials

Beginning Raw Materials Inventory

Add: Purchases of raw materials 535,800
Add: fright in
Add: transportation in

Add: carriage in

535,800
Less: purchase return 16,200
519,600
less: purchase discount
Add: Net purchase
Material available for use
Less: Ending Raw Materials Inventory
Material consumed
Add: Direct Labor
prime cost
Add: F.O.H cost
Total factory cost/ total manufacturing cost
W.I.P. inventory
Less: increase in W.I.P opening inventory
Cost of goods manufactured
Finished Goods Inventory
Add: decrease in Finished Goods Inventory
Cost of Goods Sold
hore

2002
Amount

80,200

519,600
599,800
30,600
569,200
162,500
731,700
85,600
817,300

20,500
796,800

13,200
810,000
 R Manufacturing Company, Lahore
Cost of Goods Sold
For the year ended 31st December, 2002
particulars Amount Amount
Direct Materials
Beginning Raw Materials Inventory 44,200
Purchases of raw materials 374,000
Add: fright in 9,600
383,600
Less: purchase discount 6,200
Less: purchase return
Add: Net purchase 377,400
Material available for use 421,600
Less: Ending Raw Materials Inventory 59,300
Material consumed 362,300

Add: Direct Labor 172,500

Prime Cost 534,800

Add: F.O.H (w-1) 182,650

Total factory cost 717,450

Add: Beginning WIP Inventory 91,500

Cost of goods available for manufacturing 808,950
Less: Ending WIP Inventory 52,350
Cost of Goods Manufactured 756,600

Add: Beginning Finished Goods Inventory 58,600

Cost of goods available for sale 815,200
Less: Ending Finished Goods Inventory 79,965
Cost of Goods Sold at normal 735,235
Add: Under applied F.O.H (w-1) -
cost of good sold at actual 735,235
 (w-1)overapplied or under applied F.O.H calculation
Particulars Amount
factory office salaries -
heat and light costs -
power cost -
insurance (fire and others) -
indirect labour cost 93,400
indirect material used -
superintendence -
-
depriciation of building -
depriciation of equipment 31,350
factory taxes -
Employer's priovident fund contribution -
total expenses -
misc. factory overhead cost 57,900
Less: Total 182,650
appllied F.O.H (42,000 *50%)

over applied /under applied F.O.H

Gross profit total Amount

sales (4800*350) 1680000
Less: CGS 735,235
Gross profit total 944,765
GP per unit = Gross profit /units sold 197

Per unit cost of finished goods inv. On dec 31 Amount

per unit cost = cost of goods manufactured / no of units manufactured 154

No. of units manufactured = units sold + finished goods closing units -
finished goods opening units 4,920

Total cost of finshed goods inventory on december 31. Amount

Finished goods ending units * Per unit cost 79,966

 Answers
Req.1 Per unit cost of finished goods inv. On dec 31 154
Req.2 total cost of finished goods inv. On december 31 79,966
Req.3 cost of good sold at actual 735,235
Req.4 gross profit total 944,765
Req.5 gross profit per unit 197
 R Manufacturing Company, Lahore
Cost of Goods Sold
For the year ended 31st December, 2002
particulars Amount
Direct Materials

Beginning Raw Materials Inventory

Add: Purchases of raw materials 200,000
Add: fright in
Add: transportation in

Add: carriage in

200,000
Less: purchase return 2,000
198,000
less: purchase discount
Add: Net purchase
Material available for use
Less: Ending Raw Materials Inventory
Material consumed
Add: Direct Labor
prime cost
Add: Appliied F.O.H (42000*50%) / actual F.O.H
Total factory cost/ total manufacturing cost
W.I.P. inventory
Add: W.I.P opening inventory
cost of goods available for manufacturing
Less: W.I.P closing inventory
Cost of goods manufactured
Finished Goods Inventory
Add: Beginning Finished Goods Inventory
 Cost of goods available for sale
Less: Ending Finished Goods Inventory
Cost of Goods Sold at normal
Add: Under applied F.O.H (w-1)
Less: over applied F.O.H (w-1)
Cost of Goods Sold at actual

R Manufacturing Company, Lahore

income statement
For the year ended 31st December, 2002
particulars Amount
sales 450,000
Less: sales return / allownces
net sales
Less: Cost of goods sold
gross profit
Less: operating profit / commercial expenses
selling exp. 22,500
general exp. 9,000
total operating expenses
total operating profit
Add: other income
internal earned / received
gain of sale of fixed assets
interest on investment
total other income

less: other expenses

loss on sale of assets
interest paid
total other expenses
income before taxation
less: reserve / provision of taxation
net income / net profit
hore (w-1)overapplied or under applied calculation
Particulars
2002 factory office salaries
Amount heat and light costs
power cost
15,000 insurance (fire and others)
indirect material used
superintendence
depriciation of building / plant /
depriciation of equipment
industrial labour
factory supplies
fire insurance and others
factory office salaries
employee's provident fund contribution
198,000 misc. manufacturing costs
213,000 misc.factory overhead costs
29,000 fuel
184,000 factory repair parts
59,000 slaray of factory superintendent
243,000 taxes on factory building and equipment
29,700 factory utilities etc.
272,700
total
30,000 less: applied F.O.H ( )
302,700 under/overapplied F.O.H
25,000
277,700
factory overhead rate
70,000 Particulars
 347,700
60500 F.O.H rate =factory overhead /direct labour cost * 100
287,200

287,200 number of units manufactured

Particulars

No. of units manufactured = units sold + finished goods ending un

hore

per unit cost

2002
Amount Particulars

450,000 per unit cost = cost of goods manufactured /number of un

287,200
162,800
net sales
Particulars

31,500
131,300 net sales = sales - sales return

Gross profit
Particulars
-
131,300
Gross profit = net sales - cost of goods sold

-
operating proofit
131,300 Particulars
131,300
operating profit = gross profit - operating exp.

net profit
Particulars

net profit = operating profit + other income -other exp. - provision

d calculation operating expenses
Amount Particulars

3,000
operating expenses = selling or admin or distributive expenses +
4,500
5,000
%age of gross profit to net sales
4,500 Particulars
6,000
5,000
age of GP to NS= gross profit / neet sales *10
800

%age of net profit to net sales

900 Particulars

%age of net profit to net sales = net profit / net sales * 1

gross profit per unit sold

Particulars
29,700

29,700 gross profit per unit sold = gross profit /unit sold

net profit per unit sold

Amount Particulars
 50
net profit per unit sold = net profit / unit sold

ured sales price

Amount Particulars

sales price = cost price + net profit

gross profit to cost of goods sold

Amount Particulars

555 gross profit to cost of goods sold = gross profit / cost of g

cost of turnover
Amount Particulars

450,000 cost of turnover = cost of goods sold + operating e

Amount

162,800

Amount
 131,300

Amount

131,300
ses Answers
Amount Particulars
Cost of goods sold
net income / net profit
31,500 Actual F.O.H
applied F.O.H ( )
under/overapplied F.O.H
net sales
factory overhead rate
Amount No. of units manufactured
per unit cost
net sales
36 Gross profit
operating proofit
net profit
net sales operating expenses
Amount %age of gross profit to net sales
%age of net profit to net sales
gross profit per unit sold
29 net profit per unit sold
sales price
gross profit to cost of goods sold
t sold
cost of turnover
Amount

1,628

sold
Amount
 1,313

Amount

435,500

oods sold
Amount

57

r
Amount

318,700
nswers
rs Amount
287,200
131,300
29,700

-
29,700
50
-
555

450,000

162,800

131,300
131,300
31,500
36
29
1,628
1,313
435,500
57
318,700
 R Manufacturing Company, Lahore
Cost of Goods Sold
For the year ended 31st December, 2002
particulars Amount Amount
Direct Materials

Beginning Raw Materials Inventory

Add: Purchases of raw materials
Add: fright in
Add: transportation in

Add: carriage in

-
Less: purchase return
-
less: purchase discount

Add: Net purchase -

Material available for use -

Less: Ending Raw Materials Inventory

Material consumed 39,960
Add: Direct Labor 45,000

prime cost 84,960

Add: actual F.O.H 36,000

Total factory cost/ total manufacturing cost 120,960

W.I.P. inventory

Add: W.I.P opening inventory

cost of goods available for manufacturing 120,960

Less: W.I.P closing inventory closing 7,300

 Cost of goods manufactured 113,660
Finished Goods Inventory

Add: Beginning Finished Goods Inventory 22,680

Cost of goods available for sale 136,340
Less: Ending Finished Goods Inventory 40,593
Cost of Goods Sold at normal 95,747
Add: Under applied F.O.H (w-1)
Less: over applied F.O.H (w-1)
5 Cost of Goods Sold at actual 95,747
 1. number of units manufactured
Particulars

No. of units manufactured = units sold + finished goods ending units - fin

2. factory overhead rate

Particulars

F.O.H rate =direct factory overhead /direct labour cost *

100
estimated cost of WIP inventory closing
Particulars
material in process
Add: direct labour in proces
Add: factory overhead in process (2000*80%)
Total

3. cost of each unit manufactured

Particulars

cost of each goods manuafctured = cost of goods

manufactured/ units manufactured
?
?
4. closing inventory of finished goods inventory
Particulars

?
finished goods inventory = finished goods closing unit * p

?
red Answers
Amount Particulars
1 No. of units manufactured

11,200 2 factory overhead rate

Estimated cost of WIP inventory closing

3 Cost of goods manufactured

te
per unit cost
Amount
4 closing inventory of finished goods inventory
80
5 Cost of goods sold
osing
Amount
3700
2000
1600
7,300

tured

Amount

10.15
s inventory
Amount

40,593
s
Amount
11,200 ?

80

7,300 ?

113,660
10 ?

40,593 ?

95,747 ?