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1. Following costs were charged to Finishing Department of Mark V Pvt.

Ltd during the


month of May:
Cost from preceding department
Rs. 94500
Labor
38468
Factory overhead cost
9617
During May Finishing Department received 18000 units from preceding department.
13000 units were transferred to finished goods storeroom. 2500 completed units were in
Finishing Department awaiting transfer. At the end of May 2000 units were in process in
Finishing Department. These units were 40% converted.
Required: A cost of production report for Department No. 2 for the month of May.
2. During the month of March 20xx Department No. 2 of Mamoon Company received
50000 units @ Rs. 12.50 from Department No. 1 and transferred out 43000 completed
units. In the department there was an abnormal loss of 2000 units when 75% converted.
Units in process at the end of month were estimated as 70% converted. In Department
No. 2 all materials are added at the beginning of the process. Direct materials added
during the month totaled Rs. 162500 and conversion cost Rs. 204000.
Required: Cost of production report.
3. Following transactions relate to an item of materials kept in storeroom of Shoaib
Pharmacy Limited:
Jan. 1
Jan. 3
Jan. 5
Jan. 7
Jan. 10
Jan. 12
Jan. 17

Balance b/d
100 units @ Rs. 12
Purchased
100 units @ Rs. 14
Purchased
100 units @ Rs. 13
Issued
I50 units
Issued
100 units
Purchased
100 units @ Rs. 15
Returned to supplier 30 units
purchased on Jan. 3
Required: Record the above transaction in perpetual inventory card of the material using
i. FIFO, ii. LIFO and iii. Weighted average method of costing.
4. Consumption forecast of two materials A and B is as follow:
Maximum daily consumption
600 units
Average daily consumption
500 units
Minimum daily consumption
400 units
Materials A
Materials B
Lead time
4-8 days
3-5 days
Lead time to get urgent supply
3 days
1 day
EOQ
5000 units
3000 units
Required: Calculate for each of the materials
i.
Order level ii. Minimum Level iii. Maximum Level iv. Danger Level
5. Irfan industries Limited has two production departments A and B, and two mutually
interdependent service departments X and Y. Cost of service departments are apportioned
on the bases of following percentages:
A
B
X
Y
Service Department X

50%

30%

---

20%

Service Department Y

40%

50%

10%

----

Following figures of departmental costs are available after the primary distribution:
Department A Rs. 15750

Department B Rs. 7500

Department X Rs. 11750

Department Y Rs. 5000

Required: Calculate total factory overhead of production departments by preparing a work sheet
showing the secondary distribution using: i. Repeated distribution method and Algebraic method.
6. Predetermined factory overhead absorption rate computed by Al-Nasir Industries is Rs. 6 per
machine hour. Budgeted factory overhead for activity level of 150000 machine hours is Rs.

800000 and for activity level of 100000 machine hours it is Rs. 700000. Actual factory overhead
incurred during the year is Rs. 710000 at an actual volume of 120000 machine hours.
Required:
ii.
Variable factory overhead absorption rate.
iii.
Budgeted fixed factory overhead
iv.
Budgeted activity level on which the absorption rate is based.
v.
Over or under applied factory overhead
vi.
Volume variance
vii.
Spending variance
7. Differentiate between Financial Accounting and Cost Accounting.