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# Indian Institute of Management, Bangalore

## PGP, February 2009

Management Accounting
Test-1

Instructions:

## • Answer all the questions

• Post the answers in the respective blocks against each question
• You may use the extra sheets for workings and attach the working sheets also with the
• Write only in Pen
• You may round off the calculations to the second decimal point if required
• You are permitted to use calculators
• This is a closed book examination
• This booklet consists of Six pages

1
Problem-1 (Marks 5) Stanley Company, a manufacturing firm, has supplied the following information
from its accounting records for the year 2006(in dollars):

Prime cost

## The cost of goods sold

Period Cost

Conversion cost

2
Problem-2 (Marks 8) Aussie yarn Co. is a producer of woolen yarn made from wool imported from
Australia .Raw wool is processed, spun, and finished before being shipped out to knitting and weaving
companies. Material is added in the beginning of processing and conversion costs are added evenly
throughout processing.

Aussie began the month of August with 10,000 units in process that were 100 percent complete as to
materials and 80 percent complete as to labor and overheads. They introduced 70000 units in
production during the month. At the end of the month 20,000 remained in ending inventory, where
material is 100% complete and 50 percent complete as to conversion cost. The cost data are as follows:

Beginning work
Current costs
in progress

Direct
Material 18000 142000

## Value of closing WIP

3
Problem-3 (Marks 5) Mats Farms produces strawberries and raspberries. Annual fixed costs are
\$15,600. The variable cost is \$0.75 per box of strawberries and \$0.95 per box of raspberries.
Strawberries sell for \$1.10 per box and raspberries for \$1.45 per box. Two boxes of strawberries are
produced and sold for every box of raspberries.

## 2 ) Number of boxes of strawberries and Strawberry:

raspberries produced and sold at the break-even
point assuming sales mix remains unchanged Raspberries :

## 3 ) The break-even number of raspberry boxes if

only raspberries are produced :

Problem-4 (Marks 8) Bouncer Company sells its product at Rs.15 per unit. In a period, if it produces and
sells 8000 units, it incurs a loss of Rs.5 per unit .If the volume is raised to 20,000 units, it earns a profit of
Rs. 4 per unit.

## The profit if the volume is 27,000 units

4
Problem-5 (Marks 9) Lowder Inc. builds custom conveyor systems for warehouses and distribution
canters.

## b) Direct Labor wages rate is \$ 14 per hour

c) Overhead is charged to production at the rate of \$10 per direct labor hour.

## d) Job #703 was completed and transferred to finished goods.

e) Job # 704, which was started during July, remained in process at the end of the month

f) Job #700 which had been completed in June was sold on account for cost plus 30%.

g)
Direct material requisition during July \$

h)

## Job # 704 1100

5
1) You are required to calculate: