Reference no: EM132518415

BAAC2101 Cost Accounting - Higher College Of Technology

Question 1 Modern Bakery started its company with a total Capital of 2 Million with a Bank loan. For the year 2019 Company has produced and sold 10 Million of Bread. The following are the particulars regarding the bread produced and sold by them. The Stock of Flour Material opening was OMR 40,000, closing OMR 20,000 and during the year purchase of flour was OMR 45,000 for which transportation paid OMR 250. Amount paid to the workers who makes the bread OMR 14,000. Company has spent OMR 1,350 for Lubricating oil for the machinery and Packing Material of OMR 1,720. Electricity expense of OMR 1,000 had been spent in the office.

Rent and Insurance for Factory OMR 5,450, for Office OMR 7,150, Total of Managers salary amounting to 25,000 which belongs to 1/4th for Factory manager and 3/4th to Office manager and the amount of commission paid to factory manager was OMR 700, Depreciation were calculated on Straight line balance method for the machineries in the office and factory and the value of depreciation for the Office was OMR 1,000 and Factory was OMR 1,200.

Once the goods were manufactured all the finished products were kept in a warehouse for which company has spent OMR 9,000 for its rent. There was Opening balance of finished goods of 1,500 with no Closing Balance of Finished goods. Work in process Opening 18,000, Work in process closing 12,000. Three fourth of the warehouse was given for rent and the rent received by the company was OMR 2,467.

Total bread manufactured has been sold at OMR 170,000 and in order to make a Sales Company has spent on samples and gifts OMR 1,500, Show room cleaning expenses and Insurance were OMR 1,730 and Sales Managers Salary of OMR 3,000. Transportation expenses of OMR 7,700 for transporting the bread to different markets. In the Year end Company has paid Interest on the Bank Loan of OMR 10,500
a. You are required to prepare a Cost Sheet from the relevant information provided in Modern Bakery Company
b. Modern Bakery Company was expecting to earn a profit of 15% on Cost of Production. You are required to identify from the cost sheet whether the company has earned the profit as per their expectations or not. If not find out the difference in profit which the company has earned and the company has expected.

Question 2. Mr. Marwan and Munir both are having manufacturing plant in "Salalah Industrial Special Zone". Both supplies raw material to "Amada Bakery" to produce bakery products. Mr. Marwan use marginal costing method and Mr. Munir use absorption costing methods for valuation of their stocks and calculating profit margin. You have to write comparative impact of both the methods of costing with appropriate example of inventories use in bakery products.

Question 3. The new productive undertaking purchased from time to time quantities of commodities used in production of one of its product, the following details are available regarding the stock of materials and its movement during the three Month period from March, April, and May.
There was no Opening stock for the month of March. Purchases done on 2 March 200 units @ 12 per unit, 8 March 150 units @14 per unit, 17 March 225 units @13 per unit, 25 March 300 units @ 12 per unit and Issues were made on 3rd March 125 units, 15 March 200 units and 30 March 150 units.
Stock on 1st April 130 units @ OMR 47 per unit and Purchases done on 5 April 200 units @ 52 per unit, 9 April 150 units @54 per unit, 17 April 225 units @ 53 per unit, 26 April 300 units @ 49 per unit and Issues were made on 7th April 225 units, 10 April 200 units and 19 April 150 units.
Stock on 1st May 150 units' @OMR 22 per unit On May 4, Purchased 420 units @OMR 30,
May 12 Purchased 215 units @OMR 35, May 15 Purchased 200 units @ OMR 40, May 28 Purchased 400 units @OMR 47, May 5 Issued 225 Units, May 14 Issued 190 units, May 20 Issued 200 units, May 25 Issued 250 units, May 30 Issued 90 units.

a. You are required to prepare stock register using Simple Average Method for the Period of May.
b. You are required to write the highest and lowest issue price with dates and find out the difference in both the prices.

Question 4. Mr. Karim is a cost accountant in "Hotel Oman". This is hospitality service business for the tourist of Oman. Mr. Kadir is working as manager. Mr. Kadir asked Mr. Karim to present the estimated cost for 50 tourists for one month stay in Hotel Oman. You have to explain in details five (5) overheads which can be help to offer competitive cost to tourist,who are planning to stay in "Hotel Oman" All expected example of overheads example needs to be appropriate to "HotelOman" as service business.

Question 5. Mohammed Garment Industry workers produce clothing made from cloth. The three basic processes of garment production are cutting, sewing and pressing. According to the Labour department there are 10 sewing operators, 5 cutting operators and 8 pressing operators. The Standard rate per hour for operators is OMR 25, Normal rate per hour is OMR 30, Normal rate per unit is OMR 20, Working hours per day are 8 hours, Standard Output per hour is 120 units. Five workers who work as a cutting operators Khalid, Rashid, Ahmed, Khamis and Nasir were engaged in the work and receives earnings by using Merrick Differential Piece Rate System. The Output is as follows Khalid 895 units, Rashid 520 units, Ahmed 800 units, Khamis 1020 units and Nasir 1140 units. You are required to calculate the earnings of all the five workers of cutting operatorsand also identify which of the worker performance is less than 70% among all.

Question 6. Mr. Siddiq, Mr.Rafiq , Mr. Hassim, Mr. Imthiaz and Mr. Jamil are appointed in "Seeb Paper Cup Manufacturing S.A.O.G.". Mr. Sidiq has to work daily 8 hours, irrespective of number of units to be produced by him. Mr. Rafiq has to produce minimum 4 units of finished product every day his work timing is not fixed like Mr Sidiq he has to complete his 4 units every day. Mr. Sidiq can leave only after completing his 4 units of manufacturing. Mr. Hassim is very senior worker in this factory he takes care of administration work as well as production also. For Mr. Imthiaz working hours not fixed, he works as work demand. Mr Jamil and Mr. Hassim both are newly joined worker, both get wages as per number of units they produced. All workers have to maintain the quality of produced finished goods. You have to specify & explain in details the method of calculating remuneration in each case of above mentioned five (5) workers.

Question 7. Atlas Cycle Manufacturing Company furnished the following information of the total expenditure incurred in the January 2020.Material used OMR 45,500; Wages paid for the labours OMR 42,400 for the hours worked 25,000. The machine is in operation for 35,000 hours in which 7,000 hours was lost due to repairs and maintenance and Total overhead cost OMR 43,000. Rent paid OMR 5000, Rent received OMR 2,000. An order has been executed to manufacture and deliver the 20 cycles for which materials to be used for OMR 8,000. In order to accomplish the work labour were paid OMR 11,250 for 2,600 hours and machine has been used for 2,400 hours. You are required to calculate the overhead chargeable to manufacture 20 cycle on order by the following methods.
a. Percentage of direct material cost
b. Percentage of labor hour cost
c. Percentage of Prime cost
d. Direct labor hour rate
e. Machine hour rate

Question 8. Mr. Mustafa is general manager of "Al Maya Super Market". Al Maya Super Market is famous for supplying routine grocery, vegetables, school stationary and other daily based products. Mr. Mustafa appointed Mr. Munib as a finance manager and Mr. Mujib as purchase and store manager. Mr. Mujib is working since January 2020 recently joint. Mr. Mujib made payment to supplier without checking quality and quantity of supplied material by suppliers. Later few materials found as a defective quality. You have to write details step wise procedure of purchase with relevant example of material sales in "Al Maya Super Market". Identify the mistake done by Mr. Mujib suggest suitable action to avoid such type of mistake. (1) Also explain a role of Mr. Munib in this purchase procedure.

Question 9. Paper Manufacturing Industry has three process of Cutting, Blending and Sheet Formation. The following information is provided relating to the three process expenses in OMR.

	Cutting	Blending	Sheet Formation
Sales	28,458	16,900	19,017
Direct Labour	4,958	6,250	5,200
Direct Material	2,200	1,800	1,750
Selling Variable Expenses	3,222	1,745	2550
Factory Variable Expenses	2,270	2,550	1,625
Fixed Factory Expenses	2,200	1,500	1,000
Fixed Selling Expenses	5,000	60% of Sheet formation expenses	2,300

Fixed Factory and selling overhead are apportioned to all the process on equitable basis.
From the information provided you are required to
a. Prepare Income statement under Marginal Costing and Absorption Costing Method.
b. From the above three process, Identify the total profit under Marginal costing method and also make an estimation for next year profit if the company want to earn 20% extra profit to the existing profit.

Question 10. Mr. Bashir is junior cost accountant of "Oman Flour Mills S.A.O.G". Mr. Basheer prepares his cost budget every year. Last year in 2019 his budget did not control the cost of manufacturing due to overheads. You being senior cost accountant required to identify and explain the technique of costing to control the overhead cost so as to maintain cost of production competitive selling price of product and also required elements of cost which can be used in "Oman Flour Mills S.A.O.G."

Attachment:- Cost Accounting.rar