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

Answer 1