Problem-09 (Page-86)
The Following information has been taken from the records of Maxwell Company:
Inventories January-01 December-31
Finished goods 5,000/- 7,000/-
Work-in-process 15,000/- 9,000/-
Materials 10,000/- 12,000/-
TK.
Materials purchase 1,00,000/-
Direcet labour 2,00,000/-
Freight in 3,000/-
Sales salaries and expense 25,000/-
Other factory expenses 4,000/-
Freight out 2,000/-
Factory Insurance 12,000/-
Depreciation-Machinery 40,000/-
Purchase Returns and Allownce 5,000/-
Sales 3,50,000/-
Purchase Discount 800/-
Sales Discount 200/-
Prepare a cost of goods sold statement for the year 2004.
Solution:-
Maxwell Company
Cost of goods sold statement
For the period ended 31st December, 2004
Particulars TK. TK. TK.
Raw Materials:
Opening Stock 10,000/-
Purchase 1,00,000/-
Less: Purchase Return 5,000/-
95,000/-
Less: Discount 800/-
94,200/-
Add: Freight In 3,000/-
97,200/-
Raw materials Available for use 1,07,200/-
Less: Closing Stock 12,000/-
Raw Materials Consumed 95,200/-
Direct Labour 2,00,000/-
Prime cost 2,95,200/-
Factory Overhead:
Factory Insurance 12,000/-
Factory Depreciation 40,000/-
Other factory expenses 4,000/-
56,000/-
Cost of Manufacturing 3,51,200/-
Add: opening stock of work-in-process 15,000/-
3,66,200/-
Less: Closing stock of work-in-process 9,000/-
Cost of Goods Manufactured 3,57,200/-
Add: Opening stock of finished goods 5,000/-
3,62,200/-
Less: Closing stock of finished goods 7,000/-
Cost of production/COGS 3,55,200/-
Add: Marketing overhead
Sales salaries 25,000/-
Freight out 2,000/-
27,000/-
Cost of sales 3,82,200/-
Problem-10 (Page-87)
The Following cost and inventory data for the just completed year are taken from the
accounting records of Asiatic Company:
Costs incurred TK.
Advertising expenses 1,00,000/-
Direct labor cost 90,000/-
Purchase of raw Materials 1,32,000/-
Rent, Factory Building 80,000/-
Indirect labor 56,300/-
Sales Commission 35,000/-
Utilities, Factory 9,000/-
Maintenance, Factory Equipment 24,000/-
Supplies, Factory 700/-
Depreciation, Office Equipments 8,0000/-
Depreciation, Factory Equipments 40,000/-
Inventories Beginning of year End of year
Raw Materials 8,000/- 10,000/-
Work-in-process 5,000/- 20,000/-
Finished goods 70,000/- 25,000/-
1. Prepare a schedule of cost of goods manufactured.
2. Prepare the cost of goods sold section of Asiatic Company’s income statement for the
year.
Solution:-
Req-01
Asiatic Company
Schedule of Cost of goods manufactured
Particulars TK. TK.
Direct Materials:
Raw materials inventory, beginning 8,000/-
Add: Purchase of Raw materials 1,32,000/-
Raw materials Available for use 1,40,000/-
Less: Raw materials inventory, ending 10,000/-
Raw materials used in production 1,30,000/-
Direct Labour 90,000/-
Manufacturing Overhead:
Rent, Factory Building 80,000/-
Indirect labor 56,300/-
Utilities, Factory 9,000/-
Maintenance, Factory Equipment 24,000/-
Supplies, Factory 700/-
Depreciation, Factory Equipments 40,000/-
Total overhead cost 2,10,000/-
Total Manufacturing cost 4,30,000/-
Add: work-in-process, beginning 5,000/-
4,35,000/-
Less: work-in-process, ending 20,000/-
Cost of Goods Manufactured 4,15,000/-
Req-02
Cost of Goods Manufactured 4,15,000/-
Add: Opening stock of finished goods 70,000/-
Goods Available for sale 4,85,000/-
Less: Closing stock of finished goods 25,000/-
Cost of production/COGS 4,60,000/-
Problem-11 (Page-88)
The Following information has been taken from the accounting records of Klear-Seal Company
for last year:
Selling expenses 1,40,000/-
Raw Materials inventory, January 01 90,000/-
Raw Materials inventory, December 31 60,000/-
Utilities, Factory 36,000/-
Direct labor cost 1,50,000/-
Depreciation, Factory 1,62,000/-
Purchase of raw Materials 7,50,000/-
Sales 25,00,000/-
Insurance, Factory 40,000/-
Supplies, Factory 15,000/-
Administrative expenses 2,70,000/-
Indirect labor 3,00,000/-
Maintenance, Factory 87,000/-
Work-in-process inventory, January 01 1,80,000/-
Work-in-process inventory, December 31 1,00,000/-
Finished goods inventory, January 01 2,60,000/-
Finished goods inventory, December 31 2,10,000/-
Management wants these data organized in a better format so that Financial Statements can be
prepared for the year.
1. Prepare an Income Statement.
Solution:-
Klear-Seal Company
Schedule of Cost of goods manufactured
For the period ended 31st December
Particulars TK. TK.
Direct Materials:
Raw materials inventory, January 01 90,000/-
Add: Purchase of Raw materials 7,50,000/-
Raw materials Available for use 8,40,000/-
Less: Raw materials inventory, December 31 60,000/-
Raw materials used in production 7,80,000/-
Direct Labour 1,50,000/-
Prime Cost 9,30,000/-
Manufacturing Overhead:
Utilities, Factory 36,000/-
Depreciation, Factory 1,62,000/-
Insurance, Factory 40,000/-
Supplies, Factory 15,000/-
Indirect labor 3,00,000/-
Maintenance, Factory 87,000/-
Total overhead cost 6,40,000/-
Total Manufacturing cost 15,70,000/-
Add: work-in-process inventory, January 01 1,80,000/-
17,50,000/-
Less: work-in-process inventory, December 31 1,00,000/-
Cost of Goods Manufactured 16,50,000/-
finished goods inventory, January 01 2,60,000/-
Add: Cost of Goods Manufactured 16,50,000/-
Goods Available for sale 19,10,000/-
Less: Finished goods inventory, December 31 2,10,000/-
Cost of production/COGS 17,00,000/-
Klear-Seal Company
Income Statement For the year ended December 31.
Sales 25,00,000/-
Less: COGS 17,00,000/-
Gross Margin 8,00,000/-
Less: Selling and administrative expenses
Selling Expenses 1,40,000/-
Administrative expenses 2,70,000/-
Total selling and administrative expenses 4,10,000/-
Net Operating Income 3,90,000/-
Problem-12 (Page-90)
A factory produced and sold 1,000 units of a product in the month of June 2010, for which the
Following particulars are available:
Stock of raw materials on 1st June 6,000/-
Purchase and receipt of raw materials during the month of June 1,44,000/-
Direct wage paid in cash in June (Which Included) 55,000/-
Tk. 3,000/- on account of May and Tk. 2,000/- advance for July
Works Overhead charges for the month 60,000/-
th
Stock of raw materials on 30 June 10,000/-
administration and Selling Overhead tk. 25 per unit
Sales Price tk. 300 per unit
From the above particulars you are required to prepare:
(a) A statement of cost for the month of June, 2010
(b) Estimate the sales price of a unit of the same products in July, 2010, assuming-
1. 10% increase in the cost of raw materials
2. 10% increase in direct wages
3. 5% increase in works overhead charges
4. 20% decrease in administration and selling overhead charges
5. Same percentage of profit on sales price as earned during the month of June
Solution:-
Req-(a)
Statement of Cost (For the month of July, 2010)
Output: 1,000 Units
Particulars TK. TK.
1. Materials Used:
Opening stock of Raw materials 6,000/-
Add: Purchase of Raw materials 1,44,000/-
Raw materials Available during the period 1,50,000/-
Less: Closing Stock of Raw materials 10,000/-
Raw materials used in production 1,40,000/-
2. Direct Wages
Paid In June 2010 55,000/-
Less: Payment for May 2010 3,000/-
Less: Payment for July 2010 2,000/-
50,000/-
Prime Cost 1,90,000/-
3. Works overhead 60,000/-
Works or Factory cost 2,50,000/-
4. administration and selling overhead @ tk. 25 per unit 25,000/-
Total cost / cost of sales 2,75,000/-
5. Profit (Balancing figure) 25,000/-
Total Sales ( 1,000 units @ tk. 300 per unit) 3,00,000/-
Calculation of profit percentage on sales price for the month of June:
(Profit/Total Sales) x 100 = (25,000/3,000) x 100 = 8.33%
If Sales 100 and Profit 8.33% then cost (100-8.33) = 91.67.
So, Profit on cost = (8.33/91.67) th
Req-(b)
Estimated of per unit sales price (For the month of July, 2010)
Particulars TK. TK.
Direct materials (1,40,000/1,000) 140/-
Add: increase 10% 14/-
154/-
Add: Direct wages (50,000/1,000) 50/-
Add: increase 10% 5/-
55/-
Prime cost 209/-
Add: Works overhead (60,000/1,000) 60/-
Add: increase 5% 3/-
63/-
Works cost 272/-
Add: administration and selling overhead 25/-
Less: Decrease 20% 5/-
20/-
Total cost 292/-
Add: Profit (8.33%of sales i. e. (8.33/91.67)th of cost 26.53
Estimated Selling Price 318.53
Ans: Estimated Selling Price per unit tk. 318.53
Problem-13 (Page-91)
The Following data are from the accounts of Modhumoti Company:
Inventories July 01, 2015 June 30, 2016
Finished goods 20,000/- 28,000/-
Work-in-process 60,000/- 25,000/-
Materials 40,000/- 48,000/-
TK.
Sales Discount 8,000/-
Purchase Discount 3,200/-
Sales 18,00,000/-
Purchase Returns and Allowance 20,000/-
Depreciation - Factory Machinery 1,60,000/-
Factory Insurance 50,000/-
Freight out 8,000/-
Other factory expenses 16,000/-
Bond interest expense 50,000/-
Sales salaries 1,00,000/-
Freight in 12,000/-
Direct factory labor 8,00,000/-
Materials purchase 4,00,000/-
Advertising Expenses 12,000/-
Prepare a cost of goods manufactured statement for the year ended June 30, 2016.
Solution:-
Modhumoti Company
Cost of goods manufacture statement
For year ended June 30, 2016
Particulars TK. TK. TK.
Raw materials July 1, 2015 40,000/-
Purchase 3,200/- 4,00,000/-
Less: Purchase Discount 20,000/-
Purchase Return and allowances 23,200/-
3,76,800/-
Add: Freight In 12,000/- 3,88,800/-
Raw materials Available for use 4,28,800/-
Less: Raw materials June 30 48,000/-
Direct Materials Consumed 3,80,800/-
Direct Factory Labor 8,00,000/-
Depreciation - Factory Machinery 1,60,000/-
Factory Insurance 50,000/-
Other factory expenses 16,000/-
Total Factory Overhead: 2,26,000/-
Cost of Manufacturing 14,06,800/-
Add: work-in-process, July 01, 2015 60,000/-
14,66,800/-
Less: work-in-process, June 30, 2016 25,000/-
Cost of Goods Manufactured 14,41,800/-
DAIBB : Management Accounting (MA) - December 2012
**********************************************************************
*
Answer to Question 5(b) : 1
We Know,
Profitability Index = PV of Cash Inflows/ PV of Cash Out Flows
PI of Project A = (800000+221615)/800000 = 1.28
PI of Project B = (675000+210000)/675000 = 1.31
PI of Project C = (500000+175175)/500000 = 1.35
PI of Project D = (700000+152544)/700000 = 1.22
PI of Project E = (900000-52176)/900000 = 0.94
Answer to Question 5(b) : 2
Based on NPV : A, B, C, D
Based on Profitability Index : C, B, A, D
Based on IRR : D, C, A, B
Answer to Question 5(b) : 3
Ranking Based on NPV is preferable to me. Reasons are:
- NPV is an absolute measurement, whereas IRR give us only rate may be for smaller
project with low NPV
- IRR rule sometimes give us multiple answer, that's why NPV is much preferable than
IRR.
- PI rule also only compares not the absolute dollar figures we get.
Answer to Question 5(b) : 4
Based on the NPV rule with Tk. 1.5 million budget constraints, if we invest on first 2
projects we require = 800000+675000 = 1475000. Here, Tk. 25000 unused with NPV
of Tk. 431615.
If we want to invest in project A & D we require = 800000+700000 = 1500000. Here,
Full utilization is possible with NPV of Tk. 374159.
So, We should invest in A & B only.
May-2011, 2(b) - CVP Analysis
Lisa Company is the exclusive distributor for an automative product. The product sells
for Tk. 40 per unit and has a CM ratio 30%. The company's fixed expenses are Tk.
180,000 per year.
Required:
i) What is the variable expenses per unit?
ii) Using the equation method:
1) What is the break-even point in units and sales taka?
2) What sales level in units and in sales taka is required to earn an annual profit of Tk.
60,000?
3) Assume that by using a more efficient shipper, the company is able to reduce its
variable expenses by Tk. 4 per unit. What is the Company's new break-even point in
units and sales taka?
iii) Repeat (ii) using the unit contribution method.
Solution
Answer (i)
We Know,
CM Ratio = Contribution / Sales
=> CM Ratio = (Selling Price - VC per Unit) / Selling Price
=> 0.30 = (40 - VC) / 40
=> 12 = 40 - VC
=> VC = 40 - 12
=> VC= 28 per Unit
Answer (ii) : Equation Method
1) BEP in Units and Taka
------------------------------
We have,
p = 40, v = 28 and FC = 180,000
40x = 28x + 180,000
=> 40x − 28x = 180,000
=> 12x = 180,000
So, Break-even in Units = x = 15,000 units
Break-even Point in Sales Taka = 40 × 15,000 = 600,000 Taka.
2) Targeted Sales in Units and Taka
-------------------------------------------
If Targeted Profit, P= Tk. 60,000,
We have,
40x = 28x + 180,000 + 60,000
=> 40x − 28x = 240,000
=> 12x = 240,000
So, Break-even in Units = x = 20,000 units
Break-even Point in Sales Taka = 40 × 20,000 = 800,000 Taka.
3) BEP in Units and Taka (If VC changes)
------------------------------------------------
If VC reduces by Tk. 4,
We have,
p = 40, v = 28-4 = 24 and FC = 180,000
40x = 24x + 180,000
=> 40x − 24x = 180,000
=> 16x = 180,000
So, Break-even in Units = x = 11,250 units
Break-even Point in Sales Taka = 40 × 11,250 = 450,000 Taka.
Answer (iii) : Unit Contribution Method
1) BEP in Units and Taka
-----------------------------
BEP in Units
= Fixed Costs / Contribution Margin par Unit
= Fixed Costs / (Selling Price - VC par Unit)
= 180,000/ (40 - 28)
= 180,000/12
= 15,000 Units.
BEP in Taka
= Fixed Costs / CM Ratio
= 180,000/ 0.30
= 600,000 Taka.
2) Targeted Sales in Units and Taka
------------------------------------------
Targeted Sales in Units
= (Fixed Costs + Targeted Profit)/ Contribution Margin par Unit
= (Fixed Costs + Targeted Profit)/ (Selling Price - VC par Unit)
= (180,000+60,000)/ (40 - 28)
= 240,000/12
= 20,000 Units.
Targeted Sales in Taka
= (Fixed Costs + Targeted Profit)/ CM Ratio
= (180,000+60,000)/ 0.30
= 240,000/ 0.30
= 800,000 Taka.
3) BEP in Units and Taka (If VC changes)
------------------------------------------------
BEP in Units
= Fixed Costs / Contribution Margin par Unit
= Fixed Costs / (Selling Price - VC par Unit)
= 180,000/ [(40 - (28 - 4)]
= 180,000/16
= 11,250 Units.
New CM Ratio
= (Selling Price - VC per Unit) / Selling Price
= (40 - 24) / 40 = 0.40
BEP in Taka
= Fixed Costs / CM Ratio
= 180,000/ 0.40
= 450,000 Taka.
Assumptions of BEP Analysis (Nov-11, May-12) #DAIBB
Breakeven analysis is the study of the relationship between selling prices, sales volumes, fixed costs,
variable costs and profits at various levels of activity. It is also known as cost-volume-profit analysis.
Assumptions of BEP Analysis as follows:
• Relevance range — It is assumed that a company is operating within a relevant range. The relevant
range is the range of an activity over which the fixed cost will remain fixed in total and the variable
cost per unit will remain constant.
• Fixed costs — Total fixed costs are assumed to be constant in total. Fixed costs per unit will decrease
with the increasing number of units produced.
• Variable costs — Variable costs per unit are assumed to be constant. Total variable costs will
increase with the increasing number of units produced.
• Sales revenue – Sales revenue per unit is assumed to be constant and the total revenue will increase
with the increasing number of units produced.
June/2013
A. Current Asset:
Stock of Raw materials for 1 month
70,0000*52*4/52 = 280,000
ii) Work-in-Process
1. Raw materials = 70,000*52*50%*2/52 = 70,000
2. Labor = 70,000*19.5*50%*2/52 =26250
c) Overhead = 70,000*39*50%*2/52= 52500
iii) Finished goods for one month
1. Raw materials = 70,000*52*4/52= 280,000
2. Labor = 70,000*19.5*4/52= 105000
3. Overheads= 70,000*39*4/52=210000
Debtors for 2 months= 52,500*110.5*8/52=892500
Cash at Bank= 120,000
B. Current Liabilities
i) Creditors 1 month purchase of Raw materials = (70000*52*4)/52=280,000
II) Average time lag in payment of expense
1. Overhead One Month = 70,000*39*4/52= 210,000
2. Labor 1.5 weaks= 70,000*19.5*1.5/52= 39375
Net working capital frown emoticon 2036250-529385) = 15,06875
Solution : MA/Dec/2013/3(c)
(i) C/M Ratio & Variable Expense Ratio:
============================
We have, Contribution Margin= 112,500;
Sales= 5000*50 Or, 250,000
So, C/M Ratio= (C/M)/Sales*100
= (112,500/250,000)*100
=45%
And, Variable Expense Ratio= 100%- C/M Ratio = 100%-45% = 55%
(ii) BEP in units and sales Taka
========================
BEP in Sales Tk = Fixed cost/C/M Ratio
Or, {(Sales*C/M Ratio)-profit}/ 45%
Or, {(250,000*45%)-22,500}/0.45
Or, (112,500-22,500)/0.45
Or, 90,000/0.45
Or, 200,000
BEP in Units = BEP in Sales TK/ Unit Selling Price = 200,000/50= 4000 units
(iii) Change in Income
=========================
We have, FC= 90,000,
Total Sales= 250,000+40,000 Or, 290,000
VC= 290,000*55% Or, 159,500
We Know,
Profit = Total Sales- FC-VC
=> Profit = 290,000- 90,000- 159,500
= 40,500
Change in Net Income= 40,500-22,500
Or, 18,000
Q) Explain operating, investing and financing activities with appropriate examples.
Dec-2013[Marks -4]
Ans.
Operating Activities: Addition or deduction of current activities or current liabilities
with Net Income from Income statement for knowing cash flow is referred to as
operating activities. For example-
Cash flow from operating activities:
Net income #####
(+) Depreciation ###
(+) Decrease inventory ##
(+) Increase A/c payable ##
(-) Decrease A/c receivable (### )
---------------
Net cash flow from O A ####
Investing Activities : Adjustment in cash flow statement due to increase & reduction of
fixed asset (Land, building, equipment etc.) is considered as investing activities. For
example---
Cash flow statement from investing activities :
Sale on Fixed asset ####
Purchase equipment (####)
........................
Net CF from I A ##$###
Financing Activities: Transactions of increasing and decreasing of long term liabilities
for preparing CF statement is considered as Financing Activities. For example --
Cash flow from Financing Activities
Divided paid (######)
Long term loan paid (#####)
New Bank Loan ######
.....................
Net C F from Financing A ######
Solution: MA/Dec/2013/5(c)
Net cash flow from operating Activities
Net Income------------- -----84,000/-
Adjustment to reconcile
to net income to net
cash provided by
operating activities
(+) Depreciation Expense ----18,000/-
(+) lose on sale of Equipment-1,000/-
(+) Decrease A/c Receivable - 3000/-
(-) Increase M Inventories --- (10,000/-)
(+) Decrease prepaid expens- 2000/-
(-) Decrease A/c Payable---- (8000/-)
(+) Increase Income T Payable-12,000/-
(-) Increase Acc Exp. Payable-(5000/-)
===================
13,000/-
====================
Net Cash Flow from O A----------97,000/-
Cash Flow from Investing Activities
Purchase Equipment ---------(180,000/-)
Sale on Equipment -----------17,000/-
=================
Net Cash Flows from I A (163,000/-)
Cash Flow from Financing Activities
Bonds Issued ---------130,0000/-
Bonds paid ---------(32,000/-)
===================
Net Cash Flow from F A 98,000/-
====================
Net Increase /Decrease 32,000/-
Cash beginning 159,000/-
====================
Cash Ending 191,000/-
[[** Cash Flow from non-operating & non-financing Common stock of Tk 60,000/-
was issued to acquire land.] ]
Management of Financial Institutions (MFI)
DAIBB- May-2012
Question - 3(c)
Mr. X has taken mortgage loan of tk. 10,00,000/00 @ interest rate of 12% for 4 years under quarterly
repayment system. Calculate the amount of semi-annually payment and prepare loan amortization
schedule for the first year.
May-2011, 6(c) - Working Capital Requirement
Solution: MA/Dec/2013/6(c)
Depreciation: Initial Invest-SV/No of Y
frown emoticon 25,50,000-50,000)/5
= Tk. 500,0000
(All Fig in Thousands)
Year 1 2 3 4 5 SV+WC
EBDT 850 850 650 550 450
Dep 500 500 500 500 500
EAT 350 350 150 50 (50)
Tax 140 140 60 20 -
EAT 210 210 90 30 -
CFAT 710 710 590 530 500 150
cCFAT710 1420 2010 2540 3040
PV .9091 .8264 .7513. 683 .6209. 5644
PV 1= 645461, 2= 586744, 3= 443267, 4=361990, 5=310450, SV+WC= 84560
Total PV= 2432572
PBP= A+(NCO-C)/D
= 4 + (25,50,000-25,40,000)/530000
= 4 + 0.018
=4.018 Years.
Q) How does zero base budgeting is differ from capital budgeting? Dec, 2013 [marks-5]
Ans.
1) The Traditional Budgeting refers to a list of all planned expenses and revenues.
While in Zero Based Budgeting it is always assumes that the expenditures is always based on zero.
2) It focuses on what the managers tend to spend rather on what resources they need.
ZBB aims to achieve an optimal allocation of resources that incremental and other budgeting systems
cannot achieve. Zero Based Budgeting provides an efficient allocation of resources, as it based on the
needs and benefits.
3) It fails to identify wastes, incoming workloads and cost drivers.
ZBB identifies and eliminates wastage and obsolete operations .
4) it does not support continuous improvement and appears to have general lack of ownership and buy
- in.
ZBB increases staff motivation as well as the communication and coordination within the
organization, detects inflated subjects and drives managers to find out cost effective ways to improve
operations.
5) Critics also found out that it is very time consuming for the benefits to be achieved.
Within short time result is found
#MFI - December 2013
****************************
Solution to 6(a)
Net Income
= Interest Income + Non Interest Income + Securities Gains - Interest Expense - Non
Interest Expense – Taxes – Provision for Loan Loss
= 1875 + 501 + 21 – 1210 – 685 – 16 – 381
= 105
Total Equity
= Total Assets – Total Liabilities
= 15765 – 15440 = 325
ROE
= Net Income / Total Equity
= 105 / 325
= 32.30%
ROA
= Net Income / Total Assets
= 105 / 15765
= 0.66%
NIM
= (Interest Income – Interest Expenses) / Total Assets
= (1875 - 1210) / 15765
= 665 / 15765
= 4.21%
EPS = 105,000,000 / 145,000 = Tk. 724.14 per share
Net Non-interest Margin
= (Non-interest Income - Non-interest Expenses) / Total Assets
= (501 – 685) / 15765
= (184) / 15765
= - 1.16%
Here,
Total Operating Income
= Int. Income + Non Interest Income
= 1875 + 501 = 2376
Total Operating Expenses
= Int. Expenses + Non Int. Expense + Provision for Loan Loss
= 1210 + 685 + 381
= 2276
Net Operating Margin
= (Total Op. Income – Total Op. Expenses) / Total Assets
= (2376 – 2276) / 15765
= 0.63%
