From the following data, you are required to compute the amount of fixed, variable and total semi-variable expenses for the month of October 2009, where the production is 50 units. Month Production (Units) Semi-Variable Expenses (Rs.) April 2009 60 320 May 2009 40 280 June 2009 70 340 July 2009 100 400 August 2009 80 360 September 2009 90 380

ABC Co. Ltd is a manufacturing company. It produces two products A and B. It has assigned 2 and 5 points to A and B, respectively, in order to compensate for the basic differences in products. The estimated factory overhead for the budget period is Rs. 2, 40,000. The normal capacity is: A 5,000 units B 6,000 units You are required to calculate the overhead […]

Model: Combination of Labour hour and Machine hour methods The following information relates to the activities of a production department for a certain period in a factor: Materials used 36,000 Direct wages 30,000 Hours of machine operation 10,000 Labour hours worked 12,000 Overheads chargeable to the department 24,000 On one order carried out in the department during the period, the relevant data collected were as […]

Model: Machine hour rate You are required to calculate the machine hour rate from the following: Cost of machine 40,000 Cost of installation 4,000 Scrap value after 10 years 4,000 Rates and rents for a quarter of the shop: 1,200 General lighting 400 p.m. Shop supervisor’s salary per quarter 12,000 Insurance premium for a machine 240 p.a. Repairs (estimated) 400 p.a. Power 3 units per […]

Demonstrating control over the future services of employees Entity A acquires a pharmaceutical company. A critical factor in the entity”s decision to acquire the company was the reputation of its team of research chemists, who are renowned in their field of expertise. However, in the absence of any other legal rights it would not be possible to show that the entity can control the economic […]

Model: Machine-hour-rate determination Calculate the machine hour rate for recovery of overheads for a group of four machines from the following data: Original cost of four machines Rs. 1,53,600. Depreciation@ 10% per annum – straight line method. Maintenance cost – average Rs. 16 per day of 8 hours for the group of machines. Power – 50 paise per running hour per machine. Supervision for the […]

Contingent consideration relating to a football player”s registration Entity A is a football club which signs a new player on a 4 year contract. In securing the registration of the new player, Entity A agrees to make the following payments to the player”s former club: €5.5 million on completion of the transfer; €2.8 million on the first anniversary of the transfer; €1 million as soon […]

Model: Machine hour rate The following annual charges are incurred in respect of a machine shop where the manual labour is almost nil. There are five identical machines in the shop. (i) Cost of each machine is Rs. 32,000 and the residual value after the expiry of the useful life of 10 years is Rs. 8,000 (ii) Power consumption p.a. as per metre reading (each […]

What will be the earnings of a worker at Re. 0.55 per hour when he takes 140 hours to do a volume of work for which the standard time allowed is 200 hours? The plan of payment of hours is on a sliding scale as follows: Within the first 10% saving in the standard time – bonus is 40% of the time saved Within the […]

Model: Over- or Under-absorption The budgeted activity and cost data for each half year of XY Ltd were as follows: Direct labour hours 34,000 Direct wages 21,250 Overhead: 18,700 Fixed variable 32,300 During the first six months, the following actual results were achieved: Direct labour hours incurred 32,500 Direct wages 42,750 Overhead: 19,350 Fixed variable 32,900 The existing method of absorbing overhead is by a […]