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Budgeted sales (Rs. 10 per unit) Rs. 2,60,000 p.a.
Analysis of Costs (in Rs)
Raw Materials - 3.00
Direct Labour - 4.00
Overheads - 2.00
Total Cost - 9.00
Profit - 1.00
Sales - 10.00
It is estimated that
(i) Raw materials are carried in stock for three weeks and finished goods for two weeks.
(ii) Factory processing will take three weeks.
(iii) Suppliers will give full five weeks credit.
(iv) Customers will require eight weeks credit.
It may be assumed that production and overheads accrue evenly throughout the year.
From the above information, calculate
1. Number of Units
a. 2600
b. 26000
c. 52000
d. 260000
Ans - b
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2. Value of finished goods
a. 52000
b. 78000
c. 104000
d. 234000
Ans - d
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3. Value of Work in Progress
a. 4500
b. 9000
c. 12000
d. 13500
Ans - b
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4. Current Assets
a. 40000
b. 55000
c. 62500
d. 68500
Ans - c
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5. Current Liabilities
a. 4500
b. 6000
c. 7500
d. 9000
Ans - c
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6. Working Capital
a. 40000
b. 55000
c. 62500
d. 68500
Ans - b
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Solution :
1. b
= 2,60,000 / 10
= 26000
2. d
Finished Goods = Raw Materials + Direct Labour + Overheads
Raw Materials = 26,000 x 3 = 78,000
Direct Labour = 26,000 x 4 = 1,04,000
Overheads = 26,000 x 2 = 52,000
Finished Goods = 78000 + 104000 + 52000
= 2,34,000
3. b
Factory processing will take three weeks. So, Work in Progress = Value of finished goods * 3 / 52. Normally finished goods and work in progress are taken as same value. Suppose wages and overheads accrue evenly throughout the year given in the problem, we have to find out the work in progress value separately. At that time of computing work in progress labour, overhead value is reduced to half.
Raw Material 78,000 x 3/52 = 4,500
Labour (1,04,000 x 3/52) x 1/2 = 3,000
Overhead (52,000 x 3/52) x 1/2 = 1,500
Work in Progress = 4500 + 3000 + 1500
= 9,000
4. c
Raw Materials = 78,000 x 3/52 = 4,500
Work in Progress = 9,000
Finished Goods = 2,34,000 x 2/52 = 9,000
Debtors = 2,60,000 x 8/52 = 40,000
Current Assets = Raw Materials + Work in Progress + Finished Goods + Debtors
= 4500 + 9000 + 9000 + 40000
= 62500
5. c
Current Liabilities = Trade Creditors
= Trade Creditors (5 weeks) 5/52 x 78,000 = 7,500
6.
Working capital = current assets – current liabilities
Working Capital = 62500 - 7500
= 55,000
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On the basis of the information given below, answer the following questions. B Limited has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs. 3,50,000 now stands at Rs. 2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in the depreciated value of Rs. 2,97,500.
1. Straight line depreciation per annum is ......
a. Rs. 15,000
b. Rs. 17,500
c. Rs. 35,000
d. Rs. 52,500
Ans - b
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2. Number of years for which depreciation has been charged on this basis is ......
a. 2 years
b. 3 years
c. 4 years
d. 5 years
Ans - b
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3. If 8% depreciation was charged by the reducing balance method, WDV at the end of 1st year was ......
a. Rs. 2,72,541
b. Rs. 2,96,240
c. Rs. 3,22,000
d. Rs. 3,60,000
Ans - c
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4. If 8% depreciation was charged by the reducing balance method, WDV at the end of 2nd year was ......
a. Rs. 2,72,541
b. Rs. 2,96,240
c. Rs. 3,22,000
d. Rs. 3,60,000
Ans - b
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5. If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year was ......
a. Rs. 2,72,541
b. Rs. 2,96,240
c. Rs. 3,22,000
d. Rs. 3,60,000
Ans - a
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6. The extra depreciation to be provided based on the changed method during the year is ......
a. Rs. 24,959
b. Rs. 17,500
c. Rs. 10,500
d. Rs. 46,763
Ans - a
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ABC Ltd completed the transactions listed below. State whether each of the below given transaction would cause the ratio listed opposite it to increase, decrease or remain unchanged.
1. Wrote off bad debt against Allowance for Doubtful Debts - Current ratio
a. Increase
b. Decrease
c. Remain unchanged
d. None of the above
Ans - c
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2. Collected an account receivable - Receivables turnover
a. Increase
b. Decrease
c. Remain unchanged
d. None of the above
Ans - a
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3. Paid accounts payable - Rate of return on total assets
a. Increase
b. Decrease
c. Remain unchanged
d. None of the above
Ans - a
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4. Sold obsolete inventory at cost - Profit margin
a. Increase
b. Decrease
c. Remain unchanged
d. None of the above
Ans - b
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5. Issued a share dividend on ordinary shares - Earnings per share
a. Increase
b. Decrease
c. Remain unchanged
d. None of the above
Ans - b
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6. Sold inventory on account - Inventory turnover
a. Increase
b. Decrease
c. Remain unchanged
d. None of the above
Ans - a
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On the basis of the information given below, answer the following questions. Consider the following information:
I. Rate of depreciation under the written down method = 20%
II. Original cost of the asset = Rs. 1,00,000
III. Residual value of the asset at the end of useful life = Rs. 40,960
1. The estimated useful life of the asset is ......
a. 4 years
b. 5 years
c. 6 years
d. 7 years
Ans - a
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2. Depreciation for 1st year = ......
a. Rs. 20,000
b. Rs. 16,000
c. Rs. 12,800
d. Rs. 10,240
Ans - a
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3. Depreciation for 2nd year = ......
a. Rs. 20,000
b. Rs. 16,000
c. Rs. 12,800
d. Rs. 10,240
Ans - b
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4. Depreciation for 3rd year = ......
a. Rs. 20,000
b. Rs. 16,000
c. Rs. 12,800
d. Rs. 10,240
Ans - c
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5. Depreciation for 4th year = ......
a. Rs. 20,000
b. Rs. 16,000
c. Rs. 12,800
d. Rs. 10,240
Ans - d
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