MGT402 Idea Solution

Question No.

1

Direct Labor cost =290,000

Applied FOH 30% of the Direct Labor Cost

=290000x30/100

Applied FOH=87000

W-1as

Actual FOH =89760

Under Applied FOH =2760.

W-3

Adjustment to Entire Production =131.02

WIP =97.11

Finished Goods =2531.87

Cost of Goods Sold =2760

Working-1

Actual FOH =

?

Indirect Labor =46,000.00

Light & Power =4,260.00

Deprecation =4700.00

Machinery Repairs =5800.00

MISC. FOH =29,000.00

Total Actual FOH =

89760

Working -2

Cost of Goods Sold

Material Used =440,000.00

Direct Labor =290,000.00

Prime Cost =730,000.00

Indirect labor =46,000.00

Light & Power = 460.00

Depreciation =4700.00

Machinery Repairs =5,800.00

MISC. FOH =29,000.00

Total Factory Cost =819,760.00

WIP Opening =41200.00

WIP CLOSINF =42500.00

Cost of Goods manufactured =818,460.00

Finished Goods opening Balance =34,300.00

Finished Goods Closing Balance =31,500.00

Cost of Goods Sold =821,260.00

Working -3

WIP =42,500/895260x2760=131.02

Finished Goods=31,500/895260x2760=97.11

Cost of Goods Sold =821260/895260x2760=2531.87

Question No2

EOQ= SQR 2xRUxOC/ X CC%

EOQ=SQR 2x120, 000X 1,500.00 / 60X.06

EOQ=SQR 360,000,000 /3.60

EOQ=SQR 100,000,000

EOQ=10000 Units

There will be no Effect on EOQ if we reduced ordering cost & Carrying cost by 2%