MGT402 Cost & Management Accounting Assignment 1 Solution Spring 2013

Lahore Manufacturing Ltd. (LML) – a famous furniture manufacture in Lahore is enjoying an
established reputation in style, well-designed and fine quality home furniture. Mr. Khan – owner of the company is behind this success.

For the financial year 2011-12, the company’s accountant has gathered following information to
prepare financial statements:
a) Sales during the year were Rs. 590,000 (450 units);
b) Total labor hours used during the year were reported at 30,000;
c) For charging overhead, the company has estimated FOH at the rate of Rs. 7 per labor hour. The
company has the policy to charge FOH variance to the cost of goods sold.
d) Cost incurred during the year are:

e) 75% of the electricity bill and 40% of repair and maintenance is relating to factory.
f) Inventories at 1st July, 2011:
Finished goods Rs. 22,000
Work in process Rs. 35,000
Raw Material Rs. 10,000
g) Inventories at 30th June, 2012:
Finished goods ?
Work in process Rs. 33,000
Raw Material Rs. 8,000
Note: Finished goods inventory at July 1st 2011 was of 25 units and at June 30th, 2012 was of 32 units.
1. Cost of Goods Sold Statement for the year ended June 30, 2012; (10 Marks)
2. Income statement for the year ended June 30, 2012; & (15 Marks)
3. Factory overhead schedule with disposition the variance. (5 Marks)


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