Page 87 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Cost and Management Accounting

Notes You are furnished with the following information:

(a) Cost of Machine No. 5, ` 1,000.
(b) Estimated Scrap Value at finish of working life (10 years) ` 100

(c) Normal running hours per annum, 1,800.

(d) Machine No. 5 occupies one-fifth of the floor space of the department, the rent, rates,
lighting, etc. of which amount to ` 350 per annum.
(e) Charges for Electric Power supplied to Machine No. 5, ` 200 per annum.
(f) Charges for oil, waste, etc. supplied to Machine No. 5, ` 30 per annum.
(g) Repairs and Maintenance throughout working life of machine estimated at ` 360.
(h) Cost of supervision and other expenses applicable to Machine No. 5 estimated at
` 150 per annum.
(i) Labour cost of operating the machine is to be ignored in making your calculations.
6. From the following information’s, compute the Machine-hour Rate:
Cost of Machine ` 60,000

Expected Scrap Value ` 10,000
Working Life 10,000 hours
Working Hours in the month of March, 2007 200 hours
Repairs for the Whole Life of Machines ` 12,500

Standing Charges on Machines for the month of March, 2007 ` 500
Power used by Machine: 10 units p.h. @ 20 paise p.h.
7. The following information relates to the activities of a production department of factory for
a certain period:
`
Materials used 36,000
Direct wages 30,000
Labour hours worked 24,000
Hours of machine operation 20,000

Overhead chargeable to the dept. 25,000
On one order carried out in the department during the period the relevant data was:
Material used ` 2,000 Labour hours 1,650
Direct wages ` 1,650 Machine hours 1,200

Calculate by three different methods the overhead chargeable to the job.
8. In a factory, the average annual charges for direct wages amount to ` 2,40,000. The following

are some of the expenses (average figure for a year) incurred inside the factory:
(a) Works Manager’s salary and other emoluments ` 25,000.
(b) Factory rent and rates ` 18,000. The total area of the factory is 45,000 sq.ft. of which
the shops occupy 40,000 sq.ft.

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