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In this packet, if you find anything missing out of the above mentioned material, please
contact at the address given below:
Mahmood-ul-Hasan
Course Coordinator
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Business Administration)
WARNING
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING
THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD
OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM
OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN
“AIOU PLAGIARISM POLICY”.
Course: Cost and Management Accounting (568) Semester: Autumn 2010
Level: MBA Marks: 100
ASSIGNMENT No. 1
(Unit: 1–4)
Note: All questions carry equal marks.
Q. 1 In an accounting conference, discussion turned to the possibility of preparing
financial statements from few accounts together with financial ratios. The
Assistant Controller provided the following data:
Item Rs.
Net Income 1,200,000
Rate of return (Income) on Sales 10%
Gross Profit rate on Net Sale 40%
Rate of Marketing expenses to Sales 15%
Total Liabilities 2,000,000
5% Bond payable represents 37.5% of the total liabilities –
Required: An Income Statement based on the above information.
Q. 2 Waris Company uses process costing. All materials are added at the beginning of
the process. The product is inspected when it is 80% converted, and spoilage is
identified only at the point. Normal spoilage is expected to be 5% of good output.
During March 10,500 units were put into process. Current costs were
Rs.52,500 for materials, Rs.39,770 for labor, and Rs.31,525 for factory overhead.
The 3,000 units still in process at the end of March were estimated to be 90%
complete. A total of 7,000 units were transferred to finished goods.
Required: prepare a cost of production report for March.
Q. 3 (a) A club purchases 6,000 dozens of tennis balls next year, policy manual of the
club prescribes to impute 10% interest on average inventory investment.
Other costs associated with storage amount to Rs.21.60 per dozen. The cost
involved in handling each purchase order is Rs.300, price quoted by the
supplier is Rs.360 per dozen.
Required:
i. EOQ
ii. Secretary of the club propose to buy 2,000 dozens tennis balls in each order.
Show how much the club can save by buying in economic order quantity.
2
(b) Mustafa uses EOQ model to help in the planning and control of its inventory.
One of the best items jeans is sold to public for Rs.600 per piece (at a markup
of 400% of cost). Mustafa expects to buy and sell 1,200 pieces of this item
during the year 2000. The relevant costs are:
Ordering Cost = Rs.27 per order
Carrying Cost = 15%
Required: Determine the EOQ and calculate the total ordering cost and
carrying cost at this level.
Q. 4 The following information is available.
Normal working day: 8 days
Guaranteed rate of pay (on time basis) Rs.5.5 per hour
Standard time allowed to produce 1 unit 3 minutes
Piecework price Rs.0.1 per standard
minutes
Premium bonus 75% of time saved in
addition to hourly pay
Required: For the following levels of out puts produce in a day:
∅ 80 units
∅ 120 units
∅ 210 units
Calculate the earnings based on:
i. Piece work, where earnings are guaranteed at 80% of time based pay
ii. Premium bonus system
Q. 5 The XYZ company factory overhead rate is Rs.2.00 per hour. Budgeted overhead
for 3000 hours per month is Rs.8,000 and for 7000 hours is Rs.12,000. Actual
overhead for the month is Rs.9,000 and actual volume is 5000 hours.
You are required to calculate the following from the data given above:
1. Variable rate
2. Fixed overhead
3. Normal volume
4. Applied FOH
5. Over or under applied FOH
6. Capacity variance
7. Spending variance
3
To answer a question effectively, address the question directly, bring important related
issues into the discussion, refer to sources, and indicate how principles from the course
materials apply. You must also be able to identify important problems and implications
arising from the answer.
For citing references, writing bibliographies, and formatting the assignment, APA format
should be followed.
ASSIGNMENT No. 2
(Unit: 1–9) Total Marks: 100
ISSUES:
1. Process Costing Application in a manufacturing concern keeping in view the
treatment of lost units (Normal or abnormal).
2. Study an organization and discuss various issues related to Quantitative Tools of
Inventory Management.
3. Select a manufacturing organization and discuss its cost accounting cycle and issues
related thereto.
4. Appointment of Overheads is a common practice in manufacturing concern. Discuss
with reference to any specific organization.
5. Application of budgeting techniques in a manufacturing organization.
6. Draft a cost accounting information system of any manufacturing organization
7. Application of standard costing in a manufacturing concern keeping in view the
various variances.
8. Select any organization (preferably manufacturing0 and study its incentive wage plans.
9. Prepare a report on the uses of break even analysis in a specific manufacturing concerns.
0. Analysis and application of various cost concepts for decision making.
The report should follow the following format:
1.Title page
2.Acknowledgements
3. An abstract (one page summary of the paper)
4.Table of contents
5.Introduction to the issue (brief history & significance of issue assigned)
6.Practical study of the organization (with respect to the issue)
7.Data collection methods
8. SWOT analysis (strengths, weaknesses, opportunities & threats) relevant to the
issue assigned
9.Conclusion (one page brief covering important aspects of your report)
10. Recommendations (specific recommendations relevant to issue assigned)
11. References (as per APA format)
12. Annexes (if any)
4
GUIDELINES FOR ASSIGNMENT No. 2:
1.5 line spacing
Use headers and subheads throughout all sections
Organization of ideas
Writing skills (spelling, grammar, punctuation)
Professionalism (readability and general appearance)
Do more than repeat the text
Express a point of view and defend it.
WORKSHOPS:
The workshop presentations provide you opportunity to express your communication
skills, knowledge & understanding of concepts learned during practical study assigned in
assignment # 2.
You should use transparencies and any other material for effective presentation. The
transparencies are not the presentation, but only a tool; the presentation is the
combination of the transparencies and your speech. Workshop presentation
transparencies should only be in typed format.
The transparencies should follow the following format:
1) Title page
2) An abstract (one page summary of the paper)
3) Introduction to the issue (brief history & significance of issue assigned)
4) Practical study of the organization (with respect to the issue)
5) Data collection methods
6) SWOT analysis (strengths, weaknesses, opportunities & threats) relevant to the
issue assigned
7) Conclusion (one page brief covering important aspects of your report)
8) Recommendations (specific recommendations relevant to issue assigned)
Theory: 60%
Applicability (practical study of the organization): 40%
5
COST AND MANAGEMENT ACCOUNTING
Course Outline (MBA-568)
Unit-1 The Conceptual Framework
1.1. The Concept of Cost Management
1.2. The Organizational Chart, Planning and control
1.3. The Scope of Cost Accounting
1.4. Distinction between Cost & Mgt Accounting with Financial Accounting
1.5. Uses of Cost Accounting Data
1.6. The Flow of costs
1.7. Cost Accounting Principles and Practices
Unit-2 The Cost Accounting Systems
2.1. The Basics of Cost Accounting Information System
2.2. The Manufacturing Cost Accounting Cycle
2.3. Cost of goods manufactured statement
2.4. Job Order Cost Accumulation Procedures
2.5. Process Costing
2.6. The Cost of Production Report
2.7. Difficulties Encountered in Process Costing
Unit-3 Material and Labor Costing
3.1 Material Procurement and Use
3.2 Material Costing Methods
3.3 Economic Order Quantity
3.4 Material Controls
3.5 Basics of Labor Cost Control
3.6 Labor Performance Reports
3.7 Recording Labor Costs
3.8 Incentive wage plans
6
Unit-6 Budgeting
6.1. The Basic Framework of Budgeting
6.2. Difference between Planning and Control
6.3. Definition, Advantages of Budgets
6.4. Principles of Budgeting
6.5. The Budget Committee
6.6. The Master Budget – A Network of Inter-relationship
6.7. Sales, Production and Cash Budgets
6.8. Zero-based Budgeting
6.9. Projected Financial Statements
6.10. The concept of Flexible Budget – Different Dimensions
Recommended Books
Title Author Publisher
1. Cost Accounting – Matz – Usury National Book Foundation,
Planning and Control (Latest Edition) Islamabad.
2. Managerial Accounting Ray H. Garrison Irvine, USA.
(5th Edition)
3 Cost Management Hansen & Mowen
Accounting and Control
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