03 August 2011
Q. X Ltd has an installed capacity of producing 1.25 lakhs tonnes of product per annum its present capacity utilisation is 80 %. The co. produces product in 200 kg bags. The estimated cost structure per bag is as follows-
basic raw material 90
packing material 10
direct labour 50
production overheads 25
dep. 15
administrative overheads 10
selling overheads 30
it is given that the product is in process for a period of 0.5months ( assume 50% of basic raw material are required in the beginning and the balance is needed at a uniform rate during the process. conversion cost are to be taken at 50%)
PLEASE EXPLAIN ME HOW TO CALCULATE STOCK OF WORK IN PROGRESS AND TREATMENT FOR CONVERSION COST CLEARLY, AS I DO UNDERSTAND CONVERSION COST IS RELATED TO CALCULATION OF DIRECT LABOUR AND PRODUCTION OVERHEADS.....IS THERE ANY CALCULATION OF CONVERSION COST WITH RAW MATERIAL TOO
05 August 2011
Installed Capacity(in kg) 125000000 A Utilised Capacity (in kgs) 100000000 B Bags produced p.a 500000 C B/200 Bags produced in one cycle 20833.33333 D (C/12)*.5
Per bag W.I.P Raw Material 45 937500 22.5 468750 Direct Labour 25 520833 Production Overheads 12.5 260417 TOTAL 2187500
Sorry but if u cud let me know your id i will send you the excel sheet Administrative overheads unless specifically related to production will not form part of W.I.P Selling overheads will never form part of W.I.P
CAclubindia
