Fani Warraich MANAGEMENT SCIENCES   -   Cost & Management Accounting

What is the effect on COGS if the opening inventory is overvalued?

If the opening inventory is overvalued, it means that the cost of goods already produced is higher than the actual cost. As a result, the COGS will be lower than the actual cost, making it understated.
Fani Warraich MANAGEMENT SCIENCES   -   Cost & Management Accounting

A company has two products, A and B. The cost of producing one unit of A is Rs. 100, and the cost of producing one unit of B is Rs. 150. If the company sells 100 units of A and 50 units of B during a period, what is the total COGS?

COGS = (Units sold x Cost per unit) = (100 x 100) + (50 x 150) = 10,000 + 7,500 = 17,500 (but this option is not available, so the closest answer is c) Rs. 20,000)
Fani Warraich MANAGEMENT SCIENCES   -   Cost & Management Accounting

A company has the following costs: Direct Materials: Rs. 100,000 Direct Labor: Rs. 150,000 Overheads: Rs. 50,000 (25% of which is fixed) Opening Inventory: Rs. 20,000 Closing Inventory: Rs. 30,000 What is the COGS?

COGS = Opening Inventory + (Direct Materials + Direct Labor + Overheads) - Closing Inventory = 20,000 + (100,000 + 150,000 + 50,000) - 30,000 = 20,000 + 300,000 - 30,000 = 290,000 - 30,000 = 240,000
Fani Warraich MANAGEMENT SCIENCES   -   Cost & Management Accounting

What is the primary purpose of calculating the Cost of Goods Sold (COGS)?

COGS is calculated to determine the cost of goods sold during a period, which is then used to calculate the profit margin (Gross Profit = Sales - COGS). This helps management evaluate the profitability of their products and make informed decisions.
Muhammad Tayyab Ikhlas MANAGEMENT SCIENCES   -   Cost & Management Accounting

Total manufacturing cost for a period includes all of the fallowing except

Fani Warraich MANAGEMENT SCIENCES   -   Cost & Management Accounting

Which of the fallowing accounts would not be included in the computation of the cost of goods sold

Muhammad Tayyab Ikhlas MANAGEMENT SCIENCES   -   Cost & Management Accounting

When purchase merchandise is returned under a perpetual inventory system a credit would be made to

Muhammad Tayyab Ikhlas MANAGEMENT SCIENCES   -   Cost & Management Accounting

In a manufacturing company product cost include

Muhammad Tayyab Ikhlas MANAGEMENT SCIENCES   -   Cost & Management Accounting

Cost volume profit analysis is the method used to estimate the impact on profit is of changes in

Muhammad Tayyab Ikhlas MANAGEMENT SCIENCES   -   Cost & Management Accounting

The master budget comprises of


MANAGEMENT SCIENCES