vu bt301 Mid Term Subjective Solved Past Paper No.1

vu bt301 Introduction to Biotechnology Solved Past Papers

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Question 1: The higher rate of labor turnover results in increased cost of production. Discuss the Effect of Labor Turnover.

Answer:

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Question 2: The Mars Company applies factory overheads to production by means of pre-determined rate based on expected actual capacity. Factory overhead at expected actual capacity of 120,000 hours is Rs. 240,000 of which Rs. 60,000 is fixed and Rs.180,000 is variable. Normal capacity of the company is 150,000 hours. The actual capacity attained during the year was 100,000 hours and actual factory overhead was Rs. 180,000.
Calculate: Pre-determined overhead rate based on expected actual capacity and normal capacity.
O

ver-applied or under-applied factory overhead based on rate used by the company.
Budget variance and volume variance

Answer:

Pre-determined overhead rate based on expected actual capacity
Fixed FOH rate = fixed FOH cost/ expected actual capacity = 60000/120000 = 0.50
Add variable FOH rate = Variable FOH cost for expected actual capacity/ expected actual capacity = 180000/120000 = + 1.50
FOH applied rate based on expected actual capacity 2.00
Pre-determined overhead rate based on normal capacity
Fixed FOH rate = fixed FOH cost/ normal capacity =60000/150000 = 0.40
Add variable FOH rate = +1.50
Pre-determined overhead rate based on normal capacity = 1.90

Question 3: Transferred out 22,000 units and units lost at beginning of production 500. Units in process at end of period 2,500 units which were complete as to materials, 1/2 complete as to labor and factory overhead
Required: Compute Equivalent Production of Material, Labour and FOH

Answer:

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Question 4: Units transferred out to next department 20,000 units. Units lost at beginning of production 500 units. Units in process 2,500 units which were complete as to materials, 1/2 complete as to labor and factory overhead.
Required: Prepare the Quantity Schedule

Answer:

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Question 5:

Units transferred to next department	40,000
Units still in process (all material, 2/3 labour & FO H)	8,000
Abnormal loss (1/2 complete as to material, Labour and FOH)	1,000

Following costs were added during the process.

Materials	Rs.40,500
Labour	101,700
Factory overhead	50,500

Required:
You are required to calculate equivalent units of material, labour and factory overhead and unit cost of material, labour and factory overhead.

Answer:

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Question 6: What is the justification of spreading the cost of lost units over the remaining goods units?

Answer:

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Question 7: What is the purpose to maintain Job Time Sheets for worker in manufacturing concern?

Answer:

Purposes of Maintaining job time sheets for workers are given below:

This is important because for the preparation of payrolls, when the workers are paid on time basis.
For the purpose of overhead rates if based on labor hours.
For the purpose of statutory requirements.
To differentiate between direct and indirect costs.
For normal time, overtime and regular and late comers.
For increments, pension, provident fund , gratuity and other benefits.
Discipline and regularity and ensure daily requirement of labor force in the factory.

Question 8: Write a short note on Equivalent Production.

Answer:

Equivalent Production is a very important part of cost of production report. We prepare it in process costing system. It is the number of partially completed units considered to be equivalent to a greater number of fully completed units. This is used to calculate per unit cost.

Question 9: A financial instrument is a real or virtual document representing a legal agreement involving some sort of monetary value." Discuss further on financial instruments by giving examples. Point out some of its uses and important characteristics.

Answer:

Financial Instrument

Financial instrument is a written obligation of one party to transfer something of value to anther party at a future date under certain conditions.

By written obligation we mean that it is enforced by the government and this obligation is an important feature of a financial instrument.

The party here can be an individual, company or a government

Future date can be specified or when some event occurs.

Examples: Stocks, bonds, insurance etc are examples of financial instruments.

Characteristics of Financial Instruments: There are certain characteristics of financial instruments.

Standardization:

It is a standardized agreement which enables reduction in costs of complexity. So because of this most financial instruments today are similar.

Communicate Information:

Provide certain important information about the issuer which otherwise would have been difficult to gather for the lenders.

Value of Financial Instruments: The value of financial instruments depends on various factors.

Size: Larger the promised payment more valuable is the financial instrument.

Timing: The sooner the payment is made increases the value of financial instrument.

Risk: A financial instrument is more valuable if there are greater possibilities that payment will be made.

Circumstances: Payments made when needed the most makes the financial instrument more valuable.

Uses of Financial Instruments:

Store Of Value:

Stocks: The stock holder is a part owner of the firm and receives part of its profits.

Bonds: A form of loan which promises to make repayment in future dates. Bank loans: Borrowers obtains resources from lenders in exchange of promised payments.