SMT Ltd Cost Accounting Assignment Solution

This assignment provides a detailed solution to the costing and pricing problems of SMT Ltd. It includes the computation of closing stock, inventory valuation using FIFO method, calculation of fixed and variable costs for YOYO product, and determination of selling price per unit with a 10% profit margin. The solution also involves assessing overhead cost per unit and calculating sales revenue at 2000 units.

Cost Accounting

TABLE OF CONTENTS
1...................................................................................................................................................3
2...................................................................................................................................................3
3...................................................................................................................................................4

1.
Computation of closing stock
Particulars Figures
Units available for sale 650 + 450 + 200
= 1300
Units sold 500 + 300 + 400
= 1200
Units in ending inventory 1300 – 1200 = 100 units
Value of Closing stock (in £) 100 * 6 = £600
Inventory valyation as per FIFO method for SMT Ltd regarding tango product
Date Purchase Sales Balances
(month
of July)
Units Unit
cost
Total Units Unit cost Total Units Unit
cost
Total
Openin
g
balance
650 5 3250 650 5 3250
5 500 5 2500 150 5 750
8 450 5.5 2475 600 5 and
5.5
3225
12 300 150@5 &
remaining
150 @
5.5
1575 300 5.5 1650
15 200 6 1200 500 5.5 &
6
2850
30 400 300 @
5.5 and
100 @ 6
2250 100 6 600
2.
Calculation of fixed and variable csot for YOYO product offered by SMT ltd
Highest ouput = 500 in the month of October

Lowest output = 100 in the month of September
Computation of variable cost per unit:
(40000 – 10000) / (500 – 100)
= £75 per unit
Assessing fixed cost
£40000 – (75 * 500)
= £2500
As per the assessed evaluation, variable cost per unit implies for £75 significantly.
Further, fixed cost associated with Yoyo product is £2500 respectively. Busioness unit is advised
to employ high-low method which in turn helps it in assesseing fixed and variable expenses from
total cost.
3.
Calculating total cost for product Yoyo
Particulars Figures (in £)
Direct material cost per unit 5
Direct labour cost per unit 7
Other direct cost per unit 3
Overhead cost per unit (refer workin note 1) 7.5
Total cost per unit 22.5
Profit margin 10%
Selling price per unit 22.5 + (22.5 * 10%)
= £24.75
Sales revenue @ 2000 units £49500
Working note 1:
Particulars Figures