per kg. Material cost= 200 Direct labour= 40 Direct variable overhead= 20 Fixed production charges for the year on normal working capacity of 2 lakh kgs is 20 lakhs. 4,000 kgs of finished goods are in stock at the year end. Calculate value of inventory per kg of finished goods.

per kg. Material cost= 200 Direct labour= 40 Direct variable overhead= 20 Fixed production charges for the year on normal working capacity of 2 lakh kgs is 20 lakhs. 4,000 kgs of finished goods are in stock at the year end. Calculate value of inventory per kg of finished goods.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

	per kg.
Material cost=	200
Direct labour=	40
Direct variable overhead=	20

Fixed production charges for the year on normal working capacity of 2 lakh kgs is 20 lakhs.

4,000 kgs of finished goods are in stock at the year end.

Calculate value of inventory per kg of finished goods.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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