Max Marks – 30
Max Time – 00 Hr 50 Mins
ACCOUTING STANDARD – 2
1. The inventory of Rich Ltd. as on 31st March, 2020 comprises of Product – A: 200 units and Product –
B: 800 units.
Details of cost for these products are:
Product – A: Material cost, Wages cost and Overhead cost of each unit are Rs.40, Rs.30 and Rs.20
respectively, Each unit is sold at Rs.110, selling expenses amounts to 10% of selling costs.
Product – B: Material cost wages cost of each unit are Rs.45 and Rs.35 respectively and normal selling
rate is Rs.150 each, however due to defect in the manufacturing process 800 units of Product – B were
expected to be sold at Rs.70.
You are requested to value closing inventory according to AS 2 after considering the above.
(5 Marks)
2.
Particulars Kg. Rs.
Opening Inventory: Finished Goods 1,000 25,000
Raw Materials 1,100 11,000
Purchases 10,000 1,00,000
Labour 76,500
Overheads (Fixed) 75,000
Sales 10,000 280,000
Closing Inventory: 900
Raw Materials
Finished Goods 1200
The expected production for the year was 15,000 kg of the finished product. Due to fall in market
demand the sales price for the finished goods was Rs.20 per kg and the replacement cost for the raw
material was Rs.9.50 per kg on the closing day. You are required to calculate the closing inventory as on
that date. (5 Marks)
3. Capital Cables LTD., has a normal wastage of 4% in the production process. During the year 20X1-
20X2 the company used 12,000 MT of raw material costing Rs.150 per MT. At the end of the year 630
MT of wastage was in stock. The accountant wants to know how this wastage is to be treated in the
books. Explain in the context of AS 2 (Revised) the treatment of normal loss and abnormal loss and
also find out the amount of abnormal loss, if any. (5 Marks)
