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CMA Intermediate · Cost Accounting · Cost Book-Keeping

Verma Engineering maintains non-integrated cost accounts. Opening balances: Stores Rs 80,000; WIP Rs 1,10,000; Finished Goods Rs 60,000. During the period: materials purchased Rs 3,00,000; direct materials issued Rs 2,50,000; direct wages Rs 1,40,000; factory overheads absorbed Rs 70,000; cost of goods completed Rs 4,40,000; cost of goods sold Rs 4,20,000 (sales Rs 5,50,000). What are the closing balances of WIP and Finished Goods respectively?

Closing WIP is Rs 1,30,000 and closing Finished Goods is Rs 80,000. WIP equals opening 1,10,000 plus materials 2,50,000, wages 1,40,000 and overheads 70,000, less Rs 4,40,000 completed. Finished goods equal 60,000 plus 4,40,000 less 4,20,000 sold.

  1. ARs 1,30,000 and Rs 80,000Correct
  2. BRs 1,30,000 and Rs 1,00,000
  3. CRs 1,70,000 and Rs 80,000
  4. DRs 1,20,000 and Rs 80,000

Explanation

WIP: opening 1,10,000 + direct materials 2,50,000 + wages 1,40,000 + overheads absorbed 70,000 = 5,70,000; less completed 4,40,000 = 1,30,000. Finished goods: opening 60,000 + completed 4,40,000 - sold 4,20,000 = 80,000. Option C omits one of the WIP additions; option B ignores the cost of goods sold properly.

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