Al Nabhan Oil Company is listed in Muscat Securities Market. The total Capital Invested in a company is 30 million in which loan from Bank was 8 million. For the year 2019 company has manufactured and Sold 20,000 tons of Oil. The Stock of oil, in the beginning, was OMR 350,000, closing OMR 100,000 and during the year purchase of oil was OMR 200,000 for which transportation in paid OMR 4,500. Amount paid to the laborer OMR 140,000. The company has spent OMR 15,500 for Lubricating oil for the machinery and Packing Material of OMR 8,000. Water expense of OMR 9,000 had been spent in the office.

Rent and Insurance for Factory OMR 45,500, for Office OMR 35,500, Total of Managers salary amounting to 100,000 which belongs to 25% for Factory manager and 75% to Office manager and the amount of commission paid to factory manager was OMR 3,000, Depreciation was calculated on Straight line balance method for plant of the office and factory and the value of depreciation for the Office was OMR 12,000 and Factory was OMR 11,000.

Once the oil was manufactured all the finished products were stored in a warehouse for which the company has spent OMR 25,000 for its rent. There was an Opening balance of finished goods of 25,000 with no Closing Balance of Finished goods. Work in process Opening 120,000, Work in the process closing 95,000. One-fourth of the warehouse was given for rent and the rent received by the company was OMR 15,467.

Total oil manufactured has been sold at OMR 2,000,000 and in order to make a Sales Company has spent on samples and gifts OMR 16,500, Insurance were OMR 18,250 and Sales Managers Salary of OMR 33,000. Transportation expenses of OMR 75,000 for transporting the oil to different markets. In the Year end Company has paid Interest on the Bank Loan of OMR 90,200

a. You are required to prepare a Cost Sheet from the relevant information provided in Al Nabhan Oil Company.

b. Al Nabhan Oil Company was expecting to earn a profit of 20% on Total Cost. You are required to identify from the cost sheet whether the company has earned the profit as per their expectations or not. If not find out the difference in profit which the company has earned and the company has expected.

Answer rating: 100% (QA)

1 Rent received on Warehouse will not form part of cost sheet as it only forms part of profit an... View the full answer