Q1. Al Maha Oil Company is listed in Muscat Securities Market. The total Capital Invested in a
Question:
Q1. Al Maha Oil Company is listed in Muscat Securities Market. The total Capital Invested in a company is 25 million in which loan from Bank was 10 million. For the year 2018 company has manufactured and sold 15,000 tons of Oil. The Stock of oil in the beginning was OMR 200,000 closing OMR 115,000 and during the year purchase of oil was OMR 160,000. Amount paid to the laborer OMR 130,000. Company has spent OMR 11,500 for lubricating oil for the machinery and purchased barrels for packaging of OMR 18,300. Electricity expense of OMR 6,000 had been spent in the factory and OMR 4,000 spent in the office.
Once the oil was manufacturing all the finished products were stored in a warehouse for which company has spent OMR 18,000 for its rent. There was Opening balance of finished goods of 16,000 with 10,000 Closing Balance of Finished goods. Work in process Opening 145,000, Work in process closing 125,000. One third of the warehouse was given for rent and the rent received by the company was OMR 16,550.
Rent and Insurance for Factory OMR 50,250, for Office OMR 45,550, Total of managers’ salary amounting to 110,000, 45% belongs to Factory manager and 55% to Office manager. The amount of commission paid to sales manager was OMR 6,000, Depreciation was calculated on Straight line balance method for the printing machineries in the office and factory and the value of depreciation for the Office was OMR 5,000 and Factory was OMR 3,000.
In order to make a Sales Company has spent on samples and gifts OMR 12,200, Insurance were OMR 17,300 and Factory supervisor salary of OMR 22,000. 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 90,000. Total oil manufactured has been sold at OMR 2,000,000.
- A. You are required to prepare a Cost Sheet from the relevant information provided in Al
Maha Oil Company
- b. Al Maha Oil Company was expecting to earn a profit of 10% on sales. 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.
