NAME AND REG. NO.

FARHAN ZAHID
L1F11BBAM2465
SEC: K.
ASSIGNMENT: ACCOUNTING
II.
SUBMITTED TO:
PROF.

MURTAZA JAHANGIR
BHATTI.
ASSIGNMENT
ACCOUNTING II
Q.1. WHAT PRODUCT ARE WE SELLING?
A: CLOTHES (SHALWAR , KAMEEZ ).
Q.2. WHAT IS THE PRODUCT COST AND HOW ARE WE
CALCULATING IT?
A:

PRODUCT COST:

ANYTHING WHICH CAN BE USED TO

PRODUCE DIFFERENT FABRIC IS CALLED PRODUCT COST.

EXAMPLE :
DIRECT MATERIAL, DIRECT LABOUR,
MANUFACTURING OVERHEADS, ETC.

CALCULATING FORMULA :
PRODUCT COST = DIRECT MATERIAL+DIRECT
LABOUR+MANUFACTURING OVERHEADS.

Q.3. LIST DOWN SOME OF THE COSTS THAT ARE FIXED

AND VARIABLE? DISCUSS THEIR BEHAVIOUR WITH THE
CHANGE IN ACTIVITY LEVEL?
A:

COST WHICH ARE VARIABLE:

ELECTRICITY, FABRIC, THREADS, LABOUR, FUEL, ETC.

BEHAVIOUR OF VARIABLE COST :

IN THE CASE OF LEVEL OF ACTIVITY

TOTAL VARIABLE COST AND LEVEL OF

ACTIVITY ARE DIRECTLY PROPORTIONAL
TOTAL VARIABLE COST PER UNIT REMAIN

UNCHANGED

COST WHICH ARE FIXED :

RENT, ADVERTISING,RESEARCH,MAINTANACE, ETC.

BEHAVIOUR OF FIXED COST :

IN THE CASE OF LEVEL OF ACTIVITY
FIXED COST PER UNIT DECREASES AS THE LEVEL OF
LEVEL OF ACTIVITY INCREASES

TOTAL FIXED COST REMAIN UNCHANGED

YOU WANT TO INVEST IN A FURTHER PROJECT.

HOW WOULD YOU USE THE FOLLOWING:

DIFFERENTIAL COST :
EXCEPT CLOTHES (SHALWAR, KAMEEZ) WE
PRODUCED SHOES IS THE DIFFERENT WEAR THAT WE
CAN MADE THE PROFIT BETTER.

OPPORTUNITY COST :
IF WE HAVE MORE PROFIT THAN CLOTHES
(SHALWAR, KAMEEZ) THAN WE CAN ADOPT AND
PRODUCE SHOES AND PRODUCE MORE SHOES TO GAIN
MORE PROFIT.

SUNK COST :
WE CAN PURCHASE THE LAND, MADE A FRNCHISE,
INTERRIOR DESIN IN THE FRANCHISE, MAINTAINANCE OF
A FRANCHISE AND ALSO THE DESIGN OF THE FACTORY.