The cost of the sale of product ‘X’ is made up as follows:

Rs.

Materials used in manufacturing 10,200 Materials used in packing materials 2,500 Materials used in selling the product 350 Materials used in factory 75 Labour required in producing 125 Salary paid to works manager and other principal officers of the factory 450 Expenses: indirect-office 250 Expenses: direct-factory 1,000 Bad debts 300 Packing expenses 150 Lighting and heating charges of the factory 200 Expenses: indirect-factory 125 Assuming that all the products manufactured are sold, what should be the selling price to obtain a profit of 20% on cost price?

Illustrate in chart form for presentation to your manager, the divisions of costs of product

‘X’.

[Ans.: Price Cost Rs. 16,200; Works Cost Rs. 17,100;

Cost of sales Rs. 18,225; Sales Rs. 21,870]