From the following details of Small Tools Ltd, compute the profit in financial accounts as well as in cost accounts and reconcile profit between cost and financial accounts showing clearly the reasons for the variation of the two profit figures:

Rs Rs Sales 20,000 Bad debts 100 Purchase of materials 3,000 Interest on overdraft 50 Closing stock of materials 500 Profit on sale of assets 1,000 Direct wages 1,000 Selling expenses 2,000 Indirect wages 500 Distribution expenses 1,000 Indirect expenses 2,000 In cost accounts:

Manufacturing overheads recovered at 300% on direct wages.

Selling overheads recovered Rs 1,500 Distribution overheads recovered Rs 700.