Datar Corporation specialises in the production of fashion outfits. On 31" March 2016, a major thunderstorm occurred in the area where the companys factory and general office was located. The inventories in the warehouse and factory were completely destroyed, as was the general office nearby. Next morning, after examining the area where the disaster happened, Vinay Malhotra, the companys controller and Veena Sethi, the cost accountant, were able to recover some small information on manufacturing cost for the current month.

Its so unfortunate, sighed Vinay and the worst part is that we may not have enough records to

enable us to file an insurance claim.

I know, Its really terrible, replied Veena. But, 1 have managed to recover some of the manufacturing cost data that I was working on yesterday evening. The data indicated that our direct labour cost in the month of March was Rs.25,00,000 and that we had purchased Rs.36,50,000 of raw materials. Also, as I can recall, the amount of raw materials used in March was Rs.35,00,000. But, I dont know if this information will be of much help, since the rest of our records are washed away.

Well, not really, said Vinay. I was working on the year-to-date income statement when the storm warning was announced. As I can recollect, our sales in March were Rs.1,24,00,000 and our gross profit ratio has been 40% of sales. Also, I recall that our cost of goods available for sale was Rs.77,00,000 for March.

Maybe we can calculate based on this information! exclaimed Veena. My experience says that our manufacturing overhead is usually 60% of direct labour.

Hey, see what 1 came across, Veena said with excitement. its a copy of Februarys balance sheet and its shows that our inventories as of February 29 are Finished Goods of Rs.3,80,000, Work in Process of Rs.2,50,000, and Raw materials of Rs.1,90,000.

Great Going, yelled Vinay. Lets put together all this information and hope something works

out.