Question
Electronics ltd furnish the following information for 10000 L.V. Valves manufactured during the year 1985: Materials Rs:90,000; Direct wages Rs:60,000; power and consumable stores Rs
Electronics ltd furnish the following information for 10000 L.V. Valves manufactured during the year 1985:
Materials Rs:90,000; Direct wages Rs:60,000; power and consumable stores Rs 12,000; Factory indirect wages Rs.15,000; Lighting of factory Rs.5,500; Defective work (cost of rectification) Rs.3000 (normal); Clericla salaries and management expenses Rs.33,500; Selling Expenses Rs.5,500; Sale proceeds of scrap Rs.2,000 and plant repairs and maintenance and Depreciation Rs.11,500. The net selling price was Rs.31.60 per unit sold , all units were sold. As from 1st January,1986 the selling price was reduced to Rs.31.60 per unit . It was estimated that production could be increased in 1986 by 50% due to spare capacity. Rates of materials and direct wages will increase by 10%. You are required to prepare:-
a) Cost sheet for the year 1985 showing various elements of cost per unit and b) estimated cost and profit for 1986.
Assuming that 15,000 units will be produced and sold during the year and factory overheads will be recovered as percentage of Direct Wages and Office and selling expenses as a percentage of works cost.
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