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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

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.

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