j1 EXAMPLE 11.2 The Hypothetical Ltd. is making a study of the relative profitability of two products-A and B. In addition to direct costs, indirect selling and distribution costs to be allocated between the two products are as under: Insurance charge for Inventory (finished) 78,000 Storage costs 1.40.000 Packing and forwarding charges 7.20.000 Salesman salaries 8,50,000 Invoicing costs 4,50.000 Other details are: Product A Product B Selling price per unit 5500 71.000 Cost per unit (exclusive of indirect selling and distribution cost) Annuals sales (in units) 8.000 Average inventory (in units) Number of invoices 2,500 2,000 One unit of product A requires a storage space twice as much as product B. The cost to pack and forward is the same for both the products. The salesmen are paid salary plus commission & 5 per cent on sales and equal amount of efforts are put forth on the sales of each of the products. REQUIRED: (1) Set up a schedule sharing the apportionment of the indirect selling and distribu- tion costs between the two products, (ii) Prepare a statement sharing the relative profitability of two products. 600 300 10.000 1.000 BOO