PROBLEM 12 The Absorption Costing Income Statement of a company is as follows: Normal Capacity in units 25,000 Sales in units 28,000 Production in units 27,000 Rs. Rs. Sales Revenue @ Rs. 50 per unit 14,00,000 Less : Manufacturing Cost of Goods Sold : Direct Material @ Rs. 5 each 1,35,000 Direct Labour @ Rs. 10 each 2,70,000 Variable Overhead @ Rs. 5 each 1,35,000 Fixed Manufacturing Cost at the Rate of Rs. 8 each 2,16,000 Total Manufacturing Cost 7,56,000 Add : Opening Stock : 3,000 units @ Rs. 28 each 84,000 8,40,000 Less : Closing Stock : 2,000 units @ Rs. 28 each 56,000 Cost of Goods Sold 7,84,000 Gross Profit before Adjustment 6,16,000 Add : Fixed Cost over Absorbed 16,000 Gross Profit after Adjustment 6,32,000 Less : Non-manufacturing Overhead : Fixed Office and Administrative 1,50,000 Variable Selling Overhead 56,000 Fixed Selling Overhead 92,000 Total Non-manufacturing Cost 2,98,000 Net Income 3,34,000 Additional Information: The fixed manufacturing and office overhead includes depreciation of Rs. 74,000. Required: (i) Break-even sales Rupees for the period. (ii) Sales volume in Rs. to earn a profit of Rs. 4,00,000. (iii) Cash break-even sales in Rupees. [Ans: (i) Rs. 3,42,000 (ii) Rs. 7,89,285.71 (iii) Rs. 15,03,571.43 (iv) Rs. 6,57,142.86]