Proprietor $($Owner$)$ of ABC Industries has limited knowledge of Cost & Managerial Accounting who prepared Income Statement for his business for the year ended on December $31,2016$ that is given as under:

$($Rs$.)($Rs$.)$

Sales $675000$

Less: Expenses

Direct Labour $137500$

Indirect Labour $18000$

Selling & Administrative Salaries $48000$

Raw materials purchased $248500$

Electricity bill $22500$

Insurance expired $6000$

Depreciation of factory equipments $33000$

Depreciation of sales equipments $4500$

Rent of Premises $75000$

Advertising $81500674500$

Net Profit $500$

The Owner has some doubts about the accuracy of the above statement and has requested you $($as Professional Accountant$)$ to check over the statement and make necessary corrections based upon following additional information.

$($i$)80\%$ of the electricity bill, $75\%$ of insurance expired and $70\%$ of Rent of Premises associated to Factory operations and the remaining amounts are applicable to Selling and Administrative activities.

$($ii$)$ Beginning Inventory $($January $1,2016)$ and Ending Inventory $($December $31,2016)$ in Rs$.$ were:

Finished Goods $5000060000$

Work in Progress $4250030000$

Raw Material $750018000$

$($iii$)$ Factory overhead is applied @ Rs$.5$ per machine hour. The total machine hours are $26400$ during the year. Factory overhead variance is charged to cost of goods sold, finished goods and work in process ending inventories.

Required:

$($a$)$ Prepare cost of goods manufactured and cost of goods sold statement indicating cost of goods sold at normal and at actual.

$($b$)$ Prepare revised income statement

$($c$)$ Explain the reason for difference between net profit as per Owner$$s Income statement and revised statement $($prepared by you$).$