QUESTION;

M/s. ABC and Co. presented the following data on 1^st January 2010: -

Material A 20,000 units @ 5 Rs. Per unit,

Material B 30,000 units @ 6.5 Rs. Per unit

Work in Process 50,000 Rs.

Finished Goods 67,000 Rs.

During the period company purchased 1,200,000 units of Material A and 160,000 units of material B. The prices were 10% more than the last year prices for both of the materials. Material produces 2 units of finished goods and each unit of finished goods requires 2 hours of labor and 1.5 hours of machine. Labor is paid @ 6 Rs. Per hour and FOH is applied @ 5 Rs. Per machine hour. At the end of the period 8000 units of Material A were in hand. 10000 units of Material B were also in hand. It is the companys strategy to maintain the opening and closing inventories of WIP and FG same. In the last year the company constructed its price by taking 40% margin which the company is planning to increase 10% more by this time. Marketing and administrative expenses are 5% of margin.

Required: - Construct an income statement for the period.

Messers A BC & CO has recently received an order to prepare 120000 units of their regular product which needs two types of material that is material A and Material B. To produce one unit of finished good 2.5 units of material A are required and 2 units of B are required. Each unit of material A is available for 50 Rs. Per unit and B is available for 80 Rs. Per unit. 15% of their purchase price is required for transportation. Two types of labor is also applied. Labour A uses 2 hours for one unit and labour 2 uses 4 hours for one unit. All types of labors are paid @ 75 Rs. Per hour and FOH is applied @ 60Rs. Per hour.

Required: - If company applies 30% margin what price do you suggest for these units?