Questions 4 A furniture manufacturer purchased 10,000 cft. of timber logs on 1st October, 1978 @ Rs. 10 per cft. and stored them in his timber yard for six months for seasoning. In the timber yard the following items of expenses were incurred during the period of seasoning : (i) Rent of the yard (2,000 sq. ft.) Rs. 250 per month. (ii) Salaries of 5 watchmen and Khalasis @ Rs. 100 per month each. (iii) Incidental expenses for maintenance, lighting etc. @ Rs. 150 per month. (iv) Annual share of general overhead expenses of the business Rs. 2,000. (v) Insurance charges for the logs to be seasoned @ 1% on the value of unseasoned logs for the period of seasoning- 50% of floor area of the yard has been set apart for seasoning timber and the remaining floor area is occupied by the shops making furniture. Loss in volume of logs due to seasoning 10% Calculate the price to be charged on issue of the seasoned logs por cft. to the nearest rupee. Solution Quantity Amount (cft.) Rs. 10,000 Cost of timber Rent (i share) Salaries of watchmen etc. (1 shares) Incidental expenses (t shares) Overhead expenses (shares) Insurance Loss in volume (10%) ::::::: 1,00,000 750 1,500 450 500 1,000 1,000 9,000 Total cost 1,04,200 =Rs. 11.57 ::. Cost per cft. 1,04,200 9,000 or (say) Rs. 12 per cft