M/s Modern Comany Ltd furnishes the following summary of trading and profit and loss account for the current year ending March 31.
- TO Raw material 140000 By sales(12000units)510000
- to direct wages 72000 By finished stock(200units) 6000
- to production overheads 45000 By work in process
- to selling and distribution overheads 43500 material 26800
- to administration overheads 41010 wages 11786
- to Preliminary Expenses w/off 3250 production overheads8000 46586
- to goodwill w/off 2541 by interest on securities(gross) 5000
- To divident9net) 4000
- To income tax 5870
- To net profit 210415
- 567586 567586
The company manufactures a standard unit.the scrutiny of cost records for the same period shows that-
1.factory overheads have been allocated to production at 20 percent on prime cost
2.Administration overheads have been charged at Rs.3 percent on units produced
3.Selling and distribution expenses have been charged at Rs.4 per unit on unit sold
You are required to prepare a statement of cost, to work out profit as per cost accounts and to reconcile the same with that shown in the financial accounts.