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Example 1:

Transportation and Delivery Credit and collection Bad Debts Total: General and Admn. expenses Net Profit

8400 4100 9410 163810 41250 205060 64940

Additional Information is given below:

Sales Office Expenses : allocated in the same ratio as packing and shipping. General Administrative Expenses : ,Allocated o the basis of sales. Required : A Comparative product-wise P & L Statement. Solution: Comparative Profit and Loss Statement: Basis of Total Product Particulars Allocation Rs. A B C 1.Sales Direct 520000 120000 15000 250000 0 -2.Cost of Goods Direct 250000 55000 70000 125000
Sold = 3.GP on sales 4(a) Selling and distribution cost: Salesmens salaries Actual Salesmens Actual commission Sales Office Invoice Lines Expenses 15:25:30

270000 24500 27500 14800

65000 8000 11000 3171

80000 125000 7000 6000 5286 9500 10500 6343

Advertising Ware house Packing and Shipping Transportation and delivery Credit and Collections Bad Debts

1:1:3 Space occupied 15:25:30 Weight 55:60:85 Accounts Outstanding 15:35:50 Accounts Receivables uncollectable: 1.8:1.5:1.7

65000 4500 5600 8400 4100

13000 1500 1200 2310 615

13000 1500 2000 2520 1435

13000 1500 2400 3570 2050

9410 163810

3388 44184

2823 41564

3199 78062

Total of 4(a)

4(b) General and Admn. expenses Total of 4(a)+4(b) Net Profit: (3-4)

Sales Value: 12:15:25

41250 205060 64940

9519 11899 19832 53703 53463 97894 11297 26537 27106

Example 2: Directors of B C Industries have sought your help on costing and the type of information reporting system they should have in the following circumstances: 1. The Companys annual expenses at HO, Bhopal: Marketing expenses (including advertising) Rs. 100000 General Administration and finance expenses: Rs. 75000 Production expenses (certain technical services)Rs. 10000 Total Rs. 185000
2.

The western production centre makes two products A and D (also made at the southern production centre). The annual results are: Product A Product D Total Rs. Rs. Rs. Sales 320000 180000 500000 Standard Cost of Sales 150000 120000 270000 Production cost variances (loss) 20000 10000 30000 Production overheads (fixed) -----------------60000

3. The southern production centre makes three products B, C and D (which is also made at the western centre). The annual results are: Product B Rs. 210000 180000 10000 --------Product Product Total C Rs. D Rs. Rs. 350000 75000 635000 250000 55000 485000 15000 5000 30000 --------- --------- 100000

Sales Standard Cost of Sales Product cost variances (gain) Production overheads (fixed)

You are required to prepare a statement of operation showing profitability by product for BC Industries for they year in the form which you consider most informative for the Directors to enhance control and on the lines of which, for example, you recommend that monthly reports should be prepared.

(Rs. In thousands) Total All % Produc ts Southern Production Centre All Product Product Products B C and % Western Production Centre Product All Product Product D Product A D s and %
100 66.7 33.3 (5.5) 27.8

1135 100 635 100 210 100 350 100 75 100 500 100 320 100 180 Sales 755 66.5 485 76.4 180 85.7 250 71.4 55 73.3 270 54 150 46.9 120 SCS 380 33.5 150 23.6 30 14.3 100 28.6 20 26.7 230 46 170 53.1 60 SC 30 4.7 10 4.7 15 4.3 5 6.6 (30) (6) (20) (6.2 (10 PV ) ) Pr (Ls) 380 33.5 180 28.3 40 19 115 32.9 25 33.3 200 40 150 46.9 50 AC 160 14.1 100 15.7 60 12 PO 220 19.4 80 12.6 140 28 NC SCS=Standard Cost of Sales; SC=Standard Contribution; PV=Production Variances; AC=Actual Contribution; PO=Production Overheads and NC=Net Contribution.

Head Office Expenses: Marketing:. All Products : General Administration and Finance charges Technical Services Total of HO expenses Net Profit Before Tax

100 75 10 185 35

%:

8.8 6.6 0.9 16.3 3.1

A wife came home early and found her husband in their bedroom making love to a very attractive young woman. And she was somewhat upset. 'You are a disrespectful pig!' she cried. 'How dare you do this to me -- a faithful wife, the mother of your children! I'm leaving you. I want a divorce right away!' And the husband replied, 'Hang on just a minute love so at least I can tell you what happened.' 'Fine, go ahead,' she sobbed, 'but they'll be

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the last words you'll say to me!' And the husband began -- 'Well, I was getting into the car to drive home, and this young lady here asked me for a lift. She looked so down and out and defenseless that I took pity on her and let her into the car. I noticed that she was very thin, not well dressed and very dirty. She told me that she hadn't eaten for three days. So, in my compassion, I brought her home and warmed up the enchiladas I made for you last night, the ones you wouldn't eat because you're afraid you'll put on weight. The poor thing devoured them in moments. Since she needed a good clean-up, I suggested a shower, and while she was doing that, I noticed her clothes were dirty and full of holes, so I threw them away. Then, as she needed clothes, I gave her the designer jeans that you have had for a few years, but don't wear because you say they are too tight. I also gave her the underwear that was your anniversary present, which you don't wear because I don't have good taste. I found the sexy blouse my sister gave you for Christmas that you don't wear just to annoy her, and I also donated those boots you bought at the expensive boutique and don't wear because someone at work has a pair the same.' The husband took a quick breath and continued - 'She was so grateful for my understanding and help that as I walked her to the door, she turned to me with tears in her eyes and said, 'Please ... Do you have anything else that your wife doesn't use?' Send this to all women and guys!