Accounting Questions

On August 15,2005 the steadfast cycle manu co was required to quote for a contract for the supply of 500 bicycles.
From the following details, prepare a statement showing the price to be quoted to give the same percentage of net profit on turnover as was realized during the six months upto june 30,2005.

Particulars RS Particulars RS
Stock of materials 100,000 Indirect charges during
on Jan 1,2005 6 months to june 30,2005 50,000

Stock of materials 14000 Completed stock-in-hand on
on June 30,2005 Jan 1,2005 Nil

Purchase of materials
during 6 months to June 30, 1,15,000 Completed stock-in-hand on 100000
2005 June 30,2005

Direct wages for six
months to june 30,2005 300000

The number of bicycles manufactured during the six months was 2000 including
those sold and those in stock at the end of the period. The cycles to be quoted for are
to be of uniform size and quality and similar to those manufactured during the six months
to 30th june,2005. As from 1st july, the cost of factory labor has increased by 10% and
that of materials by 15%

Sales during six months to 30th june,2005 were rs 540000.

The cost of goods sold of 2000 bicycles is ?

Answer

RS 4,86,000

Statement of cost for the half year ended 30th june 2005

RS Total Per cycle
RS RS
Opening stock of material 100000
Add: Purchase of material 150000
250000
less:Closing stock of
material 14000
material used 236000 118.00
Direct wages 300000 150.00
prime cost 536000 268.00
Indirect charges 50000 25.00
Cost of prod 586000 293.00
less: Completed stock-in-hand
on june 30,2005 100000
Cost of goods sold 486000
profit(10% on sales) 54000
sales 540000

Percentage of indirect charges on direct wages = (RS 50000/RS 300000) * 100 = 16.67%

Statement of cost for tender of 500 cycles

particulars per unit total
material(rs 118 + 15% of 118) 135.70 67,850
direct wages(rs 150 + 10% of 150) 165.00 82,500
prime cost 300.70 1,50,350
indirect charges(1/6 of wages) 27.50 13,750
cost of prod 328.20 1,64,100
profit(10% of sales
or 1/9 of cost of prod) 36.47 18,233
Amt of Tender 364.67 182,333