The Trading and Profit and Loss A/c of ABC Ltd.

for the year

ended 31-12-10 were as follows:

The following information was available from the Cost

Accounts:
(i) Closing stock of goods—Rs. 4,000

(ii) Manufacturing overhead was applied @ 150% on direct wages

(iii) Administrative, selling & distribution expenses were 10% of sales,

(iv) Depreciation charged Rs. 2,400

You are required to reconcile the profit of Financial Accounts with that
of the Cost Accounts.
QUESTION 2: M/s Rana Traders have furnished the following
information from the financial books for the year ending
31st March, 2011

The cost sheet shows the following:

(a) Cost of materials at Rs. 26 per unit and labour cost Rs. 15 per unit.

(b) Factory overheads are absorbed at 60% of labour cost

(c) Office overheads are absorbed at 20% of factory cost

(d) Selling expenses are charged at Rs. 6 per unit sold, and

(e) Opening stock of finished goods is valued at Rs. 45 per unit.

You are required to prepare:

(i) A statement showing the cost and profit as per Cost Accounts for
the year ended 31st March, 2011

(ii) A statement showing the reconciliation of profit disclosed in Cost

Accounts with the profit shown in Financial Accounts.

Note:
Production (in units) = Sales (units) + Closing Sock (units) – Opening
Stock (units)

= 10,250 + 250 – 500 = 10,000 units.