From the following details of Small Tools Ltd, compute the profit in financial accounts as well as in cost accounts and reconcile profit between cost and financial accounts showing clearly the reasons for the variation of the two profit figures:
|
Rs |
Rs |
||
|
Sales |
20,000 |
Bad debts |
100 |
|
Purchase of materials |
3,000 |
Interest on overdraft |
50 |
|
Closing stock of materials |
500 |
Profit on sale of assets |
1,000 |
|
Direct wages |
1,000 |
Selling expenses |
2,000 |
|
Indirect wages |
500 |
Distribution expenses |
1,000 |
|
Indirect expenses |
2,000 |
In cost accounts:
Manufacturing overheads recovered at 300% on direct wages.
Selling overheads recovered Rs 1,500
Distribution overheads recovered Rs 700.