Lilac Flour Mills

Managerial Accounting and Control - II

INSTRUCTOR: PROF. KEYUR THAKER

GROUP 4A
EDUKONDALU N
AMIT PANT
ADITYA JAIN
LOKESWARA REDDY T
DEEPESH DADLANI

Case Brief
About the Firm

The Problem
Current Accounting Procedure
Advised Accounting Methods

Lilac Flour Mills Flow Chart

Cleaning

Milling

Roller Mills

Chaff
Removal

Brushing
First
Break

Dust
Removal

Triuor
Equipment

Wheat
Bin

Corn
Washing

Second
Break

Third
Break

Fourth
Break

Sieving
Sieving
Sieving

Sieving

Plant Sifters

White
Flour

Suji

Wholemea
l Flour

Bran

Method used now Physical Quantities Method

Lilac Flour Mills
Calculation of average unit product costs
(on the basis of production quantities)
Monthly wheat input = 900 tons

Product

Joint costs
Producti allocated on
on in
the basis of
tons
production
quantities

Joint cost
Separable Total cost Sales price Profit per Profit for
per ton
costs per ton per ton
per ton
ton
total output

White Flour

540

9,99,000

1,850

78

1,928

2,100

172

92,880

Suji

90

1,66,500

1,850

84

1,934

2,480

546

49,140

Wholemeal flour

90

1,66,500

1,850

34

1,884

2,000

116

10,440

Bran

180

3,33,000

16

1,866

900

16,65,000

1,850

1,140

(726)

(1,30,680)
21,780

Proposed Method I

Sales Value Method

Lilac Flour Mills
Calculation of average unit product costs
(on the basis of sales value)
Monthly wheat input = 900 tons

Product

Sales
Productio
price per
n in tons
ton

Sales
Value

Joint costs
Joint Separable
Profit for
allocated on
Total cost Profit
cost per costs per
total
the basis of
per ton per ton
ton
ton
output
sales value

White flour

540

2,100

11,34,000

10,83,626

2,007

78

2,085

15

8,254

Suji

90

2,480

2,23,200

2,13,285

2,370

84

2,454

26

2,355

Wholemeal flour

90

2,000

1,80,000

1,72,004

1,911

34

1,945

55

4,936

Bran

180

1,140

2,05,200

1,96,085

1,089

16

1,105

35

6,235

17,42,400

16,65,000

900

21,780

Net Realizable Value Method

Lilac Flour Mills

Calculation of average unit product costs

900

Profit for total output

Profit per ton

180

Bran

Total cost per ton

90

Separable costs per ton

2,480

Joint cost per ton

90

Joint costs allocated on the

basis of net realizable value

Suji
Wholemeal
flour

Net Realizable Value at splitoff

point

11,34,000

Separable Costs

2,100

Separable costs per ton

540

Sales Value

Sales price per ton

White flour

Product

Production in tons

(on the basis of net realizable value)

78 42,120 10,91,880 10,77,781

1,996

78

2,074 26

14,099

2,23,200

84

7,560 2,15,640 2,12,856

2,365

84

2,449 31

2,784

2,000

1,80,000

34

3,060 1,76,940 1,74,655

1,941

34

1,975 25

2,285

1,140

2,05,200

16

2,880 2,02,320 1,99,708

1,109

16

1,125 15

2,612

17,42,400

16,86,780 16,65,000

21,780

Assuming Three By-Products

Lilac Flour Mills
Calculation of average unit product costs
(on the basis of 3 by-products)
Monthly wheat input = 900 tons

Product

Joint costs
Producti Sales
Joint Separable
Profit for
allocated on
Total cost Profit
on in price per Sales Value
cost per costs per
total
the basis of 3
per ton per ton
tons
ton
ton
ton
output
by-products

White flour

540

2,100

11,34,000

10,70,100

1,982

78

2,060

40

21,780

Suji

90

2,480

2,23,200

2,15,640

2,396

84

2,480

Wholemeal flour

90

2,000

1,80,000

1,76,940

1,966

34

2,000

Bran

180

1,140

2,05,200

2,02,320

1,124

16

1,140

17,42,400

16,65,000

900

21,780

Assuming Barn as By-Product

Lilac Flour Mills
Calculation of average unit product costs
(on the basis of bran as a by-product)

Monthly wheat input = 900 tons

Product

Joint costs
Producti Sales
allocated on
Separable
Profit for
Joint cost
Total cost Profit
on in
price per Sales Value the basis of
costs per
total
per ton
per ton per ton
tons
ton
bran as a byton
output
product

White Flour

540

2,100

11,34,000

10,79,026

1,998

78

2,076

24

12,854

Suji

90

2,480

2,23,200

2,12,380

2,360

84

2,444

36

3,260

Wholemeal flour

90

2,000

1,80,000

1,71,274

1,903

34

1,937

63

5,666

Bran

180

1,140

2,05,200

2,02,320

1,124

16

1,140

17,42,400

16,65,000

900

21,780

Summary of all Methods

Production Value
Method

Sales Value Method Net Realizable value

Assuming 3 Byproducts

Total Cost
Total Cost
Total Cost
Total Cost
Sales (Inventory
(Inventory
(Inventory
(Inventory
Price per Value) per Gross Value ) per Gross Value ) per Gross Value ) per
Ton
ton
Margin
ton
Margin
ton
Margin
ton

Assuming Bran as Byproduct

Gross
Margin

Total Cost
(Inventory
Value ) per
ton

Gross
Margin

White Flour

2,100

1,928

8.2%

2,085

0.7%

2,074

1.2%

2,060

1.9%

2,076

1.1%

Suji

2,480

1,934

22.0%

2,454

1.1%

2,449

1.2%

2,480

0.0%

2,444

1.5%

Wholemeal
flour

2,000

1,884

5.8%

1,945

2.7%

1,975

1.3%

2,000

0.0%

1,937

3.1%

Bran

1,140

1,866

-63.7%

1,105

3.0%

1,125

1.3%

1,140

0.0%

1,140

0.0%