Q-5 Spr-20

Scents Limited
Product-wise Income statement P Q refined R
------------------- Rs. ------------------
Sales [units sold (W-1) x sale price] 340,419,200 184,738,560 92,502,600
Cost of sales:
Opening FG - - 5,850,000
COGM [For P&Q(W-3.4)][For R(W-4.3)] 276,889,325 153,230,015 106,450,510
Closing FG [Closing units x cost (W-2)] (16,167,070) (11,176,197) (39,133,423)
(260,722,255) (142,053,818) (73,167,087)
Gross profit 79,696,945 42,684,742 19,335,513
Selling & admin costs [Sales x 12%] (40,850,304) (22,168,627) (11,100,312)
Net profit 38,846,641 20,516,115 8,235,201

* Since admin expenses are also annexed with selling expenses, therefore, these were not considered for NRV

W-1 Units sold P Q refined R

-------------------------- Kgs -------------------------
Opening FG - - 7,800
Produced [For P&Q(W-3.1)][For R(W-4.1)] 345,960 207,576 130,934
Closing FG (20,200) (15,140) (48,134)
Sale 325,760 192,436 90,600

W-2 Cost per unit Rs.

P [276,889,325(W-3.4) ÷ 345,960] 800.35
Q [153,230,015(W-3.4) ÷ 207,576] 738.19
refined R [106,450,510(W-4.3) ÷ 130,934] 813.01

W-3 Process - I

W-3.1 Quantity schedule Kgs

Opening WIP -
Input 744,000
Closing WIP -
NL [744,000 x 7%] (52,080)
Output 691,920
Output comprises of:
P [691,920 x 50%] 345,960
Q [691,920 x 30%] 207,576
R [691,920 x 20%] 138,384
691,920

W-3.2 Equivalent production

- Since there is only output and no AL/AG or WIP, therefore, no need for equivalent production
W-3.3 Joint-cost of completed units
- Since there is no AL/AG or WIP, therefore, all current period costs are actually joint cost of output

Rs.
Direct material [744,000 x 411] 305,784,000
Direct labor [611,568 x 200] 122,313,600
FOH 91,456,000
Joint cost of completed units 519,553,600

W-3.4 Allocation of joint cost

Product Units Total NRV Cost allocation
----------------- Rs. ------------------
P 345,960 [345,960 x (1,045 - 15)] 356,338,800 276,889,325
[519,553,600 x 356,338,800/668,632,156]

Q 207,576 [207,576 x (960 - 10)] 197,197,200 153,230,015

[519,553,600 x 197,197,200/668,632,156]

R 138,384 [130,934* x (1,021 - 12) - 17,016,250(W-4.3)] 115,096,156 89,434,260

[519,553,600 x 115,631,733/668,632,156]

668,632,156 519,553,600

* Since 138,384 Kgs of R are only converted into 130,934 Kgs of refined R due to by product (assuming it to
be normal), therefore, total NRV is calculated for 130,934 Kg

W-4 Process - II
W-4.1 Quantity schedule
Kgs
Opening WIP -
Transfer in 138,384
Closing WIP -
By-product (7,450)
Output 130,934

W-4.2 Equivalent production

- Since there is output only and no AL/AG or WIP, therefore, no need for equivalent production

W-4.3 COGM refined R

- Since there is no AL/AG or WIP, therefore, all current period costs are actually cost of output
Rs.
Cost of R transferred in (W-3.4) 89,434,260
Further processing:
Direct labor [55,450 x 200] 11,090,000
FOH 7,230,000
Sale of by-product [7,450 x 175] (1,303,750)
17,016,250
106,450,510