You are on page 1of 9

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 Second
Third Fourth
Dust Break
Triuor Break Break
Removal Equipment

Sieving
Wheat Corn Sieving
Bin Washing Sieving
Sieving

Plant Sifters

White Suji Wholemea Bran


Flour l Flour
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 Producti Joint costs Joint cost Separable Total Sales price Profit per Profit for
on in allocated on per ton costs per ton cost per per ton ton total
tons the basis of ton output
production
quantities

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 1,850 16 1,866 1,140 (726) (1,30,680)

900 16,65,000 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 Productio Sales Sales Joint costs Joint Separable Total cost Profit Profit for
n in tons price per Value allocated on cost per costs per per ton per ton total
ton the basis of ton ton output
sales value

White flour 540 2,100 10,83,626 2,007 78 2,085 15 8,254


11,34,000
Suji 90 2,480 2,13,285 2,370 84 2,454 26 2,355
2,23,200
Wholemeal flour 90 2,000 1,72,004 1,911 34 1,945 55 4,936
1,80,000
Bran 180 1,140 1,96,085 1,089 16 1,105 35 6,235
2,05,200
900 16,65,000 21,780
17,42,400
Net Realizable Value Method
Lilac Flour Mills
Calculation of average unit product costs
(on the basis of net realizable value)
Product Produc Sales Sales Separa Separa Net Joint Joint Separ Total Profi Profit for
tion in price per Value ble ble Realizabl costs cost able cost per t per total
tons ton costs Costs e Value allocated per ton costs ton ton output
per ton at splitoff on the per
point basis of ton
net
realizable
value

White flour 540 2,100 11,34,000 78 42,120 10,91,880 1,996 78 2,074 26


10,77,781 14,099
Suji 90 2,480 2,23,200 84 7,560 2,15,640 2,365 84 2,449 31 2,784
2,12,856
Wholemeal 90 2,000 1,80,000 34 3,060 1,76,940 1,941 34 1,975 25 2,285
flour 1,74,655
Bran 180 1,140 2,05,200 16 2,880 2,02,320 1,109 16 1,125 15 2,612
1,99,708
900 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 Producti Sales Sales Value Joint costs Joint Separable Total cost Profit Profit for
on in price per allocated on cost per costs per per ton per ton total
tons ton the basis of 3 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 0 0

Wholemeal flour 90 2,000 1,80,000 1,76,940 1,966 34 2,000 0 0

Bran 180 1,140 2,05,200 2,02,320 1,124 16 1,140 0 0

900 17,42,400 16,65,000 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 Producti Sales Sales Value Joint costs Joint cost Separable Total cost Profit Profit for
on in price per allocated on per ton costs per per ton per ton total
tons ton the basis of ton output
bran as a by-
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 0 0

900 17,42,400 16,65,000 21,780


Summary of all Methods

Sales Production Value Method


Sales Value Method Net Realizable value Assuming 3 By-products
Assuming Bran as By-
Price per product
Ton
Total Cost Gross Total Cost Gross Total Cost Gross Total Cost Gross Total Cost Gross
(Inventory Margin (Inventory Margin (Inventory Margin (Inventory Margin (Inventory Margin
Value) per Value ) per Value ) per Value ) per Value ) per
ton ton ton ton ton

White Flour 2,100 1,928 8.2% 0.7% 1.2% 2,060 1.9% 2,076 1.1%
2,085 2,074

Suji 2,480 1,934 22.0% 1.1% 1.2% 2,480 0.0% 2,444 1.5%
2,454 2,449

Wholemeal 2,000 1,884 5.8% 2.7% 1.3% 2,000 0.0% 1,937 3.1%
flour 1,945 1,975

Bran 1,140 1,866 -63.7% 3.0% 1.3% 1,140 0.0% 1,140 0.0%
1,105 1,125