125 were also recorded only in the pass book out of

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Accounting Using Excel for Success
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Chapter 17 / Exercise 8
Accounting Using Excel for Success
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Bank charges made by the bank Rs. 125 were also recorded only in the pass book.Out of the cheques of Rs. 25,000 paid into the bank, cheques of Rs. 18,750 were cleared and credited by the bankers.Two cheques of Rs. 7,500 and Rs. 15,000 were issued but out of them only one cheque of Rs. 7,500 was presented for payment upto 28th February.Dividends on shares Rs. 4,500 were collected by the bankers directly, for which Priya & Co. did not have any information.7 . A company manufactures a single product in its factory utilizing 600% of its capacity. The selling price and cost details are given below:Rs.Sales (6,000 units)5,40,000Direct materials96,000Direct labour1,20,000Direct expenses19,000Fixed overheads :Factory2,00,000Administration21,000Selling and Distribution25,00012.5% of factory overheads and 20% of selling and distribution overheadsare variable with production and sales. Administrative overheads are wholly fixed.Since the existing product could not achieve budgeted level for two consecutiveyears, the Company decides to introduce a new productwith marginal investmentbut largely using the existing plant and machinery.The cost estimates of the new product are as follows:
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Accounting Using Excel for Success
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Chapter 17 / Exercise 8
Accounting Using Excel for Success
Reeve/Warren
Expert Verified
3------Accounting for ManagersCost elementsRs. per unitDirect materials16.00Direct labour15.00Direct expenses1.50Variable factory overheads2.00Variable selling and distribution overheads1.50It is expected that 2,000 units of the new product can be sold at a price of Rs. 60 per unit. The fixed factory overheads are expected to increase by 10%, while fixed selling and distribution expenses will go up by Rs. 12,500 annually. Administrative overheads remain unchanged.However, there will be an increase of working capital to the extent of Rs. 75,000, which would take the total cost of the projectto Rs. 8.75 lakh.The company considers that 20o/o pre-tax and interest return on investment You are required to(a) Decide whether the new product be introduced.(b) Make any further observation/recommendations about profitability of the company on the basis of the above data , after making assumption that the present investment is Rs. 8 lakh.8 . (a) What is Master Budget? How it is different from Cash Budget?(b) What are the various methods of inventory valuation? Explain the effect of inventory valuation methods on profit during inflation. What are the provisions of Accounting Standard 2 (AS-2) with regards to inventory valuation?

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