MNP Limited have the capacity to produce 84,000 units of a product very month. Its prime cost per unit at various levels of production is as…

MNP Limited have the capacity to produce 84,000 units of a product very month. Its prime cost per unit at various levels of production is as follows: Level Prime Cost per unit (₹) 10% 50 20% 48 30% 46 40% 44 50% 42 60% 40 70% 38 80% 36 90% 34 100% 32 Its prime cost consists of raw material consumed, direct wages and direct expenses in the ratio of 3 : 2 : 1. In the month of January 2024, the company worked at 40% capacity and raw material purchased amounting to 8,40,000. In the month of February 2024, the company worked at 100% capacity and raw material purchased for 16,46,400. It is the policy of the company to maintain opening stock of raw material equal to 1/3 of closing stock of raw material. Factory overheads are recovered at 60% of direct wages cost. Fixed administration expenses (as part of production cost) and fixed selling and distribution expenses are - 2,01,600 and - 1,68,000 per month respectively. During the month of January 2024 company sold 33,600 units @68.8 per unit. The variable distribution cost amounts to 1.5 per unit sold. The management of the company chalks out a plan for the month of February 2024 to sell its whole output @61 per unit by incurring following further expenditure : (i) Company sponsors a television programme on every Sunday at a cost of 26,250 per week. There are 4 Sundays in February 2024. (ii) Hi-tea programme every month for its potential customers at a cost of 1,05,000. (iii) Special gift item costing 105on sale of a dozen units. (iv) Lucky draws scheme is introduced every month by giving the first prize of 1,00,000; second prize of 80,000; third prize of 40,000 and four consolation prizes of 8,000 each. Note: (In the month of February 2024, there is a significant saving in material cost per unit due to entry of new suppliers in the market and saving in per unit cost of Direct wages and Direct expenses due to introduction of new policy by the management.) Prepare a cost sheet for the month of January 2024 and February 2024 showing prime cost (with different elements of prime cost), factory cost, cost of production, total cost and profit earned.