RST Ltd. manufactures a standard line of office desks. The company operates with a monthly manufacturing capacity of 5,000 units. The following data…

CA Intermediate · Cost and Management Accounting · PYQS · September 2025
RST Ltd. manufactures a standard line of office desks. The company operates with a monthly manufacturing capacity of 5,000 units. The following data relates to the output and cost of two consecutive months of production: Month Units Manufactured Direct Material (₹) Direct Wages (₹) Factory Overheads (₹) April 3,000 15,00,000 6,00,000 3,50,000 May 3,800 19,00,000 7,60,000 4,30,000 In the month of June, the number of units manufactured will be 4,000 units. However, the prices of direct material will increase by 10% and direct wages will increase by 15%. The fixed factory overheads will reduce by 20%. The company desires to earn a profit of 11% on selling price. Calculate the selling price per desk in the month of June when the monthly output is 4,000 units.

Suggested Answer and Working Notes:

Statement of total cost and Sales Particulars Amount (₹) Direct Material (15,00,000/3,000 x 4,000) x 110% 22,00,000 Direct Labour (6,00,000/3,000 x 4,000) x 115% 9,20,000 Factory Overheads: Variable (4,000 x 100) 4,00,000 Fixed (50,000 x 80%) 40,000 Total Cost 35,60,000 Profit (Bal. Fig) 4,40,000 Sales (35,60,000/89%) 40,00,000 No of units 4,000 Selling Price per unit 1,000 Calculation of fixed and variable factory overhead Variable Factory overhead (per unit) = (4,30,000 - 3,50,000) / (3,800 - 3,000) = 100 Fixed factory overheads {3,50,000 - (3,000 x 100)} = 50,000

Topics: Cost Sheet

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