AATMA Ltd. manufactures a product ‘OM’ using a raw material M1. The company took Bank Overdraft at an interest rate of 15% p.a. specifically for the purpose of purchasing 10,000 kg. of material M1 at ₹ 200 per kg. The purchase price includes GST ₹ 20 per kg., in respect of which full credit is admissible. Freight, loading, and unloading charges incurred amounted to ₹ 81,600. Interest on such Bank Overdraft amounted to ₹ 50,000. Normal Transit Loss is 2%. The company actually received 9,760 kg. and consumed 9,500 kg. One unit of Finished product requires five units of Raw Material. Direct Labor Cost amounted to ₹ 4,56,000, Direct Overheads Cost amounted to ₹ 1,14,000. Total Fixed Overheads for the year were ₹ 2,40,000 on the normal capacity of 20,000 units of Finished Goods. During the year Sales of product ‘OM’ were ₹ 15,00,000 @ ₹ 1,500. There were no opening inventories. With reference to AS 2 “Valuation of Inventory”, Calculate the amount of Abnormal Loss (if any), Closing Inventory of Finished Goods and Raw Material if (i) Finished units can be sold @ ₹ 1,600 subject to payment of 10% brokerage on selling price., The replacement Cost of Raw Material is ₹ 180 per kg. ii) Finished units can be sold @ ₹ 1,400 subject to payment of 10% brokerage on selling price, Replacement Cost of Raw Material is ₹ 180 per kg.

Answer rating: 100% (QA)

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