Q$.$No$.2$

$\frac{M}{s}$ Adarsh Bearings Ltd$.,$ Mumbai manufactures and sells a Bearing No$.6275$ for use in industries. On

review of its operational efficiency for the last quarter which ended on ${31}^{3t}$ December, the Vice

President, Mr$.$ Awasthi found some room for improvement in various functions of the organisation

and for that purpose he requests you to provide him the data of various overheads like factory

overheads, administration overheads and selling and distribution overheads of his unit along with

their percentage on the sale value for the month.

The other relevant data, found from the cost books are as under:

$10,000$ Units of the bearing were manufactured and sold @ Rs$.60$ per unit during the month.

$[$Ans$.$ Factory overheads: Rs$.190,000/-(32\%)$; Administration overheads: Rs$.40,000/-(7\%)$; Selling

and Distribution overheads: Rs$.60,000/-(10\%)]$

Q$.3$

M$.$L$.$ Auto Ltd$.$ is a manufacturer of auto components and the details of its expenses for the year

$2014$ are given below:

During $2015,$ the company has received an order from a car manufacturer$-$where it estimates that the

cost of material and labour will be Rs$.8,00,000$ and Rs$.4,50,000$ respectively. M$.$L$.$ Auto Ltd$.$ charges

factory overhead as a percentage of direct labour and administrative overhead as a percentage of

factory cost based on previous year's cost.

Cost of delivery of the components at customer's premises is estimated at Rs$.45,000.$

You are required to:

i$.$ Calculate the overhead recovery rates based on actual costs for $2014.$

ii$.$ Prepare a detailed cost statement for the order received in $2015$ and the price to be

quoted if the company wants to earn a profit of $10\%$ on sales.

Inswers: