The components of Costs incurred by Lavish Motors Inc. for the year 2019-20 are as follows: (All figures are in USD $)
Sales: 6,00,000, Materials Consumed: 1,20,000, Manufacturing Expenses: 75,000, Rent, Rates & Taxes: 15,000, General Expenses: 30,000, Office Expenses: 90,000, Sales & Distribution Expenses: 45,000.
Their estimates for the year 2020-21 are as under: -
Sales would increase by 50%. Materials Consumed will rise by 40%, Manufacturing Expenses will be in same proportion to Materials consumed as in 2019-20.  Total Office & Administrative Expenses will remain the same. Sales and Distribution expenses will rise by 15%.
You are required to make the cost sheet for 2019-20 and also the Estimated cost sheet for the year 2020-21.

Answer rating: 100% (QA)

Working Note 1 Proportion of manufacturing expenses to material consumed ... View the full answer