9. Bad debts recovered in financial accounts 50,000 Required: Prepare Reconciliation Statement to arrive at net profit/loss as per Cost Accounts. (5 Marks)

All Options:

• A(i) Calculation of Total cost per batch Particulars Amount (`) Hall Charges (` 20,000 x 30) 6,00,000 Honorarium of instructor (` 1,500 x 2 x 5 x 30) 4,50,000 Reimbursement of travel expenses (` 200 x 5 x 30) 30,000 Refreshment (` 1,500 x 30) 45,000 Administrative and miscellaneous expenses (` 500 x 30) 15,000 Total Cost 11,40,000 No. of Batches 1 Total cost per batch 11,40,000 (ii) Minimum fee per student in a batch to cover costs = Total cost per batch Students per batch = 11,40,000 250 = ` 4,560 (iii) Number of Students if batch is 80% filled = 250 students x 80% = 200 students Total Fee to be recovered to achieve 25% profit margin on the fee COST AND MANAGEMENT ACCOUNTING = ` 11,40,000 + (` 11,40,000 x 1/4th of sales or 1/3rd of the cost) = ` 15,20,000 Fee per student = Total Fee per batch Students per batch = 15,20,000 200 = ` 7,600 ✓
• BReconciliation Statement (`) (`) Profit (loss) as per Financial Accounts 2,25,000 Add: Preliminary expenses written off 35,000 Expenses on issue of shares in financial accounts 30,000 Under recovery of administration overheads in cost accounts 25,000 Under recovery of selling overheads in cost accounts 35,000 1,25,000 Less: Factory Overheads Over charged in cost accounts 20,000 Undervaluation of closing stock in cost accounts 65,000 Interest on Bank Deposits 60,000 Notional Rent of own premises charged in cost accounts 30,000 Bad debts recovered in financial accounts 50,000 (2,25,000) Net Profit as per Cost Accounts 1,25,000
• C(i) Statement Showing “Cost and Profit under Both Situation” Particulars Existing Production (60,000 units) After Offer (80,000 units) (`) (`) Sales Existing (60,000 x ` 20) 12,00,000 12,00,000 Offer (20,000 x ` 14) - 2,80,000 Total Sales 12,00,000 14,80,000 Less: Direct Materials @ ` 6 3,60,000 4,80,000 Direct Labour @ ` 4 2,40,000 3,20,000 Variable Overheads @ ` 2 1,20,000 1,60,000 Contribution 4,80,000 5,20,000 Less: Additional Shipping cost - 8,000 Less: Fixed Cost 3,00,000 3,00,000 Profit 1,80,000 2,12,000 Since the Profit has increased by ` 32,000, the proposal of the Japanese client should be accepted (ii) Yes, the advice will be different, if the customer is local one since the company is currently selling at ` 20 in local market and therefore, selling at discounted price of ` 14 may impact its local market. (iii) Statement Showing “Cost and Profit” Particulars After Offer (80,000 units) (`) Sales Existing (50,000 x ` 20) 10,00,000 Offer (30,000 x ` 14) 4,20,000 Total Sales 14,20,000 COST AND MANAGEMENT ACCOUNTING Less: Direct Materials @ ` 6 4,80,000 Direct Labour @ ` 4 3,20,000 Variable Overheads @ ` 2 1,60,000 Additional Shipping cost (` 8,000/20,000 units) x 30,000 units 12,000 Contribution 4,48,000 Less: Fixed Cost 3,00,000 Profit 1,48,000 If offer of Japanese client to supply 30,000 units at a price of ` 14 is accepted, the Profit will decrease by `32,000 from the current level.
• D