Question

The directors of Departmental Stores Ltd. wish to ascertain, approximately, the net profita
of the "A", "B" and "C" departments separately for the quarter ended March 31, 2015 Jt is
found impracticable actually to take stock on that date but an adequate system of
departmental accounts is in use and the normal rates of gross profit for the departments
concerned are 40%, 30% and 20% on turnover, respectively. Indirect expenses are charged
in proportion to departmental turnover.
Following are the figures for each department:
B
с
Stock as on 1.1.2015
30,000 35,000 15,000
Purchases to March 31, 2015
35,000
37.500 23,500
Sales of March 31, 2015
60,000
50,000 30,000
Direct expenses
10,100
7,250 3,550
Total indirect expenses for the period (including those relating to other
departments) were 21,000 on total sales of Rs 4,20,000.
Prepare a statement showing gross profit, net profits after maling reserve for stock at
10% in respect of each department.​

Answer 1

Answer:

30,000

Direct expenses

10,100

7,250 3,550

Total indirect expenses for the period (including those relating to other

departments) were 21,000 on total sales of Rs 4,20,000.

Prepare a statement showing gross profit, net profits after maling reserve for stock at

10% in respect of each department.