The proprietor of a large retail store wished to ascertain approximately the
net profit of the X, Y and Z departments separately for the three months ended
31st March 1996. It is found impracticable actually to take stock on that date,
but an adequate system of departmental accounting is in use, and the normal
rates of gross profit for the three departments concerned are respectively 40%,
* 30% and 20% on turnover before charging the direct expenses. The indirect
expenses are charged in proportion to departmental turnover.
The following are the figures for the departments:
X
Y
Z
Rs
Rs.
R$
Opening stock (1-1-96)
10,000 14,000 7,000
Purchases
12.000 13,500 9,700
Sales
20,000 18.000 16,000
Direct expenses
2.000
1,500
700
The total indirect expenses for the period (including those relating to other
departments) were Rs. 5,400 on the total turnover of Rs. 1.08,000.
Prepare a statement showing the approximate net profit, making a stock
reserve of 10% for each department on the estimated value on 31-3-96
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