Write report on advisability of otherwise of accepting offer

Reference no: EM131703210

Question 1 - X Ltd. produces and sells direct to consumers 10,000 units per month at Rs. 1.25 per unit. The company's normal production capacity is 20,000 units per month. An analysis of cost for 10,000 units show.

	Rs.
Direct material	1,000
Direct labour	2,475
Power	140
Misc. supplies	430
Bottles	600
Fixed expenses	7,955
Total	12,600

The company has received an offer for the export under a different brand name of 1,20,000 units at 10,000 units per month at 75 paise a unit.

Write a short report on the advisability of otherwise of accepting the offer.

Question 2 - From the following particulars make out a balance sheet.

(a) Current ratio 2.5

(b) Liquid ratio 1.5

(d) Working capital Rs. 60,000

(e) Reserves and surplus Rs. 40,000

(f) Bank overdraft Rs. 10,000

There is no long term loans or fictitious assets.

Question 3 - From the following information, calculate each of three labour variances for each department.

	Dept A	Dept B
Gross Wages direct (Rs)	17,025	26,754
Standard hours produced	4,600	6,300
Standard rate per hour (Rs)	4	4.50
Actual hours worked	4,540	6,370

Reference no: EM131703210

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