|
Question Details:
ABC Ltd produced soda ash. That product uses in different industries. The property of this product is highly inflammable. The position of inventory at the beginning of year 2007 is as follows:
Inventories at Jan 1, 2007 consisted of:
|
Particulars
|
Rs
|
|
Finished goods
|
8,000
|
|
Work-In-Process
|
6,000
|
|
Materials
|
1,200
|
|
Total
|
15,200
|
A fire broke out in a factory at July 31, 2007 destroying all Work-in-Process inventories. After the fire, the inventories were valued as follows:
|
Particulars
|
Rs
|
|
Materials
|
4,000
|
|
Finished goods
|
7,000
|
In 2007 the amount of Gross profit is based on average GP to Sale ratio of last 5 years 2002 to onward 2006. An analysis of past financial statements reflected as follows:
|
Years
|
Sales
|
Gross Profit
|
|
Rs.
|
Rs.
|
|
2002
|
40,000
|
11,555
|
|
2003
|
45,000
|
11,132
|
|
2004
|
50,000
|
13,452
|
|
2005
|
52,000
|
12,897
|
|
2006
|
60,000
|
17,654
|
|
|
|
|
|
Data for 7 months to 2007 is given as follows:
|
Particulars
|
Rs.
|
|
Sales
|
20,000
|
|
Material Purchases
|
5,600
|
|
Direct Labor
|
6,000
|
|
FOH
|
3,000
|
Required:
Calculate the Value of Work-In-Process destroyed by fire in 2007 ?
Calculate the Value Gross Profit in 2007 ?
|