Ganga Enterprises produces dolls. The following information is provided for the month of January
2013.
To produce one unit of doll,
Plastic - 2 kgs at Rs. 50 per kilogram
Cloths - 1 metre at Rs. 30 metre
Machine operators are paid at Rs. 30 per doll produced plus Rs.4,000 fixed monthly allowance per
operator.
No. of machine operators - 5
Supervisor’s salary is Rs.1,000 per working day.
No. of working days - 25
No. of supervisors - 1
During the month, 10,000 dolls were produced and 8,500 dolls were sold.
Designing is outsourced and designers are paid at Rs. 2 for each doll produced.
Machinery maintenance expenses Rs. 45,000
Purchases of materials
Plastic - 25,000 kg
Cloth - 12,500 m
There were no opening inventory of raw materials or finished goods.
Assume that there are no opening and closing work-in-progresses.
Distribution costs - Rs. 30,000
Stationery expenses at the general administration office - Rs. 3,000
Other administration costs - Rs.15,000
Selling price of a doll is decided by adding 40% on the unit production cost.
Required;
1. Calculate the product cost and the period cost of the month.
2. Prepare the Income Statement for the month.