25 November 2016
opening stock of raw materials Rs 20000,closing stock of raw materials Rs 30000,Direct wages Rs 210000,Factory overhead Rs 60% of direct wages ,general overhead Rs 10% of work cost, cost of production Rs 688600,compute the purchase of Raw materials purchase?
27 November 2016
Let Purchase Amount be Rs.x. Now Direct Materials Consumed = 20000 + x - 30000 = x - 10000. Prime Cost = Direct Material + Direct Wages = x - 10000 + 210000 = x + 200000. Factory Cost = Prime Cost + Factory Overhead = x + 200000 + 126000 = x + 326000. Cost of Production = Factory/Works Cost + General Overhead = x + 326000 + 0.1(x + 326000) = 1.1x + 358600.
As per given information, Cost of Production = 688600.
So, equating above two equations and solving for x, we get x = 300000.
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