Calculate overhead rates based on last year's data.

Here's the solution for question 22:

a. Cost Sheet

Step 1: Calculate overhead rates based on last year's data.
First, we determine the prime cost and factory cost for the last year to calculate the overhead rates.

• Prime Cost (Last Year): $$\text{Direct Materials} + \text{Direct Wages} = \text{Rs. } 1,20,000 + \text{Rs. } 80,000 = \text{Rs. } 2,00,000$$
• Works Overhead (Factory Overhead) Rate: Works overhead is based on prime cost. $$\text{Rate} = \frac{\text{Factory Overhead}}{\text{Prime Cost}} \times 100 = \frac{\text{Rs. } 60,000}{\text{Rs. } 2,00,000} \times 100 = 30\% \text{ of Prime Cost}$$
• Factory Cost (Last Year): $$\text{Prime Cost} + \text{Factory Overhead} = \text{Rs. } 2,00,000 + \text{Rs. } 60,000 = \text{Rs. } 2,60,000$$
• Office and Selling Overhead Rate: Office and selling overhead is based on factory cost. $$\text{Total Office and Selling Overhead} = \text{Office Overhead} + \text{Selling Overhead} = \text{Rs. } 50,000 + \text{Rs. } 40,000 = \text{Rs. } 90,000$$ $$\text{Rate} = \frac{\text{Total Office and Selling Overhead}}{\text{Factory Cost}} \times 100 = \frac{\text{Rs. } 90,000}{\text{Rs. } 2,60,000} \times 100 = \frac{9}{26} \times 100 \approx 34.615\% \text{ of Factory Cost}$$

Step 2: Prepare the Cost Sheet for the coming product.
Using the estimated direct costs and the calculated overhead rates:

• Direct Materials: Rs. 50,000
• Direct Wages: Rs. 30,000
• Prime Cost: $$\text{Rs. } 50,000 + \text{Rs. } 30,000 = \text{Rs. } 80,000$$
• Add: Works Overhead (30% of Prime Cost): $$0.30 \times \text{Rs. } 80,000 = \text{Rs. } 24,000$$
• Factory Cost: $$\text{Rs. } 80,000 + \text{Rs. } 24,000 = \text{Rs. } 1,04,000$$
• Add: Office and Selling Overhead ($\frac{9}{26}$ of Factory Cost): $$\frac{9}{26} \times \text{Rs. } 1,04,000 = \text{Rs. } 36,000$$
• Cost of Sales (Total Cost): $$\text{Rs. } 1,04,000 + \text{Rs. } 36,000 = \text{Rs. } 1,40,000$$

The cost sheet for the coming product is:

$$\begin{array}{|l|r|} \hline \textbf{Particulars} & \textbf{Amount (Rs.)} \\ \hline \text{Direct Materials} & 50,000 \\ \text{Direct Wages} & 30,000 \\ \hline \textbf{Prime Cost} & \textbf{80,000} \\ \text{Add: Works Overhead (30\% of Prime Cost)} & 24,000 \\ \hline \textbf{Factory Cost} & \textbf{1,04,000} \\ \text{Add: Office and Selling Overhead (9/26 of Factory Cost)} & 36,000 \\ \hline \textbf{Cost of Sales (Total Cost)} & \textbf{1,40,000} \\ \hline \end{array}$$

b. Tender Price

Step 3: Calculate the Tender Price.
The company wants to yield a profit of 25% on the selling price.
Let the Selling Price (Tender Price) be $S$.
Profit = $0.25S$
Cost of Sales = Selling Price - Profit
Cost of Sales = $S - 0.25S = 0.75S$
We know the Cost of Sales is Rs. 1,40,000.

$$\text{Rs. } 1,40,000 = 0.75 \times S$$ $$S = \frac{\text{Rs. } 1,40,000}{0.75}$$ $$$$