Question 8 Chapter 1 - Unimax Publications of Class 11

Question 8 Chapter 1 – Unimax

Table of Contents

8. Calculate Merchandise Cost, gross profit and net income from the following:

	Rs.
Purchases (3,000 articles)	25,000
Freight	1,500
Local Taxes	1,000
Salaries	2,500
Shop Rent	500
Godown Rent	500
Electric Charges	600
Municipal Taxes	200
Stationery	250
Furniture (estimated life 5 years)	12,000
Sales (2,700 Articles)	32,000

The solution of Question 8 Chapter 1 – Unimax:

Merchandise Cost	= Opening Stock + Net Purchases + Direct Expenses – Closing Stock (from see it working note)
	= Rs. Nil +25,000 +2,500-2,750
	= Rs. 24,750

Gross Profit	= Net Sales – Merchandise Cost
	= Rs. 32,000-24,750
	= Rs. 7,250

Net Income	= Gross Profit- Indirect ( Operating Expenses)
	= Rs. 7,250- 6,950
	= Rs. 300

1. Calculation of Closing Stock

Total number of articles purchased	3,000
Less number of articles sold	2,700
Number of Remaining articles	300
Total Cost of 3,000 articles	25,000
Add Direct Expenses (Freight, Local Taxes)	2,500
Total Cost of 3,000 articles	27,500

If number of articles 3,000 then cost	27,500

If number of article 1 then cost	27,500
	3,000

If number of articles 300 then cost =	27,500	X 300 articles
	3,000

Closing Stock = Rs. 2,750

2. Calculation of Indirect Expenses

Salaries	2,500
Shop Rent	500
Godown Rent	500
Electric Charges	600
Municipal Taxes	250
Stationery	200
Depreciation on Furniture (12,000/5 years)	2,400
Indirect Expenses	6950

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