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it was found from past experience that 20 of materials deteriorate in storage 616401

Model: Direct material cost and issue price of materials to jobs.

X Ltd purchased two kinds of raw materials for the manufacture of its product. From the following information given in the supplier’s bill, you are required to calculate (a) direct material cost and (b) issue price of materials:

Raw material X: 250 Nos of Rs. 5 each

1,250

Raw material Y: 500 Nos of Rs. 2 each

1,000

Insurance

45

Central excise duty: Raw material X:

80

Raw material Y:

120

Packing, storage and delivery charges

150

Sales tax

270

Freight

300

The purchaser paid Octroi duty at Rs. 2 per unit. During the checking of incoming materials at the buyer’s factory, it was found that 5 units of raw material X and 10 units of raw material Y were in broken condition. It was found from past experience that 20% of materials deteriorate in storage.

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