INSTRUCTOR: PROF. KEYUR THAKER

GROUP 4AEDUKONDALU N

AMIT PANTADITYA JAIN

LOKESWARA REDDY TDEEPESH DADLANI

Lilac Flour MillsManagerial Accounting and Control -

II

Case Brief

About the FirmThe ProblemCurrent Accounting ProcedureAdvised Accounting Methods

Lilac Flour Mills – Flow Chart

ChaffRemoval

DustRemoval

WheatBin

TriuorEquipment

CornWashing

Brushing

FirstBreak Second

BreakThirdBreak

FourthBreak

SievingSieving

SievingSieving

WhiteFlour

Suji Wholemeal Flour

Bran

Plant Sifters

Roller Mills

Cleaning Milling

Method used now – Physical Quantities Method

Lilac Flour Mills

Calculation of average unit product costs

(on the basis of production quantities)

Monthly wheat input = 900 tons

ProductProducti

on in tons

Joint costs allocated on the basis of production quantities

Joint cost per ton

Separable costs per ton

Total cost per ton

Sales price per ton

Profit per ton

Profit for total output

White Flour 540 9,99,000 1,850 78 1,928 2,100 172 92,880

Suji 90 1,66,500 1,850 84 1,934 2,480 546 49,140

Wholemeal flour 90 1,66,500 1,850 34 1,884 2,000 116 10,440

Bran 180 3,33,000 1,850 16 1,866 1,140 (726) (1,30,680)

  900 16,65,000           21,780

Proposed Method – ISales Value Method

Lilac Flour Mills

Calculation of average unit product costs

(on the basis of sales value)

Monthly wheat input = 900 tons

Product Production in tons

Sales price per

ton

Sales Value

Joint costs allocated on the basis of sales value

Joint cost per

ton

Separable costs per

ton

Total cost per ton

Profit per ton

Profit for total

output

White flour 540 2,100 11,34,000 10,83,626 2,007 78 2,085 15 8,254

Suji 90 2,480

2,23,200 2,13,285 2,370 84 2,454 26 2,355

Wholemeal flour 90 2,000

1,80,000 1,72,004 1,911 34 1,945 55 4,936

Bran 180 1,140

2,05,200 1,96,085 1,089 16 1,105 35 6,235

  900   17,42,400 16,65,000         21,780

Net Realizable Value Method

Lilac Flour Mills

Calculation of average unit product costs

(on the basis of net realizable value)

ProductProduction in tons

Sales price per

ton

Sales Value

Separable

costs per ton

Separable

Costs

Net Realizable Value at

splitoff point

Joint costs

allocated on the

basis of net

realizable value

Joint cost

per ton

Separable

costs per ton

Total cost per

ton

Profit per ton

Profit for total

output

White flour 540 2,100 11,34,000 78 42,120 10,91,880

10,77,781 1,996 78 2,074 26 14,099

Suji 90 2,480 2,23,200 84 7,560 2,15,640 2,12,856 2,365 84 2,449 31 2,784

Wholemeal flour 90 2,000 1,80,000 34 3,060 1,76,940

1,74,655 1,941 34 1,975 25 2,285

Bran 180 1,140 2,05,200 16 2,880 2,02,320 1,99,708 1,109 16 1,125 15 2,612

  900   17,42,400     16,86,780

16,65,000         21,780

Assuming Three By-Products

Lilac Flour Mills

Calculation of average unit product costs

(on the basis of 3 by-products)

Monthly wheat input = 900 tons

ProductProducti

on in tons

Sales price per

tonSales Value

Joint costs allocated on

the basis of 3 by-products

Joint cost per

ton

Separable costs per

ton

Total cost per ton

Profit per ton

Profit for total

output

White flour 540 2,100 11,34,000 10,70,100 1,982 78 2,060 40 21,780

Suji 90 2,480 2,23,200 2,15,640 2,396 84 2,480 0 0

Wholemeal flour 90 2,000 1,80,000 1,76,940 1,966 34 2,000 0 0

Bran 180 1,140 2,05,200 2,02,320 1,124 16 1,140 0 0

  900   17,42,400 16,65,000         21,780

Assuming Barn as By-Product

Lilac Flour Mills

Calculation of average unit product costs

(on the basis of bran as a by-product)

                   

Monthly wheat input = 900 tons

ProductProducti

on in tons

Sales price per

tonSales Value

Joint costs allocated on the basis of

bran as a by-product

Joint cost per ton

Separable costs per

ton

Total cost per ton

Profit per ton

Profit for total

output

White Flour 540 2,100 11,34,000 10,79,026 1,998 78 2,076 24 12,854

Suji 90 2,480 2,23,200 2,12,380 2,360 84 2,444 36 3,260

Wholemeal flour 90 2,000 1,80,000 1,71,274 1,903 34 1,937 63 5,666

Bran 180 1,140 2,05,200 2,02,320 1,124 16 1,140 0 0

  900   17,42,400 16,65,000         21,780

Summary of all Methods

Sales Price per

Ton

Production Value Method Sales Value Method Net Realizable value

Assuming 3 By-products

Assuming Bran as By-product

Total Cost (Inventory Value) per

tonGross Margin

Total Cost (Inventory Value ) per

tonGross Margin

Total Cost (Inventory Value ) per

tonGross Margin

Total Cost (Inventory Value ) per

tonGross Margin

Total Cost (Inventory Value ) per

tonGross Margin

White Flour 2,100 1,928 8.2% 2,085 0.7%

2,074 1.2% 2,060 1.9% 2,076 1.1%

Suji 2,480 1,934 22.0% 2,454 1.1%

2,449 1.2% 2,480 0.0% 2,444 1.5%

Wholemeal flour 2,000 1,884 5.8%

1,945 2.7%

1,975 1.3% 2,000 0.0% 1,937 3.1%

Bran 1,140 1,866 -63.7% 1,105 3.0%

1,125 1.3% 1,140 0.0% 1,140 0.0%