Lilac Flour Mills

Managerial Accounting and Control - II

INSTRUCTOR: PROF. KEYUR THAKER

GROUP 4A
EDUKONDALU N
AMIT PANT
ADITYA JAIN
LOKESWARA REDDY T
DEEPESH DADLANI
 Case Brief

About the Firm

The Problem
Current Accounting Procedure
Advised Accounting Methods
 Lilac Flour Mills – Flow Chart

Cleaning Milling

Roller Mills
Chaff
Removal Brushing
First
Break Second
Third Fourth
Dust Break
Triuor Break Break
Removal Equipment

Sieving
Wheat Corn Sieving
Bin Washing Sieving
Sieving

Plant Sifters

White Suji Wholemea Bran

Flour l Flour
 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

Joint costs
Producti allocated on
Joint cost Separable Total cost Sales price Profit per Profit for
Product on in the basis of
per ton costs per ton per ton per ton ton total output
tons production
quantities

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 – I
Sales Value Method

Lilac Flour Mills

Calculation of average unit product costs

(on the basis of sales value)

Monthly wheat input = 900 tons

Joint costs
Sales Joint Separable Profit for
Productio Sales allocated on Total cost Profit
Product price per cost per costs per total
n in tons Value the basis of per ton per ton
ton ton ton output
sales value

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)

Joint costs allocated on the basis of net realizable value

Net Realizable Value at splitoff point
Separable costs per ton

Separable costs per ton

Profit for total output

Sales price per ton
Production in tons

Joint cost per ton

Total cost per ton

Separable Costs

Profit per ton

Sales Value
Product

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
 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

Joint costs
Producti Sales Joint Separable Profit for
allocated on Total cost Profit
Product on in price per Sales Value cost per costs per total
the basis of 3 per ton per ton
tons ton ton ton output
by-products

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

Joint costs
Producti Sales allocated on Separable Profit for
Joint cost Total cost Profit
Product on in price per Sales Value the basis of costs per total
per ton per ton per ton
tons ton bran as a by- ton output
product

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

Production Value Assuming 3 By- Assuming Bran as By-

Method Sales Value Method Net Realizable value products product

Total Cost Total Cost Total Cost Total Cost Total Cost
Sales (Inventory (Inventory (Inventory (Inventory (Inventory
Price per Value) per Gross Value ) per Gross Value ) per Gross Value ) per Gross Value ) per Gross
Ton ton Margin ton Margin ton Margin ton Margin ton 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%