Question

From the following particulars prepare a common size statement of profit & loss of Prudence Ltd.

Particulars	2022	2021
Revenue from Operations	₹ 5,00,000	₹ 3,00,000
Cost of materials consumed	60% of revenue from operations	50% of revenue from operations
Indirect Expenses	30% of cost of materials consumed	20% of cost of materials consumed
Tax Rate	40% of Net Profit before Tax	40% of Net Profit before Tax

Answer 1

Common Size Statement of Profit & Loss of Prudence Ltd. for the years ending 31st March, 2022 and 2021
Particulars	Note No.	Absolute Amounts		Percentage of Revenue from Operations
		2021-22 (₹)	2020-21 (₹)	2021-22 (%)	2020-21 (%)
I. Revenue from Operations		5,00,000	3,00,000	100	100
II. Less: Expense:
Cost of Materials Consumed		3,00,000	1,50,000	60.00	50.00
Indirect Expenses		90,000	30,000	18.00	10.00
Total Expenses		3,90,000	1,80,000	78.00	60.00
III. Profit before Tax (I − II)		1,10,000	1,20,000	22.00	40.00
IV. Less: Tax		(44,000)	(48,000)	8.80	16.00
V. Profit after Tax (III − IV)		66,000	72,000	13.20	24.00

Working Note:

Step 1: Calculate Cost of Materials Consumed

2022: ₹ 5,00,000 × 60% = ₹ 3,00,000

2021: ₹ 3,00,000 × 50% = ₹ 1,50,000

Step 2: Calculate Indirect Expenses

2022: ₹ 3,00,000 × 30% = ₹ 90,000

2021: ₹ 1,50,000 × 20% = ₹ 30,000

Step 3: Calculate Net Profit before Tax

2022: ₹ 5,00,000 – ₹ 3,00,000 – ₹ 90,000 = ₹ 1,10,000

2021: ₹ 3,00,000 – ₹ 1,50,000 – ₹ 30,000 = ₹ 1,20,000

Step 4: Calculate Income Tax

2022: 40% of ₹ 1,10,000 = ₹ 44,000

2021: 40% of ₹ 1,20,000 = ₹ 48,000

Step 5: Calculate Net Profit after Tax

2022: ₹ 1,10,000 – ₹ 44,000 = ₹ 66,000

2021: ₹ 1,20,000 – ₹ 48,000 = ₹ 72,000