3.1 Choose a cost category from COLUMN B that matches the example in COLUMN A - NSC Accounting - Question 3 - 2024 - Paper 2

D (administration)

A (factory overhead)

To calculate the correct factory overhead cost, we need to consider the following adjustments:

1. Water and Electricity Expense Adjustment:

   Let the total water and electricity expense be represented as $X$. Then, the portion allocated to factory overhead is: $0.75X$ The portion allocated to administration is: $0.25X = R9,600$ Solving for $X$ gives: $X = R9,600 imes 4 = R38,400$ Therefore, the factory portion becomes: $0.75 imes R38,400 = R28,800$

2. Rent Expense Adjustment:

   • Total rent expense recorded = R142,800
   • Factory allocation based on floor area ratio: ext{Factory share} = R142,800 imes rac{220}{420} = R68,800

3. Insurance Expense Adjustment:

   • Original allocation = R48,000, adjusted based on correct ratio: ext{Correct factory share} = R48,000 imes rac{5}{7} = R34,285.71

Now summing all together:

Factory overhead cost:

• Original = R258,200 (incorrect)
• Adjusted = R28,800 (water) + R68,800 (rent) + R34,285.71 (insurance) = R131,885.71

Total factory overhead cost becomes: $ext{Total} = R131,885.71 + R38,400 + R9,600 = R223,885.71$

To complete the production cost statement:

1. Direct Material Cost:

   Issued to factory: $ext{Total fabric} = 70,000 m - 59,500 m = 10,500 m$ Thus, total cost of issued material = Cost per meter of last purchase: $59,500 imes R12.20 = R726,900$

2. Work-in-Progress: Latest Work-in-progress per indicated = R30,700.

3. Calculation of Prime Cost:

   $ext{Prime Cost} = ext{Direct Material Cost} + ext{Direct Labour Cost}$

4. Total Factory Overhead Costs: As previously calculated: R223,885.71.

5. Final Calculation of Total Manufacturing Cost:

   $ext{Total} = ext{Prime Cost} + ext{Factory Overheads}$

6. Continue with calculating Work-in-Progress to complete the statement.