2.1 Prepare the Production Cost Statement - NSC Accounting - Question 2 - 2020 - Paper 2

Production Cost Statement for the Year Ended 28 February 2021

Direct Costs

• Direct Material Cost: R1,575,000
• Carriage on Raw Materials (to be added): R75,000
• Direct Labour Cost: R900,000

Total Direct Material Cost = R1,575,000 + R75,000 = R1,650,000

Factory Overhead Cost Adjustment

• Factory Overhead Cost (to consider errors):
  • Original: R518,800
  • Deduct: Allocation error
    • Water and Electricity Adjustment: R117,600

Thus, listed as below:

• Factory Overhead Cost: R516,000

Total Manufacturing Cost

• Total Production Cost = Direct Material Cost + Direct Labour Cost + Adjusted Factory Overhead Cost

$ext{Total Manufacturing Cost} = R1,650,000 + R900,000 + R516,000 = R3,066,000$

Work-in-Progress Calculation

• Work-In-Progress (Beginning): (To be determined)
  • Assume it is R0 for calculation simplicity
• Total Cost of Production: $ext{Total Production} = ext{Total Cost} - ext{WIP (End)}$

Total Cost of Production

• Total Cost of Production: R3,066,000 -estimates on stocks (assumptions)

Final Production Cost Statement

• Total Production = 7,600 shirts produced