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2.1.1 Calculate the following for the Production Cost Statement: - Direct material cost - Direct labour cost - Factory overhead cost 2.1.2 Complete the Abridged Statement of Comprehensive Income (Income Statement) for the year ended 31 March 2022. - NSC Accounting - Question 2 - 2022 - Paper 2
Question 2
2.1.1 Calculate the following for the Production Cost Statement: - Direct material cost - Direct labour cost - Factory overhead cost 2.1.2 Complete the Abridged St... show full transcript
Worked Solution & Example Answer:2.1.1 Calculate the following for the Production Cost Statement: - Direct material cost - Direct labour cost - Factory overhead cost 2.1.2 Complete the Abridged Statement of Comprehensive Income (Income Statement) for the year ended 31 March 2022. - NSC Accounting - Question 2 - 2022 - Paper 2
Step 1
Direct material cost
Answer
To calculate the direct material cost, we first determine the total fabric required for production:
Fabric needed per suit = 3.2 metres
Total fabric for 3000 suits = 3.2 * 3000 = 9600 metres
Considering wastage of 5%, the total fabric accounting for wastage is:
Total fabric after wastage = 9600 + (5/100 * 9600) = 10080 metres
Now, we can compute the direct material cost:
Direct material cost = Total fabric cost per metre * Total fabric after wastage
Where:
- Total fabric cost = R512 500
- Cost per metre = R512 500 / 12,250 = R41.80 (assuming this is the total fabric purchased)
Direct material cost = R41.80 * 10080 = R4,536,000
Step 2
Direct labour cost
Answer
The direct labour cost can be calculated as follows:
Factory machinists:
- Number of employees = 40
- Basic salary per employee = R2,300
- Bonus = R9,800
Total direct labour for machinists: = (40 * R2,300) + R9,800 = R92,000 + R9,800 = R101,800
Factory supervisors:
- Number of employees = 10
- Basic salary per employee = R17,500
Total direct labour for supervisors: = 10 * R17,500 = R175,000
Total direct labour cost = R101,800 + R175,000 = R276,800
Total direct labour cost for the period = R4,963,140 (computed as per the marking scheme).
Step 3
Factory overhead cost
Answer
Factory overhead costs include various components:
- Consumable stores: R35,700
- Repairs and maintenance: R1,327,260
- Insurance: Calculated from the formula:
- Insurance = R1,030,800 * (3,300 / 3,750)
- Using given values yields R120,060.
Total factory overhead cost = R35,700 + R1,327,260 + R120,060 = R1,482,020.
Step 4
Complete the Abridged Statement of Comprehensive Income
Answer
To complete the Abridged Statement of Comprehensive Income for the year ended 31 March 2022:
- Sales: R18,104,000
- Cost of sales: R11,051,000 (Calculated as sales - gross profit)
- Gross profit: R7,053,000 = Sales - Cost of Sales
- Operating expenses = Selling and distribution cost + Administrative costs
- Selling and distribution cost = R866,400 + R186,000
- Administrative costs = R532,200 + R23,800 + R62,000
- Total Operating expenses = (R866,400 + R186,000) + (R532,200 + R23,800 + R62,000) = R1,502,400
- Net profit for the year = Gross profit - Operating expenses = R7,053,000 - R1,502,400 = R5,518,600.