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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 will first determine the total fabric needed for the production target:
Fabric needed for one suit = 3.2 metres Total suits produced = 3,000
Total fabric needed = 3.2 metres/suit * 3,000 suits = 9,600 metres
Next, consider the 5% allowance for wastage:
Total fabric including wastage = 9,600 metres * 1.05 = 10,080 metres
The cost of fabric per metre can be calculated from total purchases:
Total fabric purchased = 12,250 metres for R5,512,500 Cost per metre = R5,512,500 / 12,250 metres = R450
Now, finalize the direct material cost:
Direct material cost = 10,080 metres * R450/metre = R4,536,000.
Step 2
Direct labour cost
Answer
For the direct labour cost, we will calculate the total wages for machinists and supervisors.
Factory machinists:
- Number of employees = 40
- Monthly salary per employee = R17,500
- Annual salary per employee = R17,500 * 12 = R210,000
Total for machinists = 40 * R210,000 = R8,400,000
Factory supervisors:
- Number of employees = 20
- Monthly salary per employee = R21,000
- Annual salary per employee = R21,000 * 12 = R252,000
Total for supervisors = 20 * R252,000 = R5,040,000
Combine both totals:
Direct labour cost = R8,400,000 + R5,040,000 = R13,440,000.
Finally, include bonuses (11% of total gross wages): Bonus for machinists = 11% of R8,400,000 = R924,000 Bonus for supervisors = 11% of R5,040,000 = R554,400 Total bonus = R924,000 + R554,400 = R1,478,400
Final direct labour cost = R13,440,000 + R1,478,400 = R14,918,400.
Step 3
Step 4
Abridged Statement of Comprehensive Income
Answer
The Abridged Statement of Comprehensive Income will include:
- Sales = R18,104,000
- Cost of sales = R11,105,000
- Gross profit = R18,104,000 - R11,105,000 = R6,999,000
- Operating expenses: Selling and distribution cost = R1,052,400 + Administration costs = R532,200 + Total Operating Expenses (Selling + Administration) = R1,584,600
- Net profit = Gross profit - Operating expenses = R6,999,000 - R1,584,600 = R5,414,400.