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LADOO MANUFACTURERS The business manufacturers leather purses - NSC Accounting - Question 3 - 2023 - Paper 2
Question 3
LADOO MANUFACTURERS The business manufacturers leather purses. The financial year ended on 28 February 2023. REQUIRED: 3.1.1 Refer to Information C. Calcula... show full transcript
Worked Solution & Example Answer:LADOO MANUFACTURERS The business manufacturers leather purses - NSC Accounting - Question 3 - 2023 - Paper 2
Step 1
Refer to Information C. Calculate the factory overhead cost.
Answer
To calculate the factory overhead cost, we need to account for all relevant costs including any corrections as stated.
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Initial Calculation:
The initial factory overhead cost provided was R2 638 600. -
Insurance Calculation:
Total insurance amount = R235 950
Factory portion of insurance = ( \frac{2}{3} \times 235 950 = 157 300 )
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Water and Electricity Calculation:
Total = R69 200 allocated to office.
Sharing ratio: (560:240:160)
Factory share = ( \frac{560}{960} \times 69 200 = 40 200 )
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Rent Correction:
Correct rent allocation means adjusting from the previous incorrect ratio.
Rent = R316 000; adjustment to factory is ( \frac{5}{8} ) = 197 500
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Total Factory Overhead Cost Calculation:
Total Factory Overhead Cost = Initial + Insurance + Water and Electricity + Rent
( R2 638 600 + R157 300 + R40 200 + R197 500 = R3 033 600 )
Step 2
Prepare the Production Cost Statement on 28 February 2023.
Answer
Production Cost Statement on 28 February 2023
Direct Material Cost
- Direct material cost: R6 750 000
Direct Labour Cost
- Direct labour cost:
- Normal hours: ( 40 ext{ workers} \times 1920 ext{ hours per worker} \times R60 = R4 608 000 )
- Overtime: R1 142 000
- Total direct labour cost: ( R4 608 000 + R1 142 000 = R5 750 000 )
Prime Cost
- ( R6 750 000 + R5 750 000 = R12 500 000 )
Factory Overhead Cost
- As calculated previously: R3 033 600
Total Manufacturing Cost
- ( R12 500 000 + R3 033 600 = R15 533 600 )
Work-in-Progress
- Work-in-progress stock balance at end of the year: R542 000
Total Production Cost of Finished Goods
- ( R15 533 600 + R542 000 = R16 075 600 )