3.1 Choose the correct term from these given in brackets - NSC Accounting - Question 3 - 2019 - Paper 1
Question 3
3.1 Choose the correct term from these given in brackets. Write only the term next to the question numbers (3.1.1 to 3.1.4) in the ANSWER BOOK.
3.1.1 Wages paid to ... show full transcript
Worked Solution & Example Answer:3.1 Choose the correct term from these given in brackets - NSC Accounting - Question 3 - 2019 - Paper 1
Step 1
3.1.1 Wages paid to the factory cleaner is considered to be (direct/indirect) labour.
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Answer
The correct term is indirect labour, as wages for cleaners are not directly tied to the production of goods.
Step 2
3.1.2 Bad debts must be shown as a (selling and distribution/factory overhead) cost.
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Answer
Bad debts should be classified as a factory overhead cost, as they are associated with overall business operations rather than direct production.
Step 3
3.1.3 Rent paid for the factory building is regarded as a (fixed/variable) cost.
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Answer
Rent for the factory building is a fixed cost because it does not vary with production levels.
Step 4
3.1.4 Carriage on purchases of raw materials is regarded as a/an (direct material/indirect material) cost.
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Answer
Carriage on raw materials is classified as a direct material cost, as it is necessary for obtaining the materials used in production.
Step 5
3.2.1 Calculate: The value of the closing stock using the first-in-first-out stock valuation method.
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Answer
To calculate the closing stock:
Closing stock = (930 imes 90) + (265 imes 80) = R83,700 + R21,200 = R104,900. The total amount for the direct material cost is R627,000.
Step 6
3.2.2 Calculate the correct factory overhead cost for the year.
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Water and electricity: R7,110 (15% of R7,110 = R1,066.50)
Total Factory Overhead Cost = R84,330.
Step 7
3.2.3 Total fixed cost per unit
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Answer
The total fixed cost per unit increased by R8 per unit (22%) from R36 to R44, possibly due to changes in the economies of scale and fewer units produced.
Step 8
Direct labour cost per unit
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The direct labour cost per unit increased by R12 (32%) from R38 to R50, likely attributed to inefficiencies or poor supervision leading to higher wages for additional hours needed.
Step 9
3.2.4 Calculate the break-even point on 31 December 2018.
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The break-even point can be calculated as:
Break-even point = Total fixed costs / Contribution per unit
= R264,000 / (Sales price per unit - Variable cost per unit)
Assuming the sales price is R300 and variable costs are R165, the BEP = 1,956 or 1,955.6 units.
