EMS31ES (Accounting)
ASSIGNMENT 1
21 - 25 March 2022
PART A
Success Products manufactured 1 000 units during the year ending 31 December 200X. The
following information has been taken from the accounting records of the business:
1.
The production department transfers finished goods to the selling department at
manufacturing cost plus 25%.
2.
Factory overheads under-allocated amount to R10 000.
3.
Administrative and selling expenses for the year amount to R300 000.
4.
The turnover for the year amounts to R2 125 000.
5.
Work-in-progress on 1 January 200X and 31 December 200X amounts to R37 500 and
R62 500 respectively.
6.
Unsold finished goods on 31 December 200X amount to R187 500.
7.
Direct material on hand on 31 December 200X amounts to R25 000. There was no direct
material on hand on 1 January 200X.
8.
Direct wages owing on 1 January 200X and on 31 December 200X amounted to R75 000
and R50 000 respectively.
9.
Direct material purchased amounts to R400 000.
10.
Direct wages paid amount to R525 000.
11.
Factory overheads allocated amount to R125 000.
12.
Unrealised profit on 1 January 200X amounts to R25 000.
You are required to :
1.
Prepare the manufacturing cost/work-in-progress account in the general ledger.
2.
Prepare the manufacturing cost statement for the year ending 31 December 200X.
3.
Prepare the statement of comprehensive income for the year ending 31 December 200X.
1
PART A - ANSWER
NAME:
STUDENT NUMBER:
SUCCESS PRODUCTS
GENERAL LEDGER
DR
MANUFACTURING COST/WORK-IN-PROGRESS
2
CR
Manufacturing cost statement
3
Statement of comprehensive income
4
PART B
Below is the abbreviated trial balance of Lola Manufacturers on 31 December 200X:
Dr
R
Inventory on hand on 1 January 200X:
Direct material
Work-in-progress (unfinished goods)
Finished goods
Direct material purchased
Manufacturing wages paid
Administrative wages
Salary of factory foreman
Indirect material consumed
Customs duty: Direct material
Indirect material
Delivery costs of sold goods
General manufacturing overheads
Factory machinery at cost
Repairs to factory machinery
Rent and property tax (manufacturing = 70%)
Electricity (manufacturing = 70%)
Salaries of administrative personnel
Travelling and commission
Factory equipment at cost
Trade debtors
Stationery: Administrative
Cash and cash equivalents
Manufacturing wages accrued (1 January 200X)
Accumulated depreciation (1 January 200X):
Factory machinery
Factory equipment
Sales (finished goods)
Capital (1 January 200X)
Long-term loan
Trade creditors
83 400
90 000
67 200
444 000
210 000
42 000
30 000
9 000
15 000
3 000
9 000
5 400
216 000
3 900
39 000
30 000
36 000
15 000
12 000
38 000
13 200
45 600
30 000
1 456 700
5
Cr
R
43 200
1 200
1 080 000
223 300
56 000
23 000
1 456 700
Additional information:
1.
Inventory on hand on 31 December 200X:
Direct material
R39 430
Work-in-progress (unfinished goods)
R71 970
Stationery
2.
R
900
Depreciation must still be provided for as follows:
Factory machinery at 20% p.a. on the reducing balance method, and
Factory equipment at 10% p.a. on the fixed instalment method.
3.
Manufacturing wages owing on 31 December 200X amount to R60 000.
4.
Manufacturing overheads over-allocated amount to R3 360.
5.
All finished goods are transferred on a regular basis to the sales department at
manufacturing cost plus a factory profit of 12%.
6.
Without exception, Lola Manufacturers adds 50% to the cost of sales to determine the
selling price.
You are required to:
1.
Answer the following multiple choice questions (round off to the nearest Rand):
1.1
1.2
1.3
1.4
1.5
What is the amount of direct material consumed?
a)
R414 030
c)
R548 970
b)
R503 970
d)
R992 940
What are the direct labour costs for the year?
a)
R180 000
c)
R282 000
b)
R240 000
d)
R312 000
What is the depreciation for the year?
a)
R35 640
c)
R44 280
b)
R35 760
d)
R44 400
What are the actual manufacturing costs for the year?
a)
R 93 360
c)
R135 360
b)
R101 880
d)
R179 880
What are the allocated manufacturing overheads for the year?
a)
R132 000
c)
R176 520
b)
R138 720
d)
R182 140
6
1.6
1.7
1.8
1.9
What are the primary manufacturing costs for the year?
a)
R683 970
c)
R785 970
b)
R743 970
d)
R815 970
What are the conversion costs for the year?
a)
R315 360
c)
R375 360
b)
R318 720
d)
R378 720
What is the cost of sales for the year ending 31 December 200X?
a)
R540 000
c)
R720 000
b)
R544 500
d)
R726 000
What is the cost price of unsold finished goods at the end of the year?
a)
R356 006
c)
R350 006
b)
R536 006
d)
None of the above
1.10 What was the unrealised profit in the inventory of finished goods at the end of the
previous year?
a)
R 6 720
c)
R10 080
b)
R 8 064
d)
R7 200
1.11 What is the balance of the provision of unrealised profit on 31 December 200X?
a)
R37 501
c)
R57 429
b)
R38 144
d)
None of the above
1.12 How much is the factory profit for the year ending 31 December 200X?
a)
R 96 506
c)
R108 086
b)
R105 923
d)
None of the above
1.13 What is the influence of the change in the unrealised profit in unsold inventory on
the net profit for the year ending 31 December 200X?
a)
Increases closing inventory of finished goods and thus increases the net profit.
b)
Decreases closing inventory of finished goods and thus increases the net
profit.
c)
Decreases the net profit.
d)
No influence.
7
1.14 What is the influence of overheads over-allocated on the net profit?
a)
Decreases the net profit.
b)
Increases the net profit.
c)
Decreases the actual overheads and thus increases the net profit.
d)
No influence.
1.15 What is the amount that must be disclosed as closing inventory of finished goods in
the statement of financial position of Lola Manufacturers on 31 December 200X?
2.
a)
R356 006
b)
R313 285
c)
R312 505
d)
R317 863
Prepare the manufacturing cost statement of Lola Manufacturers for the year ending
31 December 200X.
3.
Prepare the statement of comprehensive income for the year ending 31 December 200X.
4.
Prepare the statement of financial position on 31 December 200X.
The suggested solution will be discussed during the next contact session. Please
bring your assignment to class.
8
PART B - ANSWER
NAME:
STUDENT NUMBER:
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
9
Manufacturing cost statement
10
Statement of comprehensive income
11
Statement of financial position
12