A factory incurred the following expenditure during the year ended 31 May 2016:Sh.Direct material consumed1,200,000Manufacturing wages700,000Manufacturing overhead – fixed360,000Manufacturing overhead – variable250,000Total cost2,510,000In the financial year ending 31 May 2017, the following changes are expected in production and cost of production.Production will increase due to recruitment of 60% more workers in the factory.Overall efficiency will decrease by 10% as a result of the recruitment of the new workersThere will be an increase of 20% in fixed overhead and 60% in variable overheadThe cost of direct material will decrease by 6% due to anticipated increase in supplyThe company desires to earn a profit of 10% on selling price.You are required to write a management report that compares the total costs for the year ended 31 May 2016 with those expected in 2017.
A factory incurred the following expenditure during the year ended 31 May 2016:Sh.Direct material consumed1,200,000Manufacturing wages700,000Manufacturing
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