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INFORMATION RAW MATERIAL STOCK Meters Cost per metre Total amount Opening Balance (1 Jan 2023) Purchases 25 Feb 2023 600 m R39 500 4 215 m R316 710 2 220 m R72.00 R159 840 25 May 2023 1 680 m R78.00 R131 040 25 August 2023 R82.00 R25 830 Returns: (damaged stock) 25 May 2023 195 m R78,00 Closing balance (31 Dec 2023) 495 m Stock sent to the factory 4 125 m The previous bookkeeper prepared a factory overhead cost note but did not take into account the items listed below. Their total was R44 188. Note that the other cost accounts were adjusted accordingly. Rent Expense Water & Electricity Insurance Office sundry expenses 72 252 51 840 22 050 9570 ⚫Rent must be allocated according to floor space occupied. The factory occupies 500 m², the sales department occupies 300 m²and the office occupies 100 m². 75% of the water and electricity relates to the factory. • Insurance on equipment is allocate in the ratio 3:2: 1 between the factory, sales and office departments. Note that insurance is a fixed monthly instalment and is paid for three months in advance. ⚫ 2/3 of the sundry expenses relates to the factory and the rest is office sundry expenses. EXTRACT FROM PRODUCTION COST STATEMENT 2023 2022 TOTAL (R) UNIT COST (R) UNIT COST (R) Direct Material Cost ? 42.00 Direct Labour Cost 171 675 32.70 26.50 Factory Overhead Costs ? 32.40 Total Fixed Cost 229 150 47.40 Variable cost per unit 87.45 81.70 Number of units produced and sold Breakeven point 5 080 units 3 387 units 3 195 EXTRACT FROM INCOME STATEMENT 2023 2022 TOTAL (R) UNIT COST (R) | UNIT COST (R) Sales 751 840 132,00 Cost of sales 529 985 101,00 96,15 Gross Profit 221 855 41,55 35,85 Selling and distribution costs 86 625 16,50 13,50 Administration costs 71 662 13,70 15,00 Net Profit 63 568 12,51 7,35 ⚫ The selling price of a similar canvas bag from competitors is R149.00 per bag.

INFORMATION RAW MATERIAL STOCK Meters Cost per metre Total amount Opening Balance (1 Jan 2023) Purchases 25 Feb 2023 600 m R39 500 4 215 m R316 710 2 220 m R72.00 R159 840 25 May 2023 1 680 m R78.00 R131 040 25 August 2023 R82.00 R25 830 Returns: (damaged stock) 25 May 2023 195 m R78,00 Closing balance (31 Dec 2023) 495 m Stock sent to the factory 4 125 m The previous bookkeeper prepared a factory overhead cost note but did not take into account the items listed below. Their total was R44 188. Note that the other cost accounts were adjusted accordingly. Rent Expense Water & Electricity Insurance Office sundry expenses 72 252 51 840 22 050 9570 ⚫Rent must be allocated according to floor space occupied. The factory occupies 500 m², the sales department occupies 300 m²and the office occupies 100 m². 75% of the water and electricity relates to the factory. • Insurance on equipment is allocate in the ratio 3:2: 1 between the factory, sales and office departments. Note that insurance is a fixed monthly instalment and is paid for three months in advance. ⚫ 2/3 of the sundry expenses relates to the factory and the rest is office sundry expenses. EXTRACT FROM PRODUCTION COST STATEMENT 2023 2022 TOTAL (R) UNIT COST (R) UNIT COST (R) Direct Material Cost ? 42.00 Direct Labour Cost 171 675 32.70 26.50 Factory Overhead Costs ? 32.40 Total Fixed Cost 229 150 47.40 Variable cost per unit 87.45 81.70 Number of units produced and sold Breakeven point 5 080 units 3 387 units 3 195 EXTRACT FROM INCOME STATEMENT 2023 2022 TOTAL (R) UNIT COST (R) | UNIT COST (R) Sales 751 840 132,00 Cost of sales 529 985 101,00 96,15 Gross Profit 221 855 41,55 35,85 Selling and distribution costs 86 625 16,50 13,50 Administration costs 71 662 13,70 15,00 Net Profit 63 568 12,51 7,35 ⚫ The selling price of a similar canvas bag from competitors is R149.00 per bag.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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INFORMATION RAW MATERIAL STOCK Meters Cost per metre Total amount Opening Balance (1 Jan 2023) Purchases 25 Feb 2023 600 m R39 500 4 215 m R316 710 2 220 m R72.00 R159 840 25 May 2023 1 680 m R78.00 R131 040 25 August 2023 R82.00 R25 830 Returns: (damaged stock) 25 May 2023 195 m R78,00 Closing balance (31 Dec 2023) 495 m Stock sent to the factory 4 125 m The previous bookkeeper prepared a factory overhead cost note but did not take into account the items listed below. Their total was R44 188. Note that the other cost accounts were adjusted accordingly. Rent Expense Water & Electricity Insurance Office sundry expenses 72 252 51 840 22 050 9570 ⚫Rent must be allocated according to floor space occupied. The factory occupies 500 m², the sales department occupies 300 m²and the office occupies 100 m². 75% of the water and electricity relates to the factory. • Insurance on equipment is allocate in the ratio 3:2: 1 between the factory, sales and office departments. Note that insurance is a fixed monthly instalment and is paid for three months in advance. ⚫ 2/3 of the sundry expenses relates to the factory and the rest is office sundry expenses.
Transcribed Image Text:INFORMATION RAW MATERIAL STOCK Meters Cost per metre Total amount Opening Balance (1 Jan 2023) Purchases 25 Feb 2023 600 m R39 500 4 215 m R316 710 2 220 m R72.00 R159 840 25 May 2023 1 680 m R78.00 R131 040 25 August 2023 R82.00 R25 830 Returns: (damaged stock) 25 May 2023 195 m R78,00 Closing balance (31 Dec 2023) 495 m Stock sent to the factory 4 125 m The previous bookkeeper prepared a factory overhead cost note but did not take into account the items listed below. Their total was R44 188. Note that the other cost accounts were adjusted accordingly. Rent Expense Water & Electricity Insurance Office sundry expenses 72 252 51 840 22 050 9570 ⚫Rent must be allocated according to floor space occupied. The factory occupies 500 m², the sales department occupies 300 m²and the office occupies 100 m². 75% of the water and electricity relates to the factory. • Insurance on equipment is allocate in the ratio 3:2: 1 between the factory, sales and office departments. Note that insurance is a fixed monthly instalment and is paid for three months in advance. ⚫ 2/3 of the sundry expenses relates to the factory and the rest is office sundry expenses.
EXTRACT FROM PRODUCTION COST STATEMENT 2023 2022 TOTAL (R) UNIT COST (R) UNIT COST (R) Direct Material Cost ? 42.00 Direct Labour Cost 171 675 32.70 26.50 Factory Overhead Costs ? 32.40 Total Fixed Cost 229 150 47.40 Variable cost per unit 87.45 81.70 Number of units produced and sold Breakeven point 5 080 units 3 387 units 3 195 EXTRACT FROM INCOME STATEMENT 2023 2022 TOTAL (R) UNIT COST (R) | UNIT COST (R) Sales 751 840 132,00 Cost of sales 529 985 101,00 96,15 Gross Profit 221 855 41,55 35,85 Selling and distribution costs 86 625 16,50 13,50 Administration costs 71 662 13,70 15,00 Net Profit 63 568 12,51 7,35 ⚫ The selling price of a similar canvas bag from competitors is R149.00 per bag.
Transcribed Image Text:EXTRACT FROM PRODUCTION COST STATEMENT 2023 2022 TOTAL (R) UNIT COST (R) UNIT COST (R) Direct Material Cost ? 42.00 Direct Labour Cost 171 675 32.70 26.50 Factory Overhead Costs ? 32.40 Total Fixed Cost 229 150 47.40 Variable cost per unit 87.45 81.70 Number of units produced and sold Breakeven point 5 080 units 3 387 units 3 195 EXTRACT FROM INCOME STATEMENT 2023 2022 TOTAL (R) UNIT COST (R) | UNIT COST (R) Sales 751 840 132,00 Cost of sales 529 985 101,00 96,15 Gross Profit 221 855 41,55 35,85 Selling and distribution costs 86 625 16,50 13,50 Administration costs 71 662 13,70 15,00 Net Profit 63 568 12,51 7,35 ⚫ The selling price of a similar canvas bag from competitors is R149.00 per bag.
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