Questions (d) and (e) are based on the information below. Sanit Ltd is an alcohol sanitizer manufacturing company that produced 175 000 units of 100 ml hand sanitizer bottles during the financial year ended 31 August 2020. The normal capacity is 100 000 units of hand sanitizer 100 ml bottles per year. The total cost per unit, excluding fixed production overheads, amounts to R50 per unit. The fixed production overheads incurred amounts to R700 000 for the year. The closing balance of finished goods is 5 000 units. Assume there is no opening balance. (d) The under / over recovered fixed production overheads that is recognised as an expense (cost of sales) according to IAS 2, Inventories, amounts to: 1) R525 000 over recovery 2) R525 000 under recovery 3) R700 000 over recovery 4) R0 (e) Calculate the cost of sales in the statement of profit or loss and other comprehensive income for the financial year end 31 August 2020 of Sanit Ltd:
Questions (d) and (e) are based on the information below. Sanit Ltd is an alcohol sanitizer manufacturing company that produced 175 000 units of 100 ml hand sanitizer bottles during the financial year ended 31 August 2020. The normal capacity is 100 000 units of hand sanitizer 100 ml bottles per year. The total cost per unit, excluding fixed production overheads, amounts to R50 per unit. The fixed production overheads incurred amounts to R700 000 for the year. The closing balance of finished goods is 5 000 units. Assume there is no opening balance. (d) The under / over recovered fixed production overheads that is recognised as an expense (cost of sales) according to IAS 2, Inventories, amounts to: 1) R525 000 over recovery 2) R525 000 under recovery 3) R700 000 over recovery 4) R0 (e) Calculate the cost of sales in the statement of profit or loss and other comprehensive income for the financial year end 31 August 2020 of Sanit Ltd:
Questions (d) and (e) are based on the information below. Sanit Ltd is an alcohol sanitizer manufacturing company that produced 175 000 units of 100 ml hand sanitizer bottles during the financial year ended 31 August 2020. The normal capacity is 100 000 units of hand sanitizer 100 ml bottles per year. The total cost per unit, excluding fixed production overheads, amounts to R50 per unit. The fixed production overheads incurred amounts to R700 000 for the year. The closing balance of finished goods is 5 000 units. Assume there is no opening balance. (d) The under / over recovered fixed production overheads that is recognised as an expense (cost of sales) according to IAS 2, Inventories, amounts to: 1) R525 000 over recovery 2) R525 000 under recovery 3) R700 000 over recovery 4) R0 (e) Calculate the cost of sales in the statement of profit or loss and other comprehensive income for the financial year end 31 August 2020 of Sanit Ltd:
Questions (d) and (e) are based on the information below.
Sanit Ltd is an alcohol sanitizer manufacturing company that produced 175 000 units of 100 ml hand sanitizer bottles during the financial year ended 31 August 2020. The normal capacity is 100 000 units of hand sanitizer 100 ml bottles per year. The total cost per unit, excluding fixed production overheads, amounts to R50 per unit. The fixed production overheads incurred amounts to R700 000 for the year. The closing balance of finished goods is 5 000 units. Assume there is no opening balance.
(d) The under / over recovered fixed production overheads that is recognised as an expense (cost of sales) according to IAS 2, Inventories, amounts to:
1) R525 000 over recovery
2) R525 000 under recovery
3) R700 000 over recovery
4) R0
(e) Calculate the cost of sales in the statement of profit or loss and other comprehensive income for the financial year end 31 August 2020 of Sanit Ltd:
1) R9 000 000
2) R9 180 000
3) R9 450 000
4) R9 705 000
Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.
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