Photo AI
Question 5
The following information relates to Moses Manufacturers, a small business that manufactures photo frames. The financial year ended on 30 April 2016. **Required:** ... show full transcript
Step 1
Answer
Direct Material Cost Calculation:
Purchases of raw materials = R555 000
Less defective materials = R21 000
Direct Material Cost = R555 000 - R21 000 = R534 000
Direct Labour Cost:
Direct Labour Cost = R716 960
Factory Overhead Cost:
Factory Overhead Cost = R468 450
Total Manufacturing Cost Calculation:
Total Manufacturing Cost = Direct Material Cost + Direct Labour Cost + Factory Overhead Cost
= R534 000 + R716 960 + R468 450 = R1 719 410
Cost of Production of Finished Goods:
Cost of Production of Finished Goods = Number of Units Produced * Cost per Unit
= 39 000 * R45 = R1 755 000
Gross Profit:
Gross Profit = R1 250 000
Step 2
Answer
Gross Profit:
Gross Profit = R1 250 000
Less:
Net Profit Calculation:
Net Profit = Gross Profit - (Selling and Distribution Cost + Administration Cost)
= R1 250 000 - (R609 850 + R443 950)
= R1 250 000 - R1 053 800
= R196 200
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