1.1 Indicate whether the following statements are TRUE or FALSE. Write only 'true' or 'false' next to the question numbers (1.1.1 to 1.1.3) in the ANSWER BOOK. 1.1.1 Wages of factory cleaners is a direct labour cost. 1.1.2 Delivery costs of finished goods to retailers are a selling and distribution cost. 1.1.3 Depreciation on office equipment is an administration cost. 1.2 DESKS FACTORY REQUIRED: 1.2.1 Complete the Factory Overhead Cost Note. 1.2.2 Calculate the total cost of production of finished goods. 1.2.3 Sihle wants to produce an additional 1 500 desks, while maintaining the selling price and costs. Calculate the additional profit he can expect. 1.3 CHAIRS FACTORY REQUIRED: 1.3.1 Provide a calculation to confirm the break-even point for 2019. 1.3.2 Comment on the break-even point and the production level achieved. Quote figures. 1.3.3 Sihle feels that the wood raw material was not well controlled. Provide a calculation. Identify TWO possible causes of this problem. Provide a solution for EACH. 1.3.4 Give TWO reasons for the increase in direct labour cost. Provide a solution for EACH. Note that wages and salaries increased by 15% in the current financial year.

NSC Accounting Important concepts of manufacturing: 1.1 Indicate whether the followi

1.1 Indicate whether the following statements are TRUE or FALSE - NSC Accounting - Question 1 - 2019 - Paper 1

Question 1

1.1 Indicate whether the following statements are TRUE or FALSE. Write only 'true' or 'false' next to the question numbers (1.1.1 to 1.1.3) in the ANSWER BOOK. 1.1.... show full transcript

Worked Solution & Example Answer:1.1 Indicate whether the following statements are TRUE or FALSE - NSC Accounting - Question 1 - 2019 - Paper 1

Step 1

1.1.1 Wages of factory cleaners is a direct labour cost.

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Answer

This statement is FALSE. Wages of factory cleaners are typically classified as indirect labour costs since they do not directly contribute to the production of finished goods.

Step 2

1.1.2 Delivery costs of finished goods to retailers are a selling and distribution cost.

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This statement is TRUE. Delivery costs associated with transporting finished goods to retailers fall under selling and distribution costs.

Step 3

1.1.3 Depreciation on office equipment is an administration cost.

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This statement is TRUE. Depreciation on office equipment is categorized as an administrative cost as it supports the overall operation of the business.

Step 4

1.2.1 Complete the Factory Overhead Cost Note.

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Answer

To complete the Factory Overhead Cost Note, gather all relevant data on indirect costs involved in producing desks, including:

Indirect labour
Utilities (water and electricity)
Factory rent
Insurance
Sundry expenses

Sum these costs to find total overhead.

Step 5

1.2.2 Calculate the total cost of production of finished goods.

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Total cost of production can be calculated by summing:

Direct materials
Direct labour
Factory overhead costs

Utilizing the data from the factory overhead cost note will provide accurate figures.

Step 6

1.2.3 Calculate the additional profit he can expect.

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To find the additional profit from producing 1,500 additional desks, the formula is:

$Additional Profit = (Selling Price - Variable Cost) imes 1,500$

Identify the selling price and variable cost per desk to compute this value.

Step 7

1.3.1 Provide a calculation to confirm the break-even point for 2019.

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The break-even point (BEP) is calculated as follows:

$BEP = rac{Fixed Costs}{Selling Price - Variable Cost per unit}$

Utilize the relevant figures to determine the BEP in units.

Step 8

1.3.2 Comment on the break-even point and the production level achieved.

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Analyzing the relationship between the break-even point and total units produced provides insight into profitability. If fewer units produced than BEP, a loss is incurred; if greater, a profit ensues.

Step 9

1.3.3 Sihle feels that the wood raw material was not well controlled. Provide a calculation.

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To assess this, compare actual wood usage against the budgeted amount:

Actual usage: 22,000 m²
Budgeted amount: 16,000 m²

A calculation of wastage can reveal efficiency issues.

Step 10

Identify TWO possible causes of this problem. Provide a solution for EACH.

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Possible causes for material control issues include:

Inefficient inventory management: Solution: Implement a new inventory tracking system.
Supplier inconsistencies: Solution: Establish contracts with reliable suppliers.

Step 11

1.3.4 Give TWO reasons for the increase in direct labour cost. Provide a solution for EACH.

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Reasons for increased direct labour costs could be:

Increased wages due to market demand: Solution: Consider workforce optimization or automation.
Higher overtime due to understaffing: Solution: Evaluate hiring additional staff for peak times.

1.1 Indicate whether the following statements are TRUE or FALSE - NSC Accounting - Question 1 - 2019 - Paper 1

Worked Solution & Example Answer:1.1 Indicate whether the following statements are TRUE or FALSE - NSC Accounting - Question 1 - 2019 - Paper 1

1.1.1 Wages of factory cleaners is a direct labour cost.

1.1.2 Delivery costs of finished goods to retailers are a selling and distribution cost.

1.1.3 Depreciation on office equipment is an administration cost.

1.2.1 Complete the Factory Overhead Cost Note.

1.2.2 Calculate the total cost of production of finished goods.

1.2.3 Calculate the additional profit he can expect.

1.3.1 Provide a calculation to confirm the break-even point for 2019.

1.3.2 Comment on the break-even point and the production level achieved.

1.3.3 Sihle feels that the wood raw material was not well controlled. Provide a calculation.

Identify TWO possible causes of this problem. Provide a solution for EACH.

1.3.4 Give TWO reasons for the increase in direct labour cost. Provide a solution for EACH.

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