KRIGE SHIRTS The business manufactures shirts - NSC Accounting - Question 1 - 2018 - Paper 1

To create a Production Cost Statement, we need to include:

• Direct Material Cost
• Direct Labour Cost (calculated previously)
• Factory Overheads
• Total Production Cost
• Cost of Production of Finished Goods

1. Direct Material Cost: R528,300

2. Direct Labour Cost: R756,050 (as calculated earlier)

3. Factory Overheads: R360,880 (given)

4. Total Production Cost:

   $$Total \, Production \, Cost = Direct \, Material + Direct \, Labour + Factory \, Overheads$$ $$Total \, Production \, Cost = R528,300 + R756,050 + R360,880 = R1,645,230$$

5. Work-in-Progress (1 August 2017): R35,570 Work-in-Progress (31 July 2018): R?? (will balance)

6. Cost of Production of Finished Goods:

   To find the Cost of Production, we will subtract Work-in-Progress at year-end from Total Production Cost:

   $$Cost \, of \, Production \, of \, Finished \, Goods = Total \, Production \, Cost - WIP \, at \, year-end$$ $$Cost \, of \, Production \, of \, Finished \, Goods = R1,645,230 - R?? = R??$$

   (Final WIP balance will be determined based on previous year's closing and needs calculation.)