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2.1.1 Calculate the following for the Production Cost Statement: - Direct material cost - Direct labour cost - Factory overhead cost 2.1.2 Complete the Abridged Statement of Comprehensive Income (Income Statement) for the year ended 31 March 2022. - NSC Accounting - Question 2 - 2022 - Paper 2
Question 2
2.1.1 Calculate the following for the Production Cost Statement: - Direct material cost - Direct labour cost - Factory overhead cost 2.1.2 Complete the Abridged St... show full transcript
Worked Solution & Example Answer:2.1.1 Calculate the following for the Production Cost Statement: - Direct material cost - Direct labour cost - Factory overhead cost 2.1.2 Complete the Abridged Statement of Comprehensive Income (Income Statement) for the year ended 31 March 2022. - NSC Accounting - Question 2 - 2022 - Paper 2
Step 1
Direct material cost
Answer
To calculate the direct material cost, we first determine the amount of fabric needed for 3,000 suits. Each suit uses 3.2 meters of fabric with an additional 5% allowance for wastage. Thus, the calculation is:
Fabric required = 3,000 suits * 3.2 m/suit * (1 + 0.05) = 3,000 * 3.2 * 1.05 = 10,080 meters.
Now, the cost of fabric purchased is R512,500 for 12,250 meters, and the cost per meter is:
Cost per meter = R512,500 / 12,250 m = R41.8/m.
The total direct material cost is:
Direct material cost = 10,080 m * R41.8/m = R420,864.
Step 2
Direct labour cost
Answer
To calculate the direct labour cost, we consider the number of factory machinists and their wages. The details are:
Employee description: Factory machinists Number of employees: 40 Basic salary per employee: R7,800/month
Total monthly salary = 40 employees * R7,800 = R312,000.
Over the year (12 months), the direct labour cost is:
Direct labour cost = R312,000 * 12 = R3,744,000.
Step 3
Step 4
Complete the Abridged Statement of Comprehensive Income
Answer
The Abridged Statement of Comprehensive Income for the year ended 31 March 2022 includes the following components:
- Sales: R18,104,000
- Cost of Sales: R11,115,000
- Gross Profit: Sales - Cost of Sales = R18,104,000 - R11,115,000 = R6,989,000.
- Operating Expenses: R1,260,400
- Net Profit: Gross Profit - Operating Expenses = R6,989,000 - R1,260,400 = R5,728,600.