Photo AI
PRUDY MANUFACTURERS The information relates to the financial year ended 28 February 2021 - NSC Accounting - Question 2 - 2021 - Paper 2
Question 2
PRUDY MANUFACTURERS The information relates to the financial year ended 28 February 2021. The business produces one style of travelling bag. The owner is Prudy Sith... show full transcript
Worked Solution & Example Answer:PRUDY MANUFACTURERS The information relates to the financial year ended 28 February 2021 - NSC Accounting - Question 2 - 2021 - Paper 2
Step 1
Production Cost Statement
Answer
To prepare the Production Cost Statement for Prudy Manufacturers for the year ended 28 February 2021, follow these steps:
- **Calculate Total Costs:
- Direct Material Cost**
Raw Material issued: R1,494,000
-
Calculate Direct Labour Cost:
Wages paid to production workersTotal Wages: R647,400
-
Factory Overhead Costs:
a. Start with factory overhead cost: R520,280
b. Adjust for mis-posted telephone expense (R22,400) and rent expense (split into 7:2:1) to redefine the actual factory overhead.
c. Account for the insurance split (60% to factory) from R26,400. -
Total Production Costs Calculation:
Formula:
Substitute known values to find the total production cost of finished goods:
- Finished Goods Value: R2,795,000
Step 2
Abridged Statement of Comprehensive Income (Income Statement)
Answer
For the Abridged Statement of Comprehensive Income for the year ended 28 February 2021:
-
Sales Revenue:
- Total Sales Amount: R4,433,600
-
Cost of Sales Calculation:
a. Cost of finished goods R2,795,000
b. Subtract Cost of Sales from Total Sales: -
Total Expenses:
- Include Selling and distribution cost and administration cost that need to be accounted in this section.
-
Net Profit:
- Calculate using:
This will give the precise profitability of Prudy Manufacturers for the year.