ANSWER
a. | Manufacturing account | |||
RM | RM | |||
Opening stock of raw materials | 8000 | |||
Add: | ||||
Purchase of raw materials | 87000 | |||
Carriage inwards | 2000 | |||
97000 | ||||
Less: Closing stock of raw material | 10500 | |||
Cost of direct materials | 86500 | |||
Add: | ||||
Direct wages | (39600+550) | 40150 | ||
Direct expenses | 1400 | |||
Prime cost | 128050 | |||
Add: Factory overhead expenses | ||||
Lubricants used | 3000 | |||
Factory rent | (7200-140) | 7060 | ||
Depreciation of factory plant and machinery | 4200 | |||
Internal transport expenses (for factory) | 1800 | |||
Insurance of factory buildings and plant | 1500 | |||
General factory expenses | 3300 | |||
Fuel and power | 9900 | |||
Indirect wages | 25500 | 56260 | ||
184310 | ||||
Add: Opening stock of work in progress | 3500 | |||
187810 | ||||
Less: Closing stock of work in progress | 4200 | |||
Cost of production | 183610 | |||
b. | Income statement | |||
$ | $ | |||
Sales | 250000 | |||
Less: Cost of goods sold | ||||
Cost of production | 183610 | |||
Add: Opening stock of finished goods | 38900 | |||
222510 | ||||
Less: Closing stock of finished goods | 4400 | 218110 | ||
Gross profit | 31890 | |||
Less: | ||||
General expenses | 4100 | |||
Commission on sales | 2500 | |||
Carriage outwards | 3300 | |||
Administrative salaries | 12000 | |||
Sales staff salaries | 8000 | |||
Interest paid | 1950 | 31850 | ||
Net income | 40 | |||
Note: It is assumed that carriage outward is related to sales. | ||||
If carriage outward was related to return of purchased goods,it would have been deducted in the computation of cost of direct materials | ||||
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