Question

Question 6 On 30 April 2002, the following balances were extracted from the books of Wilson Manufacturing Company: 9,890,400 4,372,000 58.000 83.840 Sales Purchases of raw materials Carriage inwards Carriage outwards Stocks, 1 May 2001 Raw materials Work in progress Finished goods Plant and machinery, at cost Office equipment, at cost 225,522 30,180 194,500 980,000 385,000

plz solve step by step

Answer 1

(a)	Direct costs are the manufacturing costs which can be directly attributable to the product
	Example: Direct materials and Direct labor
	Indirect costs are the manufacturing costs which cant be attributable to the product
	Example: Indirect materials,Indirect labor,Depreciation on manufacturing equipment,salary to factory supervisor etc
(b)
(i)	Prime cost=Direct materials+Direct labor
	Direct materials=Raw materials on 1st May 2001+Purchase of raw materials-Raw materials on 30th April 2002=225522+4372000-115290=$ 4482232
	Prime cost=4482232+491100=$ 4973332
(ii)	Total factory overheads:
						$
	Rent and rates			(395250*80%)		316200
	Electricity and water			(134400*75%)		100800
	Indirect labour					240000
	Administrative staff-Paid to factory					100000
	Repairs to machinery					18928
	Other production expenses					326400
	Depreciation on plant & machinery			(980000*15%)		147000
	Total					1249328
(iii)	Production cost per unit=Cost of goods manufactured/Units produced
	Cost of goods manufactured:
					$
	Prime cost				4973332
	Factory overhead				1249328
	Total manufacturing cost				6222660
	Add:Work in progress as on 1st May,2001				30180
	Total manufacturing cost to account for				6252840
	Less:Work in progress as on 30th April,2002				94840
	Cost of goods manufactured				6158000
	Production cost per unit=6158000/400000=$ 15.395
c)			Trading account
	Particulars			Debit	Particulars				Credit
	Beginning balance:				Ending balance:
	Raw materials			225522	Raw materials				115290
	Work in progress			30180	Work in progress				94840
	Finished goods			194500	Finished goods				181900
	Purchase of raw materials			4372000	Sales				9890400
	Direct labour			491100
	Carriage inwards			58000
	Rent and rates			316200
	Electricity and water			100800
	Indirect labour			240000
	Administrative staff-Paid to factory			100000
	Repairs to machinery			18928
	Other production expenses			326400
	Depreciation on plant & machinery			3661800
	Gross profit		(Plug)
				10135430					10282430