William Boot owns a factory which manufactures waterproof footwear. The following is a summary of the transactions
Question:
William Boot owns a factory which manufactures waterproof footwear.
The following is a summary of the transactions of the company during the financial year ending 31 May 19_4:
Value of opening stocks of raw materials:
Purchases of raw materials:
Factory expenses:
Wages of production workers, 6 300 man-hours at £3 per man-hour.
Hire of special moulds (a direct expense), £1 500.
Rent and Rates, £14 501 (three seventeenths of this total is for an office building).
Non-productive labour, £16 480.
Light, Heat and Power, £18 500. (This includes a payment of £700 which relates to the following year).
Depreciation is calculated at £2.50 per machine-hour. (Records show that six machines have been used for six hours per day for twohundred-
and-fifty days during the year.)
Sundry factory expenses, £9 400.
At 31 May 19_4 raw materials were:
Rubber £30 880 Linings £3 135 Glue £150 Work in progress was valued at £24 500 at the start of the year and £35 302 at the end of the year.
47 500 pairs of boots were sold in the year for a total of £750 000. The opening stock of finished boots was valued at £40 000 (12 000 pairs) and the closing stock at £90 000 (27 000 pairs). m
(a) You are required to prepare:
(i) A manufacturing account and trading account for the year to 31 May 19_4. (24 marks)
(ii) A calculation of the production cost of one pair of boots. (4 marks)
(b) A footwear retailer has offered Mr Boot a special order for 20 000 pairs. Mention two matters that should be considered before deciding whether to accept the order.
Step by Step Answer:
Accounting Costing And Management
ISBN: 9780198328230
2nd Edition
Authors: Riad Izhar, Janet Hontoir