a. Explain the difference between:

i. Direct costs and indirect costs
ii. Prime cost and cost of production.

b. Explain the meaning of the term ‘work in progress’.
c. Explain why a manufacturer may purchase finished goods as well as raw materials.
d. i. Calculate the prime cost.
ii. Calculate the cost of production.

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Iftikhar is a manufacturer. He provided the following information for the year ended 31 May 20-9: 1 June 20-8 Inventory of raw materials 4750 Inventory of work in progress 5600 31 May 20-9 Inventory of raw materials 4850 Inventory of work in progress 4300 For the year ended 31 May 20-9: Purchases of raw materials 49590 Direct factory wages 61940 Indirect factory wages 29660 Carriage on raw materials Factory direct expenses 3710 2960 Factory indirect expenses 48930