ADDENDUM Q4 QUESTION: MANUFACTURING (40 marks; 25 minutes) 3.1 Choose the correct term from those given in brackets. Write only the term next to the question numbers (3.1.1 to 3.1.4) in the ANSWER BOOK 3.1.1 Wages paid to the factory cleaner is considered to be direct/indirect) labour. 3.1.2 as Bad debts must be shown factory overhead) cost. a (selling and distribution/ 3.1.3 3.1.4 Rent paid for the factory building is regarded as a (fixed/variable) cost. Carriage on purchases of raw materials is regarded as alan (direct material/indirect material) cost. (4) 3.2 ZINZI MANUFACTURERS Information is provided for the financial year ended 31 December 2018. The business manufactures leather jackets according to orders received. There is no work-in-progress stock. REQUIRED: 3.2.1 Raw material stock: Calculate: . The value of the closing stock using the first-in-first-out stock valuation method The direct material cost (5) (4) 3.2.2 Refer to Information C. Calculate the correct factory overhead cost for the year. (8) 3.2.3 The owner is concerned about the increase in the following: Total fixed cost per unit Direct labour cost per unit Provide evidence (figures) to justify his concern. In each case, also give a possible reason for the increase in EACH unit cost, apart from normal inflation. (6) 3.2.4 Break-even: (4) . Calculate the break-even point on 31 December 2018. Explain whether or not there was any improvement in the trends of the level of production and the break-even point from one year to the next. Quote figures. The owner cannot understand why he is making a better profit this (4) year. Explain how this happened. Provide TWO points. Quote figures. (5) INFORMATION: A. Raw material: INFORMATION: A. Raw material: Stock balance: 1 January 2018 31 December 2018 Metres 920 1 195 Cost per metre R65 ? Total amount R59 800 ? B. Purchases for the year: Date February 2018 May 2018 September 2018 TOTAL Metres 5 200 2480 930 8 610 Cost per metre R75 R80 R90 Total amount R390 000 R198 400 R83 700 R672 100 C. Factory Overhead Costs: The bookkeeper calculated the factory overhead cost at R84 330. He did not take into account the following expenses: Insurance R31 200 Rent expense R114 000 Water and electricity for the administration section R7 110 60% of the insurance relates to the factory. The rent must be allocated between the factory, sales and administration in the ratio 5:2:1. 15% of the water and electricity expense relate to the office. 50% must be allocated to the factory. D. 2018 TOTAL PER UNIT AMOUNT R264 000 R44 Fixed costs: Factory overheads Administration 2017 PER UNIT R36 R26 R10 R165 Variable costs: Direct materials Direct labour Selling and distribution R330 000 R50 R150 R94 R38 R18 E. Additional information: Number of jackets produced and sold Break-even point Selling price per jacket Inflation rate 2018 6 000 units ? R300 5% 2017 7 560 units 3 888 units R220 QUESTION 4 Make use of Question (ADDENDUM Q4) (Manufacturing) to prepare the memorandum and show calculations done in Manufacturing. (20) Assessment Criteria: Prepare the MEMO with mark allocation for the Manufacturing question (ADDENDUM Q4)