Question
Almighty Tools is a small manufacturing establishment. At the end of the accounting year, February 28, 2020, the following information was available. $ Stocks, March
Almighty Tools is a small manufacturing establishment. At the end of the accounting year, February 28, 2020, the following information was available.
$
Stocks, March 1, 2019
Raw materials 27,000
Finished goods 35,000
Work-in-progress 7,500
Factory wages (direct) 150,000
Factory salaries 25,700
Purchases of raw materials 36,300
Returns outwards 500
Factory power and fuel 83,200
Sales 532,800
Insurance 4,400
Administrative expenses 120,000
Returns inwards on finished goods 3,000
Stocks, 28 February, 2020
Raw materials 15,600
Finished goods 20,000
Work -in-progress 13,200
Machinery at cost 100,000
You are given the following additional information:
1. Machinery is to be depreciated at the rate of 25 per cent per annum
2. Factory power and fuel is in arrears of $720
3. Insurance, which is to be divided in the ratio 3:1 between the factory and the office, is prepaid in the amount of $200.
(a) Prepare a manufacturing account for the year ended February 28, 2020, showing clearly the following:
(i) The cost of raw materials consumed
(ii) The prime cost
(iii) Factory overheads
(iv) The total cost of production
(b) Prepare a Statement of Profit or Loss for year ended February 28, 2020.
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