FACULT FACULTY OF COMMERCE, MANAGEMENT AND LAW Question 1 20 Marks Katima Candy CC is a confectionery that manufactures various sweets and candy from syrup. Syrup is the raw materials used in the manufacturing and is purchased in kilograms. No wastage of syrup occurs in the production process thus 1kg of syrup material is required to produce 1kg of finished goods. At each financial year-end no work in progress is on hand. The cost of finished goods is calculated based on weight. The following information is available for 2020 financial year: N$ 7,500 30,000 57,000 65,000 Inventory 1 January 2020 Raw material - syrup (150 kg) Finished goods (250 kg) Syrup purchases 1 March 2020 (950 kg @ N$60 per kg) 1 September 2020 (1,000 kg @ R65 per kg) Salaries and wages Direct labour Production management Administration and sales personnel Colour and flavourings used in production process Electricity and water - plant (variable) Advertising and other marketing costs Depreciation Plant Office equipment Repairs and maintenance - plant (50% fixed) 90,000 30,000 20,000 7,000 4,950 15,000 Additional information 15,000 5,000 9,000 1. On 31 December 2020, 300 kg of raw material and 350 kg of finished goods were on hand. 2. Normal production capacity is 2,000 kg of finished goods per year. 3. Due to an increase in the consumers heall awareness, the market share for sweets and to N$160 per kg and the selling costs are expected to be N$9 per kg. candy has been declining. As a result, management is forced to reduce the future selling price 4. Inventory is valued on the first-in, first-out basis. 5. Ignore tax implications Required Prepare the following general ledger accounts for the year ended 31 December 2020: Raw materials (3.5) b) Work in process (5) d) Finished goods (6.5) a) c) Fixed manufacturing overheads (5) page 18 of 22