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FIFI Company of Dodoma, Tanzania, is a family-owned enterprise that makes birdcages for the central Tanzania market. The company sells its birdcages through an
FIFI Company of Dodoma, Tanzania, is a family-owned enterprise that makes birdcages for the central Tanzania market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. All of the company's transactions with customers, employees, and suppliers are conducted in cash; there is no credit. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated TZS 330,000 of manufacturing overhead for an estimated activity level of TZS 200,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: TZS 25,000 Raw materials Work in process TZS 10,000 Finished goods TZS 40,000 During the year, the following transactions were completed: a. Raw materials purchased for cash TZS 275,000. b. Raw materials requisitioned for use in production, TZS 280,000 (materials costing TZS 220,000 were charged directly to jobs; the remaining materials were indirect). c. Costs for employee services were incurred as follows: Direct labor Indirect labor Sales commissions TZS 180,000 TZS 72,000 TZS 63,000 Administrative salaries TZS 90,000 d. Rent for the year was TZS 18,000 (TZS 13,000 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, TZS 57,000. f. Advertising costs incurred, TZS 140,000. g. Depreciation recorded on equipment, TZS 100,000. (TZS 88,000 of this amount was on equipment used in factory operations; the remaining TZS 12,000 was on equipment used in selling and administrative activities.) h. Manufacturing overhead cost was applied to jobs, TZS?. i. Goods that had cost TZS 675,000 to manufacture according to their job cost sheets were completed. j. Sales for the year totaled TZS 1,250,000. The total cost to manufacture these goods according to their job cost sheets was TZS 700,000.
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