Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION 1 ( 3 9 marks ) CampMore ( Pty ) Ltd is a company with a 3 0 June year - end. CampMore (

QUESTION 1(39 marks) CampMore (Pty) Ltd is a company with a 30 June year-end. CampMore (Pty) Ltds main business is to manufacture and sell tents. CampMore (Pty) Ltd also, as an added extra, sells gazebos that fit their tent range. Due to capacity constraints, CampMore (Pty) Ltd does not manufacture the gazebos in-house but rather purchases completed gazebos from the third-party manufacturer to sell as inventory. Tent manufacturing Below is an extract from the trial balance of CampMore (Pty) Ltd for the 30 June 2024 year-end, which the entity is in the process of finalising. R Purchases raw materials (components)1275000 Labour costs hourly paid employees Factory staff 810000 Administration and selling staff 280000 Salaries and commissions Factory staff 310000 Administrative and sales staff 140000 Depreciation plant and machinery 120000 Depreciation office equipment 10000 The normal capacity at CampMore (Pty) Ltds factory is 10000 tents per year. Due to various factors, CampMore (Pty) Ltds actual production for the 30 June 2024 financial year was 90% of normal production capacity. ANNEXURE I: FORMATIVE ASSESSMENT 296 HFAC231-1-Jan-Jun2024-FA2-CP-V2-05122023 Inventories relating to tent manufacturing as at 30 June: 20232024 R R Raw materials (cost price)120000210000 Work in progress (cost price)165000 Note 1 Finished goods (cost price)255500 Note 2 Note 1 Work in progress of CampMore (Pty) Ltd has not been finalised for the 30 June 2024 financial year-end. The production records indicate that 25% of the current years allocated production expenditure (labour, salaries and depreciation costs) and materials used relate to tents that were still under production at the year-end. Note 2 The production records indicate that 10% of the current years allocated production expenditure (labour, salaries and depreciation costs) and materials used relate to tents that are finished and still on hand at year-end. Gazebos Completed gazebos are purchased from a third party on an as-needed basis. CampMore (Pty) Ltd purchased the following from a third party during the 2024 financial year: Date Number of gazebos Cost per gazebo July 202330 R1900 September 202350 R1850 November 202325 R2050 January 202460 R2110 March 202445 R2200 May 202440 R2250 CampMore (Pty) Ltd had 55 gazebos with a cost of R1885 per gazebo on hand on 1 July 2023 and CampMore (Pty) Ltd had 35 gazebos on hand on 30 June 2024. ANNEXURE I: FORMATIVE ASSESSMENT 297 HFAC231-1-Jan-Jun2024-FA2-CP-V2-05122023 While the year-end stock take was performed, it was noted that CampMore (Pty) Ltd had 10 gazebos on hand, which links to an older tent model. CampMore (Pty) Ltd no longer manufactures or sells this older tent model and in order to sell these 10 gazebos they would need to be modified to fit the current tent model that CampMore (Pty) Ltd manufactures. These 10 gazebos can be modified at a cost of R1100 per gazebo. CampMore (Pty) Ltd will then be able to sell these 10 gazebos for R3000 each, while all other gazebos are sold for R3500 each. Additional information: CampMore (Pty) Ltd makes use of a periodic inventory recording system. CampMore (Pty) Ltd values raw materials, work in progress, and finished goods relating to the manufactured tents on a first-in-out basis (FIFO). There were no raw material spillages with the manufacturing process during the year. CampMore (Pty) Ltd values the gazebos on a weighted average costing basis (WAC). REQUIRED: 1.1) Prepare an extract from the Statement of Profit or Loss and Other Comprehensive Income of CampMore (Pty) Ltd for the year ended 30 June 2024 to show the cost of sales relating to the Tent manufacturing only. Comparative figures are not required. 1.2) Prepare an extract from the statement of financial position of CampMore (Pty) Ltd as at 30 June 2024 to ahow the Gazebos inventory only for the year ended 30June 2024. Comparative figures are not required

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield

13th Edition

9780470374948, 470423684, 470374942, 978-0470423684

More Books

Students also viewed these Accounting questions