QUESTION $1(39$ marks$)$

CampMore $($Pty$)$ Ltd is a company with a $30$ June year$-$end. CampMore $($Pty$)$ Ltd$$s

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$)$ Ltd$$s factory is $10000$ tents per year. Due to

various factors, CampMore $($Pty$)$ Ltd$$s actual production for the $30$ June $2024$ financial

year was $90\%$ of normal production capacity.

ANNEXURE I: FORMATIVE ASSESSMENT $2$

$96$ HFAC$231-1-$Jan$-$Jun$2024-$FA$2-$CP$-$V$2-05122023$

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 year$$s

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 year$$s 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 $202330$ R$1900$

September $202350$ R$1850$

November $202325$ R$2050$

January $202460$ R$2110$

March $202445$ R$2200$

May $202440$ R$2250$

CampMore $($Pty$)$ Ltd had $55$ gazebos with a cost of R$1885$ 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 $2$

$97$ HFAC$231-1-$Jan$-$Jun$2024-$FA$2-$CP$-$V$2-05122023$

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 R$1100$ per gazebo.

CampMore $($Pty$)$ Ltd will then be able to sell these $10$ gazebos for R$3000$ each, while

all other gazebos are sold for R$3500$ 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:

$1\mathrm{.}1)$ 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.