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QUESTION 3 a) SANTA LTD. submits the following information on 31st March, 2020: Particulars Sales for the year Purchases of material for the year
QUESTION 3 a) SANTA LTD. submits the following information on 31st March, 2020: Particulars Sales for the year Purchases of material for the year Direct labor Inventories at the beginning of the year Finished goods Work-in-progress Materials inventory At the beginning of the year At the end of the year Inventories at the end of the year Work-in-progress Finished goods Additional information: Amount (USD) 5,500,000 2,200,000 1,300,000 140,000 80,000 60,000 80,000 120,000 160,000 3 - Manufacturing overheads were 60% of the direct labor cost. - Administration expenses were 5% of sales. - Selling & distribution expenses were 10% of sales. Required: Prepare a Cost Sheet with all elements? b) MODERN LTD. has three departments X, Y and Z, each of which makes a different product. The budgeted data for the coming year are as follows (USD): Particulars X Sales 2,240,000 Direct materials 280,000 Direct labour 112,000 Direct expenses 280,000 Fixed cost 560,000 Department Y 1,120,000 1,680,000 140,000 280,000 140,000 448,000 140,000 560,000 280,000 560,000 The management of the company is considering closing down department 'Z'. There is a possibility of reducing fixed cost by $150,000 if department 'Z' is closed down. Advise the management whether or not department 'Z' should be closed down?
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