QUESTION ONE Sakala Manufacturing makes a single product. The following balances were extracted from the books at the end of the financial year on 31 December 2019: Inventory at 1 January 2019: Raw materials Work in progress Finished goods Purchases of raw materials Carriage Production wages Office wages Sundry office expenses Production manager's salary Factory rent, rates and power Royalties General factory expenses Premises maintenance Factory machinery (at cost) Factory machinery - provision for depreciation Inventory at 31 December 2019: Raw materials Work in progress Finished goods 17 500 24 000 50 000 82 600 12 000 75 000 35 000 14 500 20 500 18 400 9 000 15 200 40 000 120 000 70 000 16 300 29 000 46 000 Additional information at 31 December 2019: 1. 60% of the carriage relates to raw materials and 40% to goods sold. 2. General factory expenses owing K400. 3. 70% of the maintenance relates to the factory premises and 30% to the office premises 4. Factory machinery is depreciated at the rate of 15% per annum using the diminishing (reducing) balance method. Required: (a) Prepare the manufacturing account for the year ended 31 December 2019. Clearly label the prime cost and cost of production. [16 Marks] (b) Explain the difference between direct cost costs and overheads. [4 Marks] [Total: 20 Marks]