Question
Question Six (6 marks) Clarkes manufactures school shoes and incurs the following costs as part of its operations for the period ending 30 June 2021
Question Six (6 marks)
Clarkes manufactures school shoes and incurs the following costs as part of its operations for the period ending 30 June 2021
Costs | $ |
Factory Supervisor salary | 80,000 |
Purchase of leather and other materials | 400,000 |
Depreciation of factory machinery | 120,000 |
Wages for factory machine operators | 180,000 |
Television Advertising Back to school campaigns | 50,000 |
Wages for workers on the factory assembly line | 250,000 |
Rent for factory premises | 70,000 |
Repair and Maintenance costs- factory machinery | 20,000 |
Administration staff wages | 100,000 |
Commission to sales staff | 55,000 |
(a) Calculate the prime costs. Show all workings including details of what costs have been included. (1 mark)
(b) Calculate the total manufacturing overhead costs. Show all workings including details of what costs have been included. (1 mark)
(c) Calculate the total product costs. Show all workings including details of what costs have been included. (2 marks )
(d) Explain two (2) key reasons why it is important that entities understand their manufacturing costs. (2 marks)
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