The following data were obtained from the books of Smarties Ltd, a manufacturer, as at 31 December 2011:

Shs 000

Raw material purchases 200,000

Indirect materials 20,000

Carriage on materials 2,000

Direct labour cost 450,000

Raw material returns 4,500

Carriage outwards 30,000

Other overheads 135,000

Lighting 35,000

Power for production machines 145,000

Indirect labour costs 45,000

Office salaries 77,000

Administration expenses 125,000

Sales 4,210,000

Advertising 14,000

Provision for bad debts, 1 January 2011 14,500

Bank charges 2,950

Delivery van expenses 8,500

Discounts allowed 4,500

Depreciation:

• Motor vehicle 2,500
• Furniture 3,500
• Fittings 6,500

The following additional information was provided:

1. Inventory

1 January 2011 31 December 2011

Shs 000 Shs 000

Raw materials 50,000 35,000

Work in progress 25,000 10,000

Finished goods 20,000 23,000

2. The production machines had the following balances at 1 January 2011:

Shs 000

Cost 800,000

Accumulated depreciation 464,000

Net book value 336,000

A machine which had cost Shs 100 million on 1 February 2009 was disposed of during the year at Shs 32 million. This transaction had not yet been accounted for in Smarties Ltds books.

The firm depreciates its production machines at the rate of 40% per annum on the reducing balance basis.

1. Shs 150 million payable for power for the production machines had not yet been accounted for.
2. Lighting was apportioned as follows: factory , office .
3. 70% of other overheads relate to the office while the balance to the factory.
4. Bad debts provision should be increased to Shs 16 million.
5. Advertising expenses of Shs 1 million were prepaid.
6. Manufactured goods are transferred at factory cost plus mark-up of 20% to cater for factory profit. (Ignore provision for unrealized profits).
   1. Manufacturing cost statement.

Required:

Prepare Smarties Ltd.s:

a) Manufacturing Cost Statement

b) Statement of profit or loss and other comprehensive income for the year ended 31 December 2011.