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Answer to Accounting Test Question No.Mfg.1
Jim Brothers
Manufacturing Account For The Year Ended 30 September Year 7
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$
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$
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$
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Raw materials
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Opening stock-raw materials
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7,450
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Purchases of raw materials
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128,740
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Add: Carriage inwards
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1,055
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Less: Purchases returns
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310
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129,485
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Raw materials available for production
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136,935
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Less: Closing stock
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6,325
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130,610
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Add: Direct wages (W1)
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188460
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Add: Direct expenses
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3,280
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PRIME COST
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322,350
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Add: Production overhead
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Rates(W2)
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3,840
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Light, heat and power(W3)
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2,610
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Indirect wages
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14,320
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Telephone(W4)
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640
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Factory repairs
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2,215
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Insurance(W5)
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900
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Salaries
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38,000
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Depreciation of plant & machinery (W6)
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32,000
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Depreciation of furniture & equipment(W7)
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4,200
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98,725
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Production cost
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421,075
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Add: Opening Work-In-Progress
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5,330
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426,405
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Less: Closing Work-In-Progress
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6,105
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Production cost of finished goods
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420,300
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Add: Manufacturing profit(15%) (W8)
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63,045
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Production cost transferred to Trading Account
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483,345
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Jim Brothers
Trading Account For The Year Ended 30 September Year 7
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$
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$
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Sales
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721,560
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Less: Returns inwards
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1,215
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720,345
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Less: Cost of sales
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Opening stock-Finished goods
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12,110
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Add: Production cost
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483,345
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495,455
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Less: Closing stock-Finished goods
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15,255
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480,230
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Gross profit
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240,115
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Add: Manufacturing profit
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63,045
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303,160
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Workings:
[ adjust the expenses like accruals and prepayment and to compute the expenses that relates only to manufacturing ]
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W1
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Direct Wages A/c
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=$187,240+$1,220(accrued)= $188,460
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W2
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Rates A/c
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=($5,250-$450) x $3,840
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W3
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Light, Heat & Power A/c
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=$3,480 x 3/4 =$2,610
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W4
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Telephone A/c
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=$960 x 2/3 =$640
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W5
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Insurance A/c
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=($1,420-$220) x 3/4 =$900
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W6
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Depreciation of Plant & Machinery A/c
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=$160,000 x 20% =$32,000
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W7
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Depreciation of Furniture & Equipment A/c
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=$42,000 x 10% =$4,200
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W8
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Manufacturing profit
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=$420,300 x 15% =$63,045
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