Reference no: EM132366559

Question

Wasbank Manufactures

Wasbank Manufactures is a business owned by Mbali Mbatha. The business produces one style of jerseys. The financial year ended on 28 February 2018.

Required:

1.2.1 Calculate the following:

Direct material cost (8)

Direct labour cost (10)

Factory overhead cost (18)

1.2.2 Calculate the number of metres of raw material fabric that was wasted during the production process. (4)

1.2.3 The accountant is of the opinion that the workers are not properly survived.

Identify TWO separate problem relating to the supervision of workers. Quote figures to support your answer (4)

In each case, provide a possible solution (2)

Information:

A. Stock balances: 28 February 2018 28 February 2017

Raw material stock ? 192 000

Work-in-process stock 27 380 128 000

Indirect materials 40 000 30 000

B. Raw material stock:

Fabric was issued from the storeroom to the factory using the weighted-average method.

Quantity (metres) Cost per metre Total cost

Stock on 1 March 2017 2 500 R 76.80 R192 000

Purchase of fabric 24 000 R98 R 2 352 000

Issued to factory 23 460 ? ?

Stock on 28 February 2018 3 040 ? ?

Usage:

Mbali has done a study of the manufacturing process and discovered that they need 4.7 metres of fabric to manufacture one Jersey

C. Direct Labour :

The business employs ten workers, with the following conditions:

They must work 8 hours normal time per day for 5 days a week.

48 weeks a year to produce two jerseys per 8 hours, per worker.

Hours worked by workers:

Hours per worker Rate per hour No. of worker

Normal time 1 500 R50 10

Overtime 1 400 R100 5

2 900

D. Indirect labour :

Foreman R 250 000

Cleaner R 110 000 ( 50% of her work hours in the factory)

Admin clerk R 190 000

E. Additional information:

Indirect material purchased during the financial year amounted to R 350 000. 70% of all indirect material is allocated to the factory.

The water and electricity for the financial year amounted to R 180 000. This is dived amongst the factory, office and sales department in the ratio 4:1:1

Rent expense was paid up to 31 March 2018. This amounted to R93 100. The rent increases annually by 10% on January. The factory occupies 80% of the floor space.

Maintenance on factory equipment amounts to R140 per hour. A total of 560 maintenance hours were recorded.

A total of 4 800 jerseys were manufactured during the financial year.

Depreciation on the factory plant and machinery, R 80 000; Office equipment, R50 000; Sales department R 20 000.