Chapter 2: Manufacturing & Trading Statements
Chapter 2:
Manufacturing & Trading Statements
Chapter Review Solutions
1.
(a)
Direct Material Cost
Inventory 1/7/09
Purchases
Less Inventory 30/6/10
(b)
Direct Material Cost
Inventory 1/7/08
Purchases
Freight on Purchases
Less Inventory 30/6/10
(c)
Direct Material Cost
Inventory 1/7/09
Purchases
Freight & Other Charges
Less Inventory 30/6/10
(d)
Direct Material Cost
Inventory 1/7/09
Purchases
Freight
Duty & Landing Charges
Less Inventory 30/6/10
(e)
Direct Material Cost
Work in Progress 1/7/10
Inventory 1/7/10
Purchase
Freight Inwards
5,000
25,000
30,000
4,000
26,000
4,000
26,000
1,000
31,000
3,000
28,000
5,000
32,000
1,000
38,000
8,000
30,000
5,000
30,000
1,000
2,000
38,000
6,000
32,000
1,200
6,500
27,300
800
35,800
Less Work in Progress 30/6/11
Inventory 30/6/11
700
1,100
11
1,800
34,000
Management Accounting in Australia - Solutions
2.
Direct Labour Costs
Direct Labour Paid
Less Direct Labour. Accrued 1/7/09
Add DIRECT LABOUR. Accrued 30/6/10
48,000
1,400
46,600
2,200
48,800
56,000
3,200
52,800
2,200
55,000
3.
Direct Labour Cost
Direct Labour Paid
Less Direct Labour. Accrued 1/7/09
Add Direct Labour. Accrued 30/6/10
4.
Work in Progress 1/7/09
Direct Labour Paid
+ Accrued 30/6/10
Less Accrued 1/7/09
11,800
52,000
1,100
1,600
Less Work in Progress 30/6/10
51,500
63,300
3,300
60,000
Manufacturing Overhead
Factory Insurance
Factory Light & Power
Indirect Labour ( 400 + 15,000 - 400 )
Machinery Repairs
Depreciation Machinery
Indirect Material ( 1,700 + 5,100 - 1,400 )
400
1,800
15,200
1,300
5,900
5,400
30,000
2,200
400
2,300
17,200
400
4,500
6,800
33,800
1,800
32,000
5.
6.
Costs for the Period
Manufacturing Overhead
Work in Progress 1/7/09
Factory Insurance ( 500 - 100 )
Factory Light & Power
Indirect Labour ( 17,000 + 600 - 400 )
Machinery Repairs
Depreciation Machinery
Indirect Materials ( 1,400 + 7,000 - 1,600 )
Less Work in Progress 30/6/10
7.
By using method as in solution 5, number manufactured equals 7,000
W.I.P.
O/bal
12,800 F.G.s
112,000
Cost of Prod 112,800 C/bal
13,600
125,600
125,600
Therefore cost per unit = $16.00
( 112,000 / 7,000 )
12
Chapter 2: Manufacturing & Trading Statements
8.
Factory Rates paid during year
Add Back prepayments 1/7/2009
2,500
1,200
3,700
600
4,300
Add Accrued 30/6/2010
To Manufacturing Account
9.
O / bal Work in Progress
Direct Material
Direct Labour
Overhead
C/bal Work in Progress
Manufacturing Account
4,000 Trading Account
12,000 Cost of Production
8,000
8,000
32,000
2,000
30,000
30,000
30,000
10.
(a)
Raw Material Cost
Work in Progress 1/7/08
Inventory 1/7/08
Purchases
Freight Inwards
Duty
2,000
10,000
60,000
2,000
5,000
79,000
Less Work in Progress 30/6/09
Inventory 30/6/09
(b)
(c)
6,000
16,000
22,000
57,000
Less Work in Progress 30/6/10
2,000
26,000
28,000
6,000
22,000
Prime Cost
Raw Materials
Direct Labour
57,000
22,000
79,000
Direct Labour Cost
Work in Progress 1/7/09
Labour ( 25,000 + 2,000 - 1,000 )
13
Management Accounting in Australia - Solutions
11.
Hopcraft Manufacturing Co. Pty Ltd
Manufacturing Statement Year Ended 30/06/2009
Raw Materials
Inventory
01/07/08
20,000
Purchases
91,000
111,000
Less Inventory
30/06/09
24,000
87,000
58,800
58,800
Direct Labour
Wages Paid
Factory Overhead
Indirect Labour
17,800
Depreciation - Factory Plant
6,800
Factory Supplies
500
Sundry Expenses
28,500
53,600
199,400
Plus Work in Progress 01/07/08
8,600
208,000
Less Work in Progress 30/06/09
- 18,000
Cost of Goods Manufactured
190,000
14
Chapter 2: Manufacturing & Trading Statements
12.
Manufacturing Statement
for the year ended 30 June 2009
Direct Materials
Inventory 1/07/08
7,500
Purchases
46,500
54,000
Less
Inventory 30/06/09
4,000
50,000
20,000
20,000
Direct Labour
Labour paid
Factory Overhead
Supervisor
7,800
Depreciation - Manufacturing Plant
2,300
Factory Rates
5,200
Factory Supplies ( 1,400 – 400 )
1,000
Insurance
1,100
Power
3,100
Repairs to Plant
4,200
24,700
Cost of Production this period
94,700
Work in Progress 01/07/08
13,300
108,000
Work in Progress 30/06/09
- 8,000
Cost of Goods Manufactured
100,000
15
Management Accounting in Australia - Solutions
13.
Conway Production Company
Manufacturing Statement 31 December 2009
Direct Material
Inventory
01/01/09
Purchases
Import Duty
Less Inventory 31/12/ 09
40,000
180,000
5,000
225,000
30,000
195,000
Direct Labour
Labour Paid
290,000
290,000
Factory Overhead
Indirect Labour
Depreciation
Faculty Power , Light & Fuel
Factory Supervisors Salaries
Sundry Factory Expenses
Total Factory Costs Incurred
Add Work in Progress 01/01/09
70,000
25,000
6,000
64,000
80,000
Less Work in Progress 31/12/ 09
Cost of Goods Manufactured
Trading Statement
Sales
Less Cost of Goods Sold
Inventory 01/01/ 09
Cost of Production
Purchases - Finished Goods
Freight Inwards on Finished Goods
Import Duty
Cost of Goods available for Sale
Less Inventory Finished Goods 31/12/ 09
Gross Profit
16
245,000
730,000
45,000
775,000
- 25,000
750,000
1,200,000
110,000
750,000
150,000
12,000
18,000
1,040,000
140,000
900,000
300,000
Chapter 2: Manufacturing & Trading Statements
14.
Rex Manufacturing Company Pty Ltd -Manufacturing Statement 31 December 2009
Direct Materials
Inventory 01/01/09
8,400
Purchases
45,100
Duty on Raw Materials
1,400
54,900
Less Inventory 31/12/ 09
6,900
48,000
Direct Labour
Labour Paid
62,000
62,000
Factory Overhead
Indirect Labour
Holiday and Sick Pay
Factory Power, Light & Fuel
Factory Managers Salary
Sundry Factory Expenses
Depreciation Factory Plant
13,200
12,300
1,800
18,600
7,800
2,300
56,000
Cost of Production
Work in Progress 01/01/ 09
Less Work in Progress 31/12/ 09
Cost of Goods Manufactured
166,000
4,000
- 10,000
160,000
P. Hogan Manufacturing Statement - 30 June, 2009
Direct Materials
Inventory 01/01/09
1,000
Purchases
145,000
Freight Inwards
400
146,400
Less Inventory 30/06/09
- 1,500
144,900
15.
Direct Labour
Labour ( 72,000 + 500 – 600 )
71,900
71,900
Factory Overhead
Factory Rent
Factory Supplies
Depreciation Factory Plant
Electricity
Indirect Labour
50,000
2,000
11,000
4,000
6,500
73,500
290,300
1,200
291,500
- 1,500
290,000
Cost of Production
Work in Progress 01/01/09
Less Work in Progress 31/12/09
Cost of Goods Manufactured
17
Management Accounting in Australia - Solutions
16.
Manufacturing Statement
30 June 2009
Direct Materials
Inventory 1/7/ 08
Purchases
Duty on Raw Materials
Freight Inwards on Raw Material
Less Inventory
30/6/09
Direct Labour
Labour ( 66,700 + 3,200 – 2,300 )
Factory Overhead
Factory Supplies 01/07/ 08
Purchases
Factory Supplies 30/06/09
Insurance
Factory Light & Power
Factory Managers Salary
Foreman’s Wages
Other Indirect Labour
Repairs to Machinery
Other Manufacturing Expenses
Cost of Production
Work in Progress 01/07/ 08
2,400
10,400
12,800
– 1,600
Less Work in Progress 30/06/ 09
Cost of Goods Manufactured
18
3,200
72,000
3,200
3,600
82,000
- 4,000
78,000
67,600
67,600
11,200
400
1,600
12,000
8,000
6,400
2,000
14,000
55,600
201,200
7,200
208,400
- 11,200
197,200
Chapter 2: Manufacturing & Trading Statements
17.
Amalfi Manufacturing Co Pty Ltd
Manufacturing Statement 30 June 2009
Direct Materials
Inventory 1/7/ 08
Purchases
Freight Inwards
Less Inventory 30/6/ 09
Direct Labour
Labour Paid
Factory Overhead
Factory Supplies 01/07/ 08
Purchases
4,500
10,000
14,500
– 5,500
Factory Supplies 30/06/09
Factory Expenses
Indirect Labour
Cost of Production
Work in Progress 1/7/ 08
18,000
100,000
5,000
123,000
- 19,000
104,000
80,000
80,000
9,000
45,400
20,000
Less Work in Progress 30/6/ 09
Cost of Goods Manufactured
74,400
258,400
5,500
263,900
8,500
255,400
Income Statement
480,000
290,400
Sales
Less Cost of Goods Sold
Inventory 1/7/08
Cost of Production
Purchases of Finished Goods
Freight Inwards
10,000
255,400
35,000
1,000
301,400
11,000
Less Inventory 30/6/ 09
Gross Profit
Add other Operating Income
Discount Received
189,600
2,500
2,500
192,100
56,100
Less Expenditure Incurred
Marketing Expenses
Advertising
Freight Outwards
General & Administrative Expenses
Office Salaries
Office Rent & Other Expenses
Financial Expenses
Discount Allowed
Interest on Bank Loan
Net ( Operating ) Profit
11,000
4,800
6,200
42,000
30,000
12,000
3,100
1,100
2,000
136,000
19
Management Accounting in Australia - Solutions
18.
(a)
Pink Limited
Manufacturing Statement for the Six Months Ended December 31 2009
($000)
($000) ($000)
Direct Materials
Inventory 01/07/09
5
Purchases
255
Freight In
13
273
Less Inventory 31/12/09
48
225
Direct Labour
Labour ( 215 – 5 + 4 )
214
Factory Overhead
Factory Supplies 01/07/09
Purchases - Factory Supplies
11
27
38
14
Factory Supplies 31/12/09
Depreciation – Plant
Depreciation – Buildings
Indirect Wages
Expenses
(112 + 5 - 3)
Factory Manager's Salary
Cost of Production
Work in Progress 01/07/09
(b)
24
13
6
50
114
20
Less Work in Progress 31/12/09
Cost of Goods Manufactured
214
227
666
14
680
18
662
Pink Limited
Trading Statement for the Six Months Ended December 31 2009
($000)
($000)
Sales
1,200
Less Cost of Goods Sold
Opening Stock
Purchases
Freight Inwards
Cost of Goods Manufactured
Less Closing Stock
Gross Profit
20
25
80
2
662
769
27
742
458
Chapter 2: Manufacturing & Trading Statements
19.
Direct Materials Bal 01/06/09
Purchases
Direct Materials
Direct Labour
Paid & Accrued ( 74,000 + 1,000 )
Factory Overhead
Factory Supplies 01/06/09
Purchases
6,000
18,000
24,000
- 4,000
Factory Supplies 30/06/09
Indirect Lab
Insurance ( 4,000 + 13,000 – 6,000 )
Power – Factory
Depreciation *
Rent – Factory
General – Factory
Current Cost of Goods Manufactured
Plus Opening Balance of W.I.P.
60,000
240,000
300,000
- 65,000
235,000
75,000
75,000
20,000
10,000
11,000
12,000
16,000
15,000
18,000
Less Closing Balance of W.I.P.
Cost of Goods Manufactured
102,000
412,000
35,000
447,000
- 47,000
400,000
Trading Statement for the Month June 2009
Sales
900,000
Cost of Goods Sold
Finished Goods 01/06/09
Purchases
Cost of Goods Manufactured
100,000
50,000
400,000
550,000
-50,000
Finished Goods 30/06/09
Gross Profit
Note:
500,000
400,000
Factory plant and machinery is depreciated at 20% p.a. straight-line.
960,000
0ne Month
80,000
Balance 01 June 2009
12
20%
= 16,000
21
Management Accounting in Australia - Solutions
20.
Manufacturing Statement for the six months ended 30th June, 2009
Direct Materials
Material Inventory 01/01/09
30,000
Purchases
120,000
Cartage and Duty
10,000
160,000
Material Inventory 30/06/09
-10,000
150,000
Direct Labour
Paid & Accrued ( 108,500 + 1,500 )
110,000
110,000
Factory Overhead
Factory Supplies 01/01/09
Purchases
3,000
12,000
15,000
-2,000
Factory Supplies 30/06/09
Indirect Labour ( 40,500 + 500 )
Electricity
Rates ( 6,200 - 200 )
General
Depreciation
13,000
41,000
16,000
6,000
4,000
15,000
Work In Progress 01/01/09
Work In Progress 30/06/09
Cost of Goods Manufactured
Sales
Trading Statement for the six month June 2009
600,000
Cost of Goods Sold
Opening Bal Finished Goods
Purchases
Cost of Goods Manufactured
Closing Bal Finished Goods
Gross Profit
70,000
30,000
360,000
460,000
-20,000
440,000
160,000
22
95,000
355,000
44,000
399,000
- 39,000
360,000
Chapter 2: Manufacturing & Trading Statements
21.
( a ) Kangan
Manufacturing Statement
$
Direct Materials
Opening stock
Cartage Inwards
Purchases
Less: Closing stock
Direct Labour
Direct labour ( 76,950 + 2,000 )
Factory Overhead
Factory Supplies
Inventory 1 July
Purchases
1,900
11,980
13,880
2,360
Less Inventory 30 June
Indirect Labour
( 32,340 + 1,060 )
Rent
( 22,000 x 50% )
Rates & Insurance ( 50% x ( 4,100 + 680 – 940 )
Sundry
Depreciation ( 59,000 x 15% )
$
21,000
4,800
96,800
122,600
- 21,480
101,120
78,950
78,950
11,520
33,400
11,000
1,920
6,070
8,850
Opening Bal Work In Progress
Less Closing Bal Work In Progress
Cost of Goods Manufactured
$
72,760
252,830
21,710
274,540
- 24,540
$ 250,000
(b)
Trading Statement
$
Sales
Less: Cost of goods sold
Opening stock of finished goods
Cost of Goods Manufactured
28,320
250,000
278,320
4,720
Less: Closing stock of finished goods
Gross Profit
23
$
423,600
273,600
$ 150,000
Management Accounting in Australia - Solutions
22.
( a ) Brook Vale
Manufacturing Statement
$
Direct Materials
Opening stock
Freight Inwards
Purchases
$
60,000
4,000
266,000
330,000
- 30,000
Less: Closing stock
$
300,000
Direct Labour
Direct labour ( 123,500 – 1,000 + 2,500)
125,000
Factory Overhead
Factory Supplies:
Inventory 1 July
Purchases
12,000
38,000
50,000
10,000
Less Inventory 30 June
Indirect Labour ( Factory Forman )
Insurance ( 25% x 4,000 ) + 6,000
Power
Depreciation
40,000
49,000
7,000
6,000
10,000
Opening Bal Work In Progress
Less Closing Bal Work In Progress
Cost of Goods Manufactured
112,000
537,000
35,000
572,000
- 20,000
552,000
(b)
Trading Statement
$
Sales
Less: Cost of goods sold
Opening stock of finished goods
Purchases
Freight Inwards
Cost of Goods Manufactured
25,000
45,000
2,000
552,000
624,000
32,000
Less: Closing stock of finished goods
Gross Profit
24
$
1,140,000
592,000
548,000
Chapter 2: Manufacturing & Trading Statements
23.
( a ) Radoslow Ltd
Manufacturing Statement
$
Direct Materials
Opening Inventory
Purchases
Freight inwards
Less: Closing Inventory
Direct Labour
Direct labour ( 159,800 + 1,100 – 900 )
Factory Overhead
Factory Supplies
Inventory 1 July
Purchases
12,600
32,400
45,000
12,700
Less Inventory 30 June
Indirect Labour
Insurance ( 3,960 + 3,000 – [ 3,960 x 10/12 ] )
Power
Depreciation
$
66,000
276,000
12,000
354,000
14,000
340,000
160,000
160,000
32,300
43,340
3,660
5,200
10,500
Work In Progress 01/07/2008
Work In Progress 30/06/2009
Cost of Production
$
95,000
595,000
15,000
610,000
- 10,000
600,000
(b)
Trading Statement
$
Sales
Less: Cost of Goods Sold
Opening Stock of Finished Goods
Cost of Goods Manufactured
Purchases
Freight
24,000
600,000
46,700
2,300
673,000
23,000
Less: Closing stock of finished goods
Gross Profit
25
$
900,000
650,000
250,000
Management Accounting in Australia - Solutions
24.
( a ) Lone Pine Ltd Manufacturing Statement for Year Ended 30 June 2009
DIRECT MATERIALS
Inventory
1 July 2008
$ 25,000
Purchases
170,000
Freight inwards
5,000
200,000
Less: Inventory 30 June 2009
20,000 180,000
DIRECT LABOUR
Direct Labour incurred ( $119,200 + 800 )
FACTORY OVERHEAD
Factory Supplies
Inventory 1 July 2008
Purchases
Less: Inventory 30 June 2009
Indirect Labour
Factory Repairs and Maintenance
Factory Power ( $9,500 + 500 )
Factory Waste disposal
Factory Insurance
Depreciation – Factory building & machinery
Work In Progress 01/07/08
Work In Progress 30/06/09
Cost of Goods Manufactured
120,000
2,500
17,500
20,000
3,000
17,000
23,500
6,500
10,000
3,300
4,500
15,300
120,000
80,100
380,100
19,900
400,000
10,000
390,000
( b ) Lone Pine Ltd Trading Statement for Year Ended 30 June 2009
Sales
800,000
Less Cost of Goods Sold
Finished Goods Inventory 1 July 2008
33,400
Purchases
40,600
Freight Inwards
4,000
Cost of Goods Manufactured
390,000
468,000
Less Finished Goods Inventory 30 June 2009
18,000 450,000
Gross Profit
$350,000
26
Chapter 2: Manufacturing & Trading Statements
25.
( a ) Ad Ler Ltd Manufacturing Statement for Year Ended 30 June 2009
DIRECT MATERIALS
Work in Process 1 July 2008
$ 3,100
Inventory
1 July 2008
25,500
Purchases
173,970
Freight inwards
4,540
207,110
Work in Process 30 June 2009
5,300
Less: Inventory 30 June 2009
28,720
34,020 173,090
DIRECT LABOUR
Work in Process 1 July 2008
Direct labour incurred ( $69,160 + 800 )
Work in Process 30 June 2009
PRIME COST
FACTORY OVERHEAD
Work in Process 1 July 2008
Indirect materials used:
Inventory 1 July 2008
Purchases
1,030
69,960
70,990
1, 720
69,270
242,360
1,100
Less: Inventory 30 June 2009
Indirect labour
Factory repairs and maintenance
Factory power ($8,540 + 1,400)
Factory waste disposal
Factory insurance ($4,680 x 3/12) + 3,330
Depreciation – factory building & machinery
Less: Work in process 30 June 2009
COST of PRODUCTION
2,240
14,840
17,080
2,660
14,420
20, 350
7, 650
9,940
2,280
4,500
15,200
74,340
1,800
( b ) Ad Ler Ltd Trading Statement for Year Ended 30 June 2009
Sales
Less Cost of Goods Sold
Finished Goods Inventory 1 July 2008
44,940
Purchases
39,900
Freight inwards
4,060
Cost of Production
314,900
403,800
Less Finished Goods Inventory 30 June 2009
35,300
Gross Profit
27
72,540
314,900
719,600
368,500
351,100