Question: 2 . 9 Established in 2 0 1 0 , Severn Manufacturers is one of South Africa's leading designers and manufacturers of custom - made
Established in Severn Manufacturers is one of South Africa's leading designers and manufacturers of custommade cosmetic and toiletry bags. The company manufactured units during the quarter ended March X The factory has maximum capacity to manufacture units per quarter. Additional space is required when more than units are planned. Extra capacity is available at R per month. The following costs for the three months ended March X appeared in the books of Severn Manufacturers:
Direct material costs of R were incurred.
Direct wages of R were paid.
The rent for the factory building was R for the quarter.
Other manufacturing overheads for the period were R of which R was fixed.
Due to recent change in sales policy, the company introduced doortodoor sales. Commission of R was paid to the sales agent. Rent of R was paid for the sales office located in Ballito.
Required:
Calculate the following:
a Prime cost per unit for the quarter ended March X
b Conversion costs incurred during the quarter ended March X
c Total period costs for the quarter ended March X
d Expected fixed costs per unit for the expected production level of units for the forthcoming quarter.
e Expected total production costs for the expected production level of units for the forthcoming quarter.
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