1 . Examine the classified costs data of Cooper Ltd shown below. Direct materials opening inventory...
Question:
1. Examine the classified costs data of Cooper Ltd shown below.
- £ Direct materials opening inventory 2,500
- Direct materials purchases 20,000
- Direct materials closing inventory 3,750
- Direct labour 40,000 Direct expenses 10,000
- Indirect production overheads 155,000
- Work-in-progress opening inventory 5,625
- Work-in-progress closing inventory 4,375
- Sales 406,250
- Finished goods opening inventory 10,625
- Finished goods closing inventory 12,500
- Indirect non-production overheads 133,125
Required:
a) Calculate production prime costs.
b) Calculate Factory Cost
c) Calculate Gross Profit
d) Calculate Net Profit
Note: show all workings.
Question 2. A business manufactures a single product with a selling price of £21 and variable unit costs of £7. Period fixed overheads are £4,942 per month. Current production levels are 700 units per month (at 80% capacity). A customer has offered to buy up all of the business spare capacity for £3,220.
Required:
Evaluate the customer’s offer from financial viewpoint and discuss whether they should accept or reject the special offer.
Note: show all workings.
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura