Zacotex Ltd, a manufacturer, produced the following financial information for the year ended 31 March 20X3. .................................................................................
Question:
Zacotex Ltd, a manufacturer, produced the following financial information for the year ended 31 March 20X3.
................................................................................. £
Row material purchases ........................ 250,000
Direct labour .................................... 100,000
Direct expenses .................................. 80.900
Indirect factory labour ......................... 16,000
Factory maintenance costs ...................... 9,700
Machine repairs ................................. 11,500
Sales of finished goods during the year .... 788,100
Inventories at 1 April 2CX2
- Row materials ................................. 65,000
- Finished goods ................................ 48,000
- Work in progress .............................. 52,500
Other factory overhead ....................... 14,500
Factory heating and lighting ................. 19,000
Factory rotes ................................... 11,500
Administration expenses ..................... 22,000
Selling and distribution expenses ........... 36.800
Additional information
1. The inventories held at 31 March 20X3 were:
Raw materials .............................. £51,400
Finished goods ...................................... £53,800
Work in progress ................................... £41,000
Raw materials are valued at cost; finished goods at factory cost; working progress at factory cost. Of the raw materials held in inventories at 31 March 20X3, £15,000 had suffered flood damage and it was estimated that they could only be sold for £2,500. The remaining raw material inventory could only be sold on the open market at cost less 10 per cent.
2. One-quarter of the administration expenses are to be allocated to the factory.
3. The raw materials purchases figure for the year includes a charge for carriage inwards. On 31 March 20X3 a credit note for £1,550 was received in respect of a carriage inwards overcharge. No adjustment had been made for this amount.
4. Expenses in arrears at 31 March 20X3 were:
............................................................ £
Direct labor ............................ 6,600
Machine repairs ....................... 1,700
Selling and distribution expenses... 4,900
5. Plant and machinery at 1 April 20X2
............................................. £
At cost .............................. 250,000
Aggregate depreciation............ 75,000
During the year an obsolete machine (cost £30,000, depreciation to date £8,000) was sold as scrap for £5,000. On 1 October 20X2 new machinery was purchased for £70,000 with an installation charge of £8,000.
The company depreciates its plant and machinery at 10 per cent per annum on cost on all items in company ownership at the end of the accounting year.
6. An analysis of the sales of finished goods revealed the following:
................................................................................... £
Goods sold for cash .................................................... 105,000
Goods sold on credit ................................................... 623,100
Goods sold on sale or return: returned ................................ 25,000
Goods sold on sale or return: retained and invoice confirmed .... 35,000
............................................................................. 788,100
7. On 1 April 20X2 the company arranged a long-term loan of £250,000 at a fixed rate of interest of 11 per cent per annum. No provision had been made for the payment of the interest.
Required
Prepare for the year ended 31 March 20X3
a. A manufacturing account showing prime cost and factory cost of goods produced.
b. A statement of profit and loss?
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Step by Step Answer:
Introduction To Financial Accounting
ISBN: 978-0077138448
7th edition
Authors: Anne Marie Ward, Andrew Thomas