Reference no: EM133433388
EduCate Ltd. is an education and training services company based in Kingston, Jamaica. EduCate produces online and video information films covering various Accounts courses, from secondary to tertiary education. There is a shortage of accountants in Jamaica, as stated by the Jamaica Observer https://www.jamaicaobserver.com/business/accountant-shortage/ . Orders have soared as the shortage in the workplace has created a demand from employers, to which prospective employees have responded by increasing their demand for EduCate's products.
During the year the management at EduCate had to hire a new photocopier. The monthly hire rate was $1,000. Other costs associated with the photocopier were toner, paper and electricity. These costs amounted to $10 per 100 copies.
The following information was reported by EduCate Ltd. for the year.
Required:
1. Calculate the prime cost for the year
2. Using the terms from the table 'Direct manufacturing labour' and 'indirect manufacturing costs' explain the difference between DIRECT COSTS and INDIRECT COSTS of a manufacturing business, citing at least THREE examples of each that might apply to EduCate Ltd.
3. Calculate the total annual cost of the photocopier if 10, 000 copies were made during the year.
4. Explain why the total cost of the photocopier is an indirect cost for EduCate.
5. You are required to show your workings for Questions 1 and 3 and provide at least two references as part of your answers.
6.
The Osbourne Store Manufacturing Company extracted the following balances as at 30 June 2014.
Inventory: 30 June 2013
Raw materials 12,000
Finished goods 36,900
Work in progress 33,810
Purchase of raw materials 195,000
Carriage on raw materials 10,500
Direct factory wages 122,100
Indirect factory wages 45,900
Maintenance and repairs 25,350
Electricity 40,110
Sales 900,000
Plant and machinery at cost 426,000
Provision for depreciation on plant and machinery 36,000
Receivables 15,000
Payables 30,000
Bank 10,000
Capital 6,670
Additional Information:
Inventory at 30 June 2014:
Raw materials $10,500
Finished goods $51,906
Work in progress $28,260
Depreciation is to be calculated on plant and machinery at the rate of 10% of cost.
The office is responsible for 2/5 of the maintenance.
The factory is responsible for 1/3 of electricity.
Prepare:
a. The Manufacturing Account and Income Statement.
b. Statement of Financial Position