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