Reference no: EM133060765

Question - On 30 April 2002, the following balances were extracted from the books of Wilson Manufacturing Company:

Rs.

Sales 9,890,400

Purchases of raw materials 4,372,000

Carriage inwards 58,000

Carriage outwards 83,840

Stocks, 1 May 2001

Raw materials 225,522

Work in progress 30,180

Finished goods 194,500

Plant and machinery, at cost 980,000

Office equipment, at cost 385,000

Rent and rates 395,250

Electricity and water 134,400

Wages and salaries

Direct labour 491,100

Indirect labour 240,000

Administrative staff 910,150

Repairs to machinery 18,928

Other production expenses 326,400

Other administrative expenses 198,685

Additional information:

(i) Stocks as at 30 April 2002: Rs.

Raw materials 115,290

Work in progress 94,840

Finished goods 181,900

(ii) Depreciation was to be provided for:

Plant and machinery 15% on cost

Office equipment 20% on cost

(iii) Electricity and water was to be apportioned as follows:

Factory 75%

Administration 25%

(iv) Rent and rates was to be apportioned as follows:

Factory 80%

Administration 20%

Required -

(a) Briefly explain the difference between direct costs and indirect costs.

(b) Calculate the following for Wilson Manufacturing Company for the year ended 30 April 2002:

(i) Prime cost;

(ii) Total factory overheads; and

(iii) Production cost of each unit of finished goods, assuming that Wilson Manufacturing Company had produced 400,000 units of finished goods during the year.

(c) Prepare the trading account of Wilson Manufacturing Company for the year ended 30 April 2002.