These slides contains calculations for the basics of cost accounting concepts. This is an important slide.

1. INTRODUCTION TO COST
ACCOUNTING
LESSON 2
UNIT 2: CALCULATIONS
PRESENTED: SAMUKELO NELSON
SAOLA
DIRECTOR: SCHOOL ACADEMIC
SUPPORT

2. Unit 2: Calculations
You are provided with information taken from the records of Fluzzie Cleaners for the
financial year ended 28 February 2015. The business manufactures and sells a single
type of cleaning broom.
REQUIRED:
1) Calculate:
 Direct material cost
 Direct labour cost
 Factory overhead costs

3. Unit 2: Calculations
2) Post to the Work-In-Process Stock account in the General Ledger.
( Show all workings in brackets)
Information:
1) Raw material stock
2014: 27500
2015: 33650
2) Work-in-process-stock
2014: 17600
2015: 19950

4. 3) Factory indirect material stock
2014: 3330
2015: 2170
Additional information
 Raw material purchased amounted to 826500
 Damaged raw material returned to suppliers 5200
 Carriage on raw material purchased 7840
 Factory indirect material purchased 85180
Direct material cost
Balance3 at the beginning 27500
Raw material Purchased- 826500
Damaged raw material returned (5200)
Carriage on raw material purchased 7840
Direct material cost (822990)
Total 33650

5. Unit 2: Calculations
 You add all the cost which are incurred into bringing the material to the factory
 7200 is the amount of material that we gave back to the suppliers
WHY ??
 Damaged, wrong delivered goods.

6. Unit 2: Calculations
 Salaries: Factory Foreman: 62500
Office workers : 32200
 Wages: Production wages: ???
Office workers : 7900
 Number of workers in production- 6 employees
 Normal hours worked by each factory worker above- 1 680 hours
 Overtime hours worked by each worker above- 240 hours
 Normal time wage rate - R75 per hour
 Overtime wage rate- R120 per hour

7. Unit2: Calculations
 Direct labour cost
No of Employees ₓNormal time workedₓ wage rate ₌
6employeesₓ1680hoursₓ75per hour
Total for normal hours= 756000
6employeesₓ24hoursₓ120per hour
Total for overtime hours= 17280
UIF CONTRIBUTIONS 1% OF 75600
UIF CONTRIBUTIONS = 7560
Total direct material cost = 780840

8. Unit2: Calculations
 UIF Factory foreman 625
 Factory indirect material purchased 85 180
 Advertising 7 500
 Factory maintenance 24 285
 Rent expense 108 000
 Bad debts 9 200
 Brooms stolen 3 720
 Water and electricity 67 100
 Depreciation of factory plant 16 660
 Sundry expenses 45 700

9. Unit2: Calculations
 Rent is apportioned according to the floor space occupied by each department.
Floor space occupied is as follows:
 Factory 2100 m2
 Sales 1 100 m2
 Office 800 m2
 Water and Electricity: 10% of this amount is allocated to the office and 25% to the
sales department. The balance applies to the factory.
 Sundry expenses must be divided between the factory and the sales department in
the ratio 3 : 1.

10. Unit 2 Calculations
 Indirect material cost = 86340
{3330+ 85180- 2170}
 Factory foreman = 63125
{62500+625}
Rent expense = 56700
(108 000 x 21/40) 56 700
Maintenance = 24 285
Depreciation of factory plant = 16 660
Sundry expenses = 34275
(45 700 x ¾)
Water and electricity = 43615
(67 100 x 65%)
TOTAL FACTORY OVERHEAD COST= 325 000