Question

T2.1 TPL Ltd. The following information relates to TPL Ltd., a manufacturing company for the year ended 31st December 2012. Raw Materials: € Stock at 1 January 2012 390,000 Purchases 1,520,000 Stock at 31 December 2012 410,000 Finished Goods: Stock at 1 January 2012 510,000 Purchases 90,000 Stock at 31 December 2012 570,000 Sales 4,000,000 Manufacturing wages 600,000 Indirect materials 253,000 Repairs and maintenance of plant &machinery 135,000 Depreciation: Factory 380,000 General offices 50,000 Warehouse 70,000 Power 100,000 Light and heat: Factory 24,000 General offices 21,000 Administration expenses 162,000 Selling and distribution expenses 327,000 REQUIREMENT You are required to compute: 1. Cost of raw materials used or consumed. 2. Prime cost. 3. Cost of finished good produced.

Answer 1

1.

Raw material consumed = Beginning raw material + Purchase – Closing raw materials

                                         = 390,000 + 1,520,000 – 410,000

                                         = $1,500,000 (Answer)

2,

Prime cost = Raw material consumed + Manufacturing wages

                  = 1,500,000 + 600,000

                  = $2,100,000 (Answer)

3.

Cost of finished goods = Prime cost + Indirect material + Repairs & maintenance + Depreciation factory + Power + Light factory + Depreciation office + Light office + Administrative exps. + Beginning finished goods – Ending finished goods

                                         = 2,100,000 + 253,000 + 135,000 + 380,000 + 100,000 + 24,000 + 50,000 + 21,000 + 162,000 + 510,000 – 570,000

                                         = $3,165,000 (Answer)