Question

5 Selected account balances of Miller Inc. as at 31 December 2015 are given in TABLE Q5 TABLE Q5: Account balances RM 3,000 2,000 7.200 4,200 Lubricants used Carriage inwards on raw materials Factory rent Depreciation of factory plant and machinery Internal transport expenses (for factory) Insurance of factory buildings and plant General factory expenses Purchase of raw materials Fuel and power 1,800 1,500 3,300 Direct expenses Direct wages Indirect wages Opening stock of raw materials Opening stock of work in progress Opening stock of finished goods Sales General expenses Commission on sales Carriage outwards 87,000 9,900 1,400 39,600 25,500 8,000 3,500 38,900 250,000 4,100 2,500 3,300 12,000 8.000 1,950 Administrative salaries Sales staff salaries Interest paid

Answer 1

ANSWER

a.		Manufacturing account
			RM	RM
	Opening stock of raw materials		8000
	Add:
	Purchase of raw materials		87000
	Carriage inwards		2000
			97000
	Less: Closing stock of raw material		10500
	Cost of direct materials			86500
	Add:
	Direct wages	(39600+550)		40150
	Direct expenses			1400
	Prime cost			128050
	Add: Factory overhead expenses
	Lubricants used		3000
	Factory rent	(7200-140)	7060
	Depreciation of factory plant and machinery		4200
	Internal transport expenses (for factory)		1800
	Insurance of factory buildings and plant		1500
	General factory expenses		3300
	Fuel and power		9900
	Indirect wages		25500	56260
				184310
	Add: Opening stock of work in progress			3500
				187810
	Less: Closing stock of work in progress			4200
	Cost of production			183610
b.		Income statement
			$	$
	Sales			250000
	Less: Cost of goods sold
	Cost of production		183610
	Add: Opening stock of finished goods		38900
			222510
	Less: Closing stock of finished goods		4400	218110
	Gross profit			31890
	Less:
	General expenses		4100
	Commission on sales		2500
	Carriage outwards		3300
	Administrative salaries		12000
	Sales staff salaries		8000
	Interest paid		1950	31850
	Net income			40
	Note: It is assumed that carriage outward is related to sales.
	If carriage outward was related to return of purchased goods,it would have been deducted in the computation of cost of direct materials

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