Question

Within the costing system of a manufacturing company the following types of expenses were incurred:

Details	$
Cost of oils used to lubricate production machinery	360,000
Motor vehicle licenses for lorries	750,000
Depreciation of factory plant and equipment	930,000
Depreciation of Office Machinery	150,000
Commission paid to sales representatives	270,000
Salary of the secretary to the finance director	225,000
Salary of security guard in warehouse for finished goods	195,000
Fees to advertising agency	105,000
Rent of finished goods warehouse	495,000
Insurance	240,000
Electricity Expense	450,000
Salary of supervisor working in the factory	234,000
Protective clothing for machine operatives	75,000
Carriage outwards	105,000
Janitorial factory wages	78,000
Cost of seminar for warehouse staff	63,000
Materials used to make product	90,000
Wages of production workers	30,000

Notes:

Insurance and electricity expenses should be apportioned as follows:

Details	Electricity	Insurance
Production	50%	40%
Administrative	30%	20%
Selling	10%	25%
Distribution	10%	15%

You have been hired as the Cost Accountant and have been asked to calculate the following-

a.       Prime Cost

2. Factory Overheads
3. Production Cost
4. Conversion Cost
5. Selling Cost
6. Distribution Cost
7. Administrative Cost

Answer 1