EBTA ACCOUNTING
MANUFACTURING TEST 2024
AKHONA MOFOKENG
APRIL 22, 2024
EARLY BIRD TESTIMONY ACADEMY
ONLINE
EBTA Grade 12 Accounting
QUESTION
The information below was extracted from the financial records of Valley Manufacturers which
is owned by Mpho. The business manufactures one style of raincoat. The financial year ends on
29 February 2024.
REQUIRED:
1. Indicate whether the following statements are TRUE or FALSE. Choose the answer and write
only “true” or “false”.
1.1. Fixed costs remain unchanged in relation to the number of units produced within a
period of time. (2)
1.2. The salary of the factory foreman will be regarded as a direct-labour cost. (2)
1.3. Factory rent will be regarded as a variable cost. (2)
1.4. Prime cost is calculated by adding direct-material cost and direct-labour cost. (2)
1.5. Advertising will be classified as an administration cost. (2)
2. Refer to information B.
Calculate the following:
2.1. The value of raw materials on hand on 29 February 2024 using the FIFO method. (5)
2.2. The value of raw material cost that would appear in the Production Cost Statement. (4)
3. Refer to information C.
Calculate the value of direct-labour cost that would appear in the Production Cost
Statement for the year ended 29 February 2024. (7)
4. The business produced 4 000 raincoats during the year. There was no work-in-process at the
beginning or at the end of the year. Factory overhead costs amounted to R67,55 per unit.
Calculate the following:
4.1. The total production cost of finished goods (5)
4.2. The unit cost of production (per raincoat) (3)
5. Mpho asks you to further investigate the control over raw materials.
5.1. Identify the number of metres of raw material fabric that appear to be missing. (5)
5.2. Apart from theft, give ONE most likely reason for this shortage. What advice could you
offer Mpho in this regard? Name ONE point. (4)
6. Break-even point:
6.1. Calculate the break-even point for the current financial year. (4)
6.2. The break-even point for 2023 was 2 273 units. Should Mpho be satisfied or dissatisfied
with the break-even point for 2024 calculated in QUESTION 6.1? Briefly Explain. (3)
Page | 1
EBTA Grade 12 Accounting
INFORMATION
A. Production:
Number of raincoats produced last year 4 500 units
Number of raincoats produced this year 4 000 units
B. Raw Materials:
1. Usage
Mpho has done a study of the manufacturing process and has found that it should
take 1,8 metres of fabric to make one raincoat.
2. Stocks of raw material on hand were:
Number of metres of Cost per metre
fabric
Opening stock 700 metres R30
Raw materials issued to the factory for
the production of raincoats 9 100 metres ?
Closing stock 4 300 metres ?
3. Purchases of raw material during the year were as follows:
Number of metres Cost per metre Total cost
of fabric
Purchases 12 700 metres R490 600
April 2023 7 200 metres R34 R238 000
November 2023 3 500 metres R42 R147 000
February 2024 2 200 metres R48 R105 600
C. Employees:
1. Mpho employs the following individuals:
Number of Basic Total cost of Overtime
Details employees monthly employment
salary/wage including Hours Rate
per benefits
employee
Employees 180 hours
in the 5 R5 000 ? (each R70
production worker)
process
Factory
foreman 1 R8 000 R112 000 - -
Salesman 1 R4 000 ? - -
Page | 2
EBTA Grade 12 Accounting
2. Employment benefits and overtime
• Employment benefits are allocated to the cost account applicable to the
salaries/wages pf the specific employees.
• All employees are registered with the business’ pension fund and the UIF.
Deductions are made from the basic salary for the pension fund (8%) and
the UIF (1%). The employer contributes 10% towards the pension fund and
1% to the UIF.
• Overtime and commissions are not subject to pension fund and UIF
deductions or contributions.
• The five workers who make raincoats each worked 180 hours of overtime
during the year at a rate of R70 per hour.
D. Stock of finished goods on hand were:
Number of raincoats Value per unit
Opening stock 110 R284
Closing stock 420 R246
E. Analysis of total costs and unit costs:
2024 2024 2023
Total Per unit Per unit
Selling price R1 400 000 R350 R350
Variable costs: R863 800 R215.95 R184.60
Direct – Material cost ? ? R63.30
Direct – Labour cost ? ? R82.20
Selling and distributions R150 000 R37.50 R39.10
Fixed costs: R350 200 R87.55 R83.54
Factory overhead cost ? R67.55 R58.04
Administration cost R80 000 R20.00 R25.50
GRAND TOTAL : 50
Page | 3
