CHAPTER 17 ANSWERS

BASIC COST ACCOUNTING

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Question 17.1

17.1.1 Primary cost = Direct material + Direct labour

= R95 000 + R60 000
= R155 000

17.1.2 Conversion cost = Direct labour + Overheads

= R60 000 + R110 000
= R170 000

17.1.3 Manufacturing cost = Direct material + Direct labour + Overheads

= R95 000 + R60 000 + R110 000
= R265 000

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Question 17.2

17.2.1 Primary cost = Direct material + Direct labour

= (10 000 + 100 000 + 7 000 – 4 000) + R80 000
= R113 000 + R80 000
= R193 000

17.2.2 Conversion cost = Direct labour + Manufacturing overheads

= R80 000 + (R4 000 + R35 000 – R2 000) + R76 800
R90 000 + R25 000
= R308 800

R76 800 calculated as follows: (R60 000 + R28 000 + R40 000) x 60% (joint cost
pertaining to factory)

17.2.3 Manufacturing cost = Direct material + Direct labour + Manufacturing over-

heads
= R113 000 + R80 000 + R228 800
= R421 800

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Question 17.3

17.3.1 Primary cost

R R
Direct material used: 104 000
Opening inventory 45 000
+ Purchases (100 000 – 5 000) 95 000
+ Railage 4 000
144 000
- Closing inventory (40 000)

Direct labour 70 000

Primary cost 174 000

17.3.2 Conversion cost = Direct labour + Manufacturing overheads

Overheads (joint) = 65 % (60 000 + 50 000 + 8 000 + 22 000) = 91 000

+ Indirect material used 20 000
Opening inventory 12 000
+ Purchases (22 000 – 10 000) 21 000
+ Railage 2 000
35 000
- Closing inventory (15 000)
Indirect labour 15 000
Overheads 126 000
Direct labour 70 000
Conversion cost 196 000

17.3.3 Manufacturing cost = Direct material + Direct labour + Manufacturing over-

heads
= 104 000 + 70 000 + 126 000
= R300 000

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Question 17.4

17.4.1 R204 000

17.4.2 R136 000
17.4.3 R340 000
17.4.4 R476 000

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Question 17.5

17.5.1 Opportunity cost = R60 000

17.5.2 Opportunity cost = R48 000

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