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Question $13\mathrm{.}12$

Part A

BabyBlue Limited manufactures receiving blankets for newborn babies.

BabyBlue Limited is in its first year of operations and estimated that a normal annual production level would be $100000$ blankets.

Due to teething problems in its first year of operations ended $30$ June $20$X$6,$ actual annual production only reached $60000$ blankets.

The only inventory on hand at year$-$end was $1000$ blankets $($finished goods$).$

The following information relates to the manufacturing costs incurred during the year ended $30$ June $206$ :

Direct materials purchased

Direct labour

Variable overheads

Fixed overheads

C$8$ per unit

C$6$ per unit

C$4$ per unit

C$60000($annual$)$

Required:

a$)$ Calculate the value of the inventory at $30$ June $206.$

b$)$ Calculate the portion of the fixed manufacturing overheads capitalised to inventory during the year ended $30$ June $206.$

c$)$ Calculate the portion of the fixed manufacturing overheads still in inventory at $30$ June $20$X$6.$

d$)$ Calculate the portion of the fixed manufacturing overheads that have been expensed during the year ended $30$ June $206.$

e$)$ Show all journals possible. Assume that all transactions$/$ events were processed as single transactions and that, where applicable, amounts were paid in cash.

f$)$ Calculate the amount at which cost of inventories expense will be disclosed in the statement of comprehensive income for the year ended $30$ June $20$X$6.$

Ignore tax.

Part B

Use the same information as that provided in Part A but assume:

the actual annual production totalled $120000$ units $($instead of $60000$ units$).$

Required:

a$)$ Calculate the value of the inventory at $30$ June $206.$

b$)$ Calculate the portion of the fixed manufacturing overheads capitalised to inventory during the year ended $30$ June $206.$

c$)$ Calculate the portion of the fixed manufacturing overheads still in the inventory asset account at $30$ June $206.$

$152$

Chapter $13$

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