2024 WORKBOOK | Grade 12 ACCOUNTING

ACCOUNTING

A joint initiative between the Western Cape Education Department and Stellenbosch University.
2024 WORKBOOK | Grade 12 ACCOUNTING

INTRODUCTION AND SESSIONS

Dear Grade 12 Accounting learner

Welcome to the Telematics project. The 2024 Gr 12 Accounting programme aims to strengthen your
understanding of the Accounting process and focuses on some of the basic knowledge and skills
necessary to be successful in Accounting.
Use this opportunity to consolidate what was taught in class. The 2024 Telematics lessons will provide
clarity on year-end adjustments, financial statements, financial indicators, stock valuation and cost
accounting on grade 12 level.

You can work through the activities on your own or with study buddies, but you will enjoy the most value
if you also join the live video lessons and interact with the presenter by asking questions via SMS,
WhatsApp or the Telematics Facebook page.
With this subject you will be equipped with valuable life skills that you can apply in any career and in
your own personal life, like orderliness, thoroughness, neatness, meticulousness, accuracy, ethical
behaviour, sound judgement, organisation as well as critical, logical and analytical abilities.
Accounting is an exciting, interesting and dynamic subject. Decide right now to enjoy it, and
even better, to love it!
“PERSEVERANCE is not a long race; it is many short races one after the other” : Walter Elliot
Break down your work into manageable tasks, and view challenges as opportunities for growth.
Be passionate about your Accounting, have a vision of what you would like to achieve with it and act
upon your passion and vision by working hard at the subject and you will succeed.

All the best.

Mrs JP Conradie
WCED SCP Accounting

Session Date Time Topic

10/04/2024 Eng Financial statements &

1 15h00-16h00
11/04/2024 Afr notes

08/05/2024 Eng
2 15h00-16h00 Financial indicators
09/05/2024 Afr

15/07/2024 Eng
3 15h00-16h00 Stock valuation
16/07/2024 Afr

29/07/2024 Eng
4 15h00-16h00 Cost Accounting
30/07/2024 Afr

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 2024 WORKBOOK | Grade 12 ACCOUNTING

TERMINOLOGY

Cheat sheet for doing adjustments

An adjustment means that the balance in the pre-adjustment trial balance is adjusted
(changed/increased/decreased) to a higher or lower amount. There are 9 adjustments in
grade 12 Accounting.

Adjustment Accounts affected

Debit Credit
1 Bad debts Bad debts (+) Debtors control (-)
2 Trading stock deficit Trading stock deficit (+) Trading stock (-)

3 Consumable stores on hand Consumable stores on hand (+) Stationery/Packaging (-)

4 Accrued income Accrued income (+) Rent income (+)

Income received in advance
5 Income received in advance Rent income (-)
(+)
6 Accrued expense Telephone (+) Accrued expense (+)
7 Prepaid expense Prepaid expense (+) Insurance (-)

Accumulated depreciation
on vehicles (+)
8 Depreciation Depreciation (+)
Accumulated depreciation
on equipment (+)
Provision for bad debts
Provision for bad debts (+)
adjustment (+)
(if provision increases)
(if provision increases)
9 Provision for bad debts
Provision for bad debts
Provision for bad debts (-)
adjustment (+)
(if provision decreases)
(if provision decreases)
Key: WHITE accounts are Statement of comprehensive income accounts
GREY accounts are Statement of financial position accounts

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2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 1 | Financial Statements & notes

TIPS FOR PREPARING THE STATEMENT OF COMPREHENSIVE INCOME

Use the systematic and logical processes outlined below. This will safe valuable
exam writing time and ensures that you can earn part marks or even full marks.

THE STEPS ARE:

• Write the pre-adjustment amount in pencil in the framework / answer book next
to the appropriate item before any adjustment is taken into account, e.g.
Insurance ( 1 200 …
• Start with the first adjustment. READ the adjustment.
• Decide on the double entry, i.e. which account is to be debited and which
account is to be credited. Show a “+” or a “–” next to the amount already
entered next to the item on your answer sheet (see Step 1), e.g.. 1 200 +
• Write the adjustment amount next to the sign, e.g. 1 200 + 300
• Once all the “calculations’ of the adjustments are done, write the final amount for
each item in the last column on the righthand side of the statement, e.g. 1 500.
• Do not erase your workings, as it can be used for awarding part or method
marks if the final answer (see Step 5) is incorrect.

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 1 | Statement of Comprehensive Income

Activity 1.1: Statement of Comprehensive Income

The following information relates to City Traders Ltd for the financial year ended on 30 June 2022.
REQUIRED:
Complete the Statement of Comprehensive Income (Income Statement) for the year ended
30 June 2022.

INFORMATION:
A Extract from the Pre-adjustment trial balance on 30 June 2022.
Sales 6 720 000
Rent Income 153 120
Directors Fees ?
Salaries and Wages 812 000
Employers’ contribution 22 080
Advertising 11 650
Audit fees 120 000
Depreciation 340 000
Sundry expenses 432 110

B The Rent Income for July 2022 has already been received. Note that the monthly
rent was decreased by 8% p.a. effective from 1 May 2022.

C The company has three directors. Two of the directors receive an annual fee of
R192 000 each. The third director receives 10% less than the other directors. All
three directors received the full amount for the year and the bookkeeper recorded this
amount in the salaries and wages account, in error.

The third director however, decided to resign and this was approved on 30 May 2022.
He promised to return the fees that he received for the period that he would not be
serving the company.

D One employee was omitted from the Salaries journal for June 2022 while
she was on maternity leave. Her salary is as follows:

Deductions Employer’s Contribution

Net Salary
PAYE Medical Aid Medical Aid
2 050 970 1 920 6 700

E Advertising excludes an amount of R7 500 paid for the period 1 May to

30 September 2022. A fixed rate is applied monthly.

F Interest on investment was received and recorded. This is the balancing figure.

G Loan Statement received, shows interest of R36 000, capitalised.

H Income Tax amounted to R272 700. This is 30% of the net profit.

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2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 1 |

Activity 1.1 (Answer sheet)

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2022

Sales 6 720 000

Cost of sales

Gross profit

Other operating income

Gross operating income 2 662 080

Operating expenses

Audit fees 120 000

Depreciation 340 000

Sundry expenses 432 110

Operating profit

Interest income

Operating profit before interest expense

Interest expense

Net profit before tax

Income tax (272 700)

Net profit after tax

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2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 2 | ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS

How to comment on financial indicators:

➢ Compare:
o Targets/Goals set by the company, e.g. % profit margin use vs the actual %
achieved.
o Indicators of the same company with previous year’s figures (to determine
improvement / decline / deterioration)
o Indicators of two or more companies in the same industry
o Interest rates of alternative investments with ROSHE
o Interest rates of loans with ROTCE
o Suggest alternative direction or solution to improve the current (negative) situation.

EXAM TIPS:
➢ Know the formula BUT do not write it down in the exams - no marks are allocated for it. (The
Formula sheet is given only to confirm the correct formula used. Do not rely on it.
➢ Problem solving (requires creative thinking and our own opinion) is part of analysis and
interpretation questions.
➢ You may be required to analyse possible investment in two companies (compare risk,
gearing, return on investment in both companies) [ENSURE that you understand the financial
gearing to be able to comment and compare effectively.
➢ You may also be asked to compare two financial years of one and/or two companies.

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 2 | Analysis and interpretation of financial statements

FINANCIAL INDICATORS

Financial statements are analysed to find answers to certain questions. Structure your
comments with these 'questions' (below) in mind
QUESTION TERM FINANCIAL INDICATOR FORMULA
% Gross profit on sales / GP/Sales x 100 = … %
% Gross profit on CoS / GP/CoS x 100 = … %
How profitable is the
Profitability
business; how well % Operating profit on sales / OP/Sales
and x 100 = … %
does it control its expenses
operating
and how effective is the % Operating expenses on sales
efficiency OE/Sales x 100 = … %
business in its operation?
/
NI/Sales x 100 = … %
% Net income on sales /
Current ratio / CA : CL
(CA - Inventory) : CL
Acid test ratio / (Debtors + Cash) : CL
Cost of Sales
Average Trading Stock
Stock turnover rate / The higher this number, the faster
assets are turned into cash
Can the business repay its Average Stock x 12 (365)
short-term debts; is the Stock holding period / Cost of Sales 1 (1)
operating capital being Liquidity Debtors' collection period / Average Debtors x 365
handled efficiently? Cash Credit
flow problems? Sales Aim
is 30 days
Average Creditors x 365
Credit Purchases
Creditor's payment period • Good, when it takes longer
/ to repay creditors
• Negotiate for 90 days to
avoid interest
Owners’ equity or Net assets
Can the business repay its
Solvency Total assets : total liabilities
debt? (for sustainability/continuity) /

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 2 | Analysis and interpretation of financial statements

Net profit after Tax x 100

Return on shareholders’ equity Average SHE
(ROSHE)  Compare this % with alternative investments,
e.g. fixed deposit interest %
Net profit after Tax x 100 = …c
No. of shares issued 1
Earnings per share (EPS) 
It shows the profit per share available for sharing
with shareholders
Dividends x 100 = …c
No. of shares issued 1
Do the owners earn a good It is the proportional share of the profit paid +
Return on Dividends per share (DPS) 
return on their capital owed to shareholders.
investment **EPS - DPS = retained profit per share for
invested in the business?
future expansion
Total SHE x 100 = …c
No. of shares issued 1
− Compare to issued or ave. price of shares
and to market (JSE) price of shares.
Net asset value per share 
− If the NAVPS increases, it shows that
(NAVPS) profits are retained; company is expanding
and is wealth growing.
− When company issues more shares, it
should be at NAV to retain wealth.

LT Liabilities : SHE = (…. : 1)

SHE = Share capital + Retained Inc

− Creditworthiness = ability to obtain loans.

Debt : Equity ratio  − High risk/low creditworthiness = 0,5 : 1 to 1 : 1
(opt to issue shares)
− Low risk /high creditworthiness = 0,1 : 1 to 0,4 :
1 (borrow more)

− Compare this ratio before and after a change in

To what extent is the business loans to show the change in risk levels
funded by borrowed capital,
and to what degree does it
affect the financial risk? Risk / gearing
Can the business borrow more Net Inc before tax and int. x 100
Return on total capital employed
money? Ave. capital employed 1
(ROTCE) 
Is it worth it? [Capital employed = SHE + LT loans] Compare
to % interest on loans.
− Higher = high leverage; loans are used to
expand and improve return/ profit.
− Lower = low leverage; loans not used
effectively to improve return/profit. May not
be able to repay loans with interest.

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 2 | Analysis and interpretation of financial statements

Activity 2.1

2.1 FINANCIAL INDICATORS OF TWO COMPANIES

Your friend, Peter, is considering buying shares in a company that sells sportswear. He
asks you for advice and presents you with the following financial indicators of two
companies he is contemplating. The companies are of similar size, and they have issued
the same number of shares.

NOTE:

When answering the questions, compare the information given and quote relevant financial
indicators of both companies (percentages, ratios and/or figures).

REQUIRED:

2.1.1 Zee Ltd is more liquid than Ryan Ltd. Quote and explain TWO financial
indicators (with figures) to prove your agreement

2.1.2 Which company uses more loans? Quote and explain a financial indicator to
support your answer. Explain whether this is a good idea or not.
2.1.3 Explain why you think the market price of Ryan Ltd's shares is much better than
that of Zee Ltd. Quote and explain TWO financial indicators to support your
answer.
2.1.4 Which company is more likely to expand its business? Explain your answer by
using relevant calculations.
2.1.5 Ryan Ltd has a better percentage return, earnings and dividends than Zee Ltd.
Explain THREE financial indicators to support this opinion.

INFORMATION:
Ryan Ltd Zee Ltd
Market price per share on the JSE 755 cents 590 cents
Net asset value per share 605 cents 625 cents
Earnings per share (EPS) 813 cents 179 cents
Dividends per share (DPS) 537 cents 182 cents
% return on shareholders' equity 28,5% 11,5%
% return on capital employed (before tax) 35,6% 12,4%
% interest rate on loans 14% 14%
Debt/Equity ratio 0,2 : 1 1,9 : 1
Current ratio 5,8 : 1 1,7 : 1
Acid-test ratio 3,7 : 1 0,8 : 1
Debtors' average collection period 55 days 26 days

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 2 | Analysis and interpretation of financial statements

Activity 2.1: Answer sheet

2.1.1 Zee Ltd is more liquid than Ryan Ltd. Quote and explain TWO financial
indicators (with figures) to prove your agreement.

2.1.2 Which company uses more loans? Quote and explain a financial indicator to
support your answer. Explain whether this is a good idea or not.

2.1.3 Explain why you think the market price of Ryan Ltd's shares is much better
than that of Zee Ltd. Quote and explain TWO financial indicators to support
your answer.

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 2 | Analysis and interpretation of financial statements

2.1.4 Which company is more likely to expand its business? Explain your answer by
using relevant calculations.

2.1.5 Ryan Ltd has a better percentage return, earnings and dividends than Zee Ltd.
Explain THREE financial indicators to support this opinion.

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 2 | Analysis and interpretation of financial statements

Activity 2.2: PROGRESS LTD

You are provided with information from the financial statements of Progress Ltd.
The financial year ended on 29 February 2023

REQUIRED:

2.2.1 Calculate the net asset value per share on 29 February 2023.

2.2.2 Calculate the return on total capital employed for the 2023 financial year.
2.2.3 The directors of Progress Ltd want to take out a loan for R500 000. Would you advise
them to take out the loan? Quote ONE financial indicators (actual
figure/ratio/percentage) that are relevant to their decision.

INFORMATION FROM FINANCIAL STATEMENTS AT THE END OF THE FINANCIAL YEARS

2023 2022
Shareholders' equity 1 630 000 1 280 000
Shares issued 400 000 300 000
Loan: Direct Loans 380 000 520 000
Current assets 488 000 412 000
Current liabilities 621 000 578 000
Total assets 2 631 000 2 378 000
Net profit before income tax 620 000 388 000
Net profit after income tax 452 600 429 240
Interest expense 76 200 68 400

FINANCIAL INDICATORS AT THE END OF THE FINANCIAL YEARS

2023 2022
Debt/Equity ratio 0,23 : 1 0,41 : 1
Current ratio 0,79 : 1 0,71 : 1
Asset test ratio 0,50 : 1 0,45 : 1
Return on total capital employed ? 25,4 %
Return on shareholders' equity 24,3 % 36,1 %
Solvency ratio 2,6 : 1 2,2 : 1

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 2 | Analysis and interpretation of financial statements

Activity 2.2

2.2.1 Calculate the net asset value per share on 29 February 2023.

2.2.2 Calculate the return on total capital employed for the 2023 financial year.

2.2.3 The directors of Progress Ltd want to take out a loan for R500 000. Quote ONE
financial indicator (actual figure/ratio/ percentage) that are relevant to their
decision. Would you advise them to take out the loan?

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 3 | STOCK VALUATION

EXPLANATORY NOTES
Trading stock represents the most valuable and least liquid current asset

Trading stock and how it will appear on the Statement of Financial Position

This amount is the actual amount of

Non-current assets
stock, after a physical stock count.
Current assets 195 000
Trading stock 140 000
Trade and other 80 000
receivables
Cash and cash 5 000
equivalents
• Consist of Trading Stock and
Cost of Sales account
• Stock-take done to verify stock
deficit/surplus
PERIODIC STOCK SYSTEM
STOCK
RECORDING
SYSTEMS • Trading Stock is recorded as
PERPETUAL STOCK SYSTEM Purchases account.
• Stock-take done to establish stock
balance (Closing stock / unsold)
• Cost of sales must be calculated.

• Stock is sold in the order of

purchase.
• Closing stock is valued at the most
FIRST IN FIRST OUT (FIFO)
recent prices.
STOCK
VALUATION WEIGHTED AVERAGE • Suited for similar valued stock,
METHODS purchased regularly.
SPECIFIC IDENTIFICATION • Closing stock is valued at the
average unit cost at the end of a
specific period.
• Large, unique, individually recognizable
items
• Recorded at their invoice price.
• Closing stock is the total amount of unsold
items.

CALCULATION OF COST OF SALES WHEN USING PERIODIC STOCK SYSTEM:

Cost of Sales =Opening Stock+ Purchases+ Carriage on Purchases-Returns – Closing Stock

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 3 | Stock valuation: FIFO

Activity: 3.1: FIFO

LWETHU’S ELECTRONICS
Lwethu Mbane sells Laptops, and his financial year ends on 30 March 2023

REQUIRED:
1. Calculate the value of the closing stock on 30 March 2023 using the first-in-first-out (FIFO)
method.
2. Lwethu suspects that laptops have been stolen. Provide a calculation to support his concern.
3. Lwethu is concerned about the volume of stock on hand.
• Calculate for how long his closing stock is expected to last.
• State ONE problem with keeping too much stock on hand and ONE problem with
keeping insufficient stock on hand

INFORMATION:

Stock balances:
UNITS UNIT PRICE TOTAL
Opening stock 420 R2 175 R913 500
Closing stock 496 ?

Purchases, returns and carriage:

Purchases 3 155 R8 460 850
September 2022 850 R2 250 R1 912 500
December 2022 980 R2 670 R2 616 600
January 2023 875 R2 930 R2 563 750
March 2023 (see returns) 450 R3 040 R1 368 000
Returns (from March purchases) 25 R3 040 R76 000

Sales:
3 050 laptops were sold at R4 200 each.

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2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 3: Stock valuation: FIFO

Activity 3.1 : Answer sheet for FIFO

1. Calculate the value of the closing stock on 30 March 2023 using the first-
in-first-out (FIFO) method.

2. Lwethu suspects that laptops have been stolen. Provide a calculation to

support his concern.

3. Lwethu is concerned about the volume of stock on hand.

• Calculate for how long his closing stock is expected to last.

• State ONE problem with keeping too much stock on hand and

• ONE problem with keeping insufficient stock on hand.

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2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 3| Stock valuation: Weighted Average

Activity 3.2: Weighted Average

You are provided with information relating to Nathi Building Suppliers for March 2023. They buy
boxes of floor tiles and sell them to retailers. They use the weighted-average method for stock
valuation and the periodic inventory system.

REQUIRED:

1. Calculate the total value of the opening stock (A).

2. Calculate the value of the tiles received on the 25 th of March 2023 (B).

3. Calculate the value of the closing stock using the weighted-Average method.

4. Calculate the gross profit.

5. Provide a calculation to prove that this business has good control over their stock.

INFORMATION:
UNITS UNIT CARRIAGE TOTAL
PRICE ON
PURCHASES
Opening stock (1March 2023) 600 R85,00 (A)
Boxes of tiles purchased during the month 3 160 ?
10 March 2023 1 000 R90,00 R4 500 R94 500
20 March 2023 1 200 R95,00 R5 700 R119 700
25 March 2023 960 R120,00 R5 760 (B)

Damaged tiles from 20 March purchases, 100 ? ?

returned to supplier. Carriage was nor
covered by supplier.

Sales for the month 2 510 R160,00 R401 600

Closing stock (30 March 2023) 1 150 ? ?

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2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 3 | Stock valuation: Weighted Average

Activity 3.2: Answer sheet

1. Calculate the total value of the opening stock (A).

2. Calculate the value of the tiles received on the 25 th of March 2023 (B).

3. Calculate the value of the closing stock using weighted-Average method.

4. Calculate the gross profit.

5. Provide a calculation to prove that this business has good control over their stock.

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2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 3| Stock valuation: Specific Identification

Activity 3.3 : Specific Identification

Indi’s Stores sells two types of women’s watches:

• Fozzil watches, imported from Zambia, valued using the specific identification method.
• Zarmin watches, locally manufactured valued using weighted average method.

The financial year ended on 30 March 2023. No watches were stolen or lost during the
financial year.
REQUIRED:
Calculate the following in respect of Fozzil watches on 30 March 2023
1. Value of closing stock
2. Cost of sales
3. Gross profit and % gross profit achieved.
4. Average stock-holding period (in days)

INFORMATION:
A. Information relating to Fozzil watches:
UNITS UNIT TOTAL UNITS TOTAL
PRICE SOLD SALES
Opening Stock 12 R6 500 R78 000 11 R104 500
Purchases 35
September 2022 15 R7 200 R108 000
January 2023 12 R7 200 R86 400 22 R209 000
March 2023 8 R7 200 R57 600
47 33

• Cost Price of Fozzil watches includes transport costs and custom duties.
• These watches are sold at R9 500 each.

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 3 | Stock valuation: Specific identification

Activity 3.3: Specific Identification

1. Value of closing stock

2. Cost of sales

3. Gross profit and % gross profit achieved.

4. Average stock-holding period (in days)

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2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 4 | COST ACCOUNTING

Basic concepts and calculations

Opening stock (OS)+ Purchases + Carriage on purchases - Closing stock (CS)
Direct material cost (DMC)
= Raw materials used
Direct labour cost (DLC) Normal wages (no. of workers x no. of hours x rate)
ADD Overtime (no. of workers x no. of hours x rate) ADD
UIF/Medical/Pension contributions
Factory / Manufacturing Indirect material (Opening stock (OS) + Purchases - Closing stock (CS))
overheads (FOHC) Indirect labour (Cleaners, security, foreman) ADD contributions UIF/Pension
Depreciation of Factory equipment
Water & Electricity (Factory)
All other factory expenses
Unit costs Total cost divided by number of units produced
Fixed cost FOHC + Administration costs (AC)
Variable cost DMC + DLC + Selling & Distribution costs (SDC)

FORMAT OF THE PRODUCTION COST STATEMENT FORMAT OF THE ABRIDGED INCOME

STATEMENT (short format)
material cost Sales
+Direct labour cost Less Cost of Sales (CoS) (…….)
[OS + Cost of finished goods** - CS]
=Prime cost Gross profit
+Factory overhead cost Selling & Distribution costs
=Total cost of production Administration costs
+Work in process beg year Net profit
-Work in process end year ( )
=Total cost of production of finished goods **

Calculating the cost per unit of certain cost items will reveal:
= which costs are higher/ lower as the budgeted costs,
= which items are exceptionally high and need to be
controlled carefully = how costs compare to
previous years.
Calculate the break-even point (BEP):
= BEP determines the quantity produced where no profit or
loss is shown; = Income generated from sales is just enough
to cover costs.
= FORMULA:
TOTAL FIXED costs = .... Number of products/units
(selling price per unit - variable costs per unit)

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 4| COST ACCOUNTING

Activity 4.1
The following information relates to the financial year ended 28 February 2023. The business
manufactures one type of product.

REQUIRED:
Calculate the following in order to prepare the note for factory overhead cost for the financial
year end. Use the tables provided on the answer page.
• Consumable stores used in the factory (see A and B)
• Factory rent (see C)
• Factory water and electricity (see C)
• Factory insurance (see C)

Complete the Production Cost Statement on 28 February 2023.

INFORMATION:

A. Stock balances: 28 Feb 2023 28 Feb 2022

Work in progress stock R145 800 R 35 100
Factory consumable stores R 3 900 R2 500

B. Extract of transactions for year ended 28 February 2023

(before adjustments in Information C)
Raw material issued to the factory for production R?
Consumable stores purchased for the factory 29 800
Production wages 525 000
Employer's contributions for workers in production 44 900
Rent expense for the office section 12 200
Water and electricity 54 400
Salaries: Factory foreman (including benefits) 102 400
Salaries: Sales staff (including benefits) 60 300
Insurance 33 500
Sundry expenses: Factory 47 040
Sales department 10 200

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2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 4|Cost Calculations

C. Additional information and adjustments:

• The following production wages was omitted from the Wages Journal for the
last week of February 2023:
Net wage due to employee R11 315
Total deductions for this employee amounts to 27% of his gross wages.
The employer pays 11% of the gross wages to the Pension Fund and 1% to the
UIF.
• Rent is shared between the factory, sales and administration in the ratio [Link].
Only the administration portion was recorded.

• The February 2023 water and electricity account of R5 600 must still be paid.
Note that 75% of this expense relates to the factory.
• Insurance includes an additional premium of R5 700 paid for the period
1 January 2023 to 30 June 2023. This expense is allocated between the factory
and sales department in the ratio 4: 1.
D. Prime cost for the year after adjustments amounted to R1 380 000.

E. The business produced 2 500 bags at a cost of R621 each.

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2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 4 |Cost Accounting / Manufacturing

Activity 4.1

4.1. Calculate the following in order to prepare the note for factory overhead cost
for the financial year end. Use the tables provided on the answer page
Workings Answer
Consumable stores used in the factory

Factory rent

Factory water and electricity

Factory insurance

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2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 4| Cost Accounting / Manufacturing

4.1.1 FACTORY OVERHEAD COST NOTE

Factory salary 102 400

Sundry expenses 47 040

4.2 Production Cost Statement for the year ended 28 February 2023.

792 740

Prime cost 1 380 000

Total manufacturing cost

Work in progress in the beginning 35 100

Work in progress at the end of the year

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 2024 WORKBOOK | Grade 12 ACCOUNTING

SESSION 4|Cost Accounting / Manufacturing

4.2 CALCULATING BREAKEVEN POINT

4.2.1 Calculate the break-even point for men’s Run Fast running shoes for 2023
2023 2022
R R
Direct Material Cost 150,00 120,00
Direct Labour Cost 102,00 98,00
Selling and Distribution Cost 52,00 50,00
VARIABLE COST PER UNIT 304,00 268,00
Factory Overhead Cost 70,00 68,00
Administration Cost 30,00 30,00
FIXED COST PER UNIT 100,00 98,00

Selling price per unit R 400,00 R 400,00

Number of units produced and sold 4 500 units 4 500 units

Break-even point ? 3 341 units

Answer sheet for breakeven point

Workings Answer

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