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Find net works cost raw material WIP opening stock $ 10,110 7,550 closing stock $ 15,000 6,00 raw material purchased $40,000 wages to Labour $20,000 Defective material returned $2,110 Direct Machine cost $5,000 factory power $4,500 factory rent $3,000 factory building depreciation $1,500
Find net works cost
| raw material | WIP | |
| opening stock $ | 10,110 | 7,550 |
| closing stock $ | 15,000 |
6,00 |
| raw material purchased | $40,000 |
| wages to Labour | $20,000 |
| Defective material returned | $2,110 |
| Direct Machine cost | $5,000 |
| factory power | $4,500 |
| factory rent | $3,000 |
| factory building depreciation | $1,500 |
Expert Solution
Works cost = Prime cost + Factory overheads + Opening WIP- Closing WIP
Prime cost =Direct material + Direct labour + Direct Expenses
Direct material = Material Purchased + Opening stock - Closing stock - defective materials returned
So direct materials will be $40000+$10110 -$15000 -$2110 =$33000
Prime cost = $33000 + $20000 +$5000 =$58000
Direct machine cost is a direct expense.
Factory overheads =$4500 +$3000+$1500 =$9000
So net works cost = $58000+$9000 + $7550 -$600 =$73950
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