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Birco Pte Limited manufactures and sells a single product

Accounting

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Birco Pte Limited manufactures and sells a single product. The following information is available at 31 October 2018: 1 Raw material stocks were 25000 kilos, at a total cost of $300 000. 2 3 Each unit requires 2 kilos of material. The purchase price of material will increase to $13 per kilo with effect from 1 November 2018. The company values raw material stock using the first in, first out (FIFO) method. It is expected that production in November 2018 will require 24000 kilos of raw material. At the end of November 2018 raw material stock is expected to be 20000 kilos. Each unit requires 3 hours of direct labour at $10 per hour. 4 5 6 Other variable manufacturing costs will be $14 per unit. REQUIRED (a) Calculate the expected direct cost of one unit of product for the month of November 2018. [3] Additional information At 31 October 2018 there were 6000 units of finished goods in stock. These were valued at a total cost of $600 000. The unit selling price is $180. Budgeted sales for November 2018 are expected to be 10500 units. 1 2 3 4 Finished goods are valued at the total of direct costs plus $42 per unit to cover fixed manufacturing costs. Other total budgeted costs for the month of November 2018 are expected to be: Fixed manufacturing costs $500000 Variable selling costs $6 per unit Fixed administrative costs $310000 REQUIRED [2] (b) Calculate the expected factory cost of production for November 2018. (c) Prepare the forecast profit and loss account for November 2018. Clearly show your calculation of gross profit. [7]