1FU251 CS II Solution

1FU251

Exercise I
Nostress, Ltd. Is engaged in the assembly of printing machines and is starting its operations in December 2012. The following transactions took place during December 2012:
Material consumed during production 500 000.
The wages for December were
- wages of production workers were
- Wages of administration people were
- wages of distribution workers were

100 000, out of which:
60 000
30 000
10 000

Depreciation of production machines and buildings were
Depreciation of administrative buildings were
Depreciation of distribution cars were

20 000
10 000
5 000

Costs of marketing were
80 000
Interest costs related to loans received were 5 000
Tax expenses were
3 000
10 printing machines were produced in December. Six of those machines were sold (sales price of one printing machine was 60 000), one of the printing machines was produced for own purposes – printing of marketing materials. This printing machine was put in use in
December.
The finished products are valued based on production costs. There was no work-in-progress as of December 31, 2012.
Tasks
1. Prepare the income statement of Nostress, Ltd. In cost of sales format and, alternatively, also in by nature format.
2. Answer the following questions:
•
•

What are the total production costs in December?
What effect did the production and put in use of the printing machine for own use have on the profit of the current year?

1FU251

Solution - Exercise I
Income statement
(expenses classified by nature)
Revenue
360 000
Material consumed
(500 000)
Wages expenses
(100 000)
Depreciation expenses
(35 000)
Marketing expenses
(80 000)
Change in inventory
Work performed by entity and capitalized
Operating loss
Interest expense
Loss before tax
Tax expenses
Loss after tax

174 000
58 000
(123 000)
(5 000)
(128 000)
(3 000)
(131 000)

Income statement
(expenses classified by nature)
Revenue
360 000
Costs of goods sold
(348 000)
Margin
12 000
Distribution costs
(15 000)
Administration
(40 000)
expenses