Practice questions:

Julies Jardinieres manufactures a range of ornamental plant pots. The business plans to produce 2.000 units over the next month. Each variety takes about the same amount of materials and time to produce. Costs for the month are as follows:

                                              £

Rent.

Factory                              500

Office                                 100

Rates:

Factory                              300

Office                                 100

Sand                               1,000

Power                                700

Light and heat:

Factory                            2,000

Office                               1,300

Wages:

Operators                      10,000

Maintenance staff            1,500

Canteen staff                   2,500

Cement                            5,000

Depreciation:

Office equipment                 500

Moulds                              2,200

Fixtures and fittings             800

Salesmen's salary and commission   2,200

Delivery expanses               500

Office salaries                   1,800

Cement mixer repairs           900

Salesmen's car expenses   1,100

Finishing paint                       200

Packing                                   800

Julie. the owner of the business. finds the list of information somewhat confusing and asks if you can draw it up in a more structured format. identifying important figures and explaining what they mean.

Prepare a report for Julies Jardinieres which provides the following financial information for the costs in total and per pot. and explain any terms used:

a. Prime cost

b. Production cost

c. Total cost

d. Administration overheads

e. Selling overheads

f. Distribution overheads.