Page 131 - Agri-Business Management Handbook
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Sh.
Additional Information:
- Out of the wages paid to the factory workers, 90% is considered direct
while the remaining 10% is in direct.
- Cleaning costs should be apportioned as follows: 70% to the factory, 20%
to the warehouse and 10% to the office.
- Depreciation on plant should be provided at the rate of 20% of the plant
balance on 1st January 20X8.
- Factory rent accrued at 31st December 2014 was Sh. 120,000.
SOLUTION 48,000
Manufacturing Account for the year ended 31st December 2014
Raw materials:
Opening stock
Add: Purchases 350,000
Carriage inwards 42,000
Costs of raw materials available 440,000
Less: Closing stock 21,000
Returns outwards 6,200 27,200
Costs of raw materials consumed in production 412,800
Direct wages 90% x 148,000 133,200
Prime cost 546,000
Add: Difference in Work In Progress
Opening WIP 9,800
FINANCIAL RATIOS ANALYSIS Hence we can calculate them to enable us
assess profitability, liquidity, efficiency,
Financial ratios are numbers that are long-term solvency and attractiveness
calculated to assess the financial health of the company to investors.
of a business in terms of its profitability
and solvency (ability to pay debts). Profitability Ratios
These ratios help us to assess the
After calculating our financial ratios, we profitability of the business over time, in
compare them with; other businesses comparison with other businesses or in
in the same industry, previous periods comparison with the target profitability.
or the planned performance that we The financial ratios that help to evaluate
had set to achieve. Financial ratios are profitability are included in table 5.8.
classified depending on the attribute of
financial health that we want to assess.
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