QUESTION 4 (30 marks) (36 minutes) This question consists of two separate questi
ID: 2551997 • Letter: Q
Question
QUESTION 4 (30 marks) (36 minutes) This question consists of two separate questions, both of which must be answered. PART 4.1 15) Mr Mkhize is employed by Amambo Limited. Mr Mkhize is directly involved in manufacturing the company's leading pharmaceutical drug. The normal working week of the company is 45 hours. Mr Mkhize's basic wage rate is R45 per hour. The company pays its employees normal time and a half for any work in excess of 45 hours per week. In the week ended 09 February 2018, Mr Mkhize worked 51 hours; however, he was idle for 3 hours due to material shortages. Additional information: Mr Mkhize makes the following contributions: Pension fund Medical Aid UIF The company makes the following contributions: Pension fund Medical aid 1. 8% of normal wage 6% of normal wage 1% of gross wage 2. 15% of normal wage 9% of normal wage 1% of gross wage 3. Mr Mkhize pays PAYE at 18% of his taxable income. REQUIRED Calculate the following: 4.1.1 The net wage payable to Mr Mkhize for the given week. (3%) (3%) The amount that will be allocated to the direct labour cost. 4.1.3The amount that will be allocated to factory overhead costs. PART 42 15 The following are the inventory transaction of Tshinakaho, a retailer. for the financial year ended 31 December 2017 125 400 2 200 Paid for delivery of the inventory in cash... Paid for delivery of sold goods to the customer in Sold inventory for cash. Sold inventory on account. Purchased inventory on account. Paid for delivery of inventory in cash. Returned unwanted goods to the supplier 1 100 12650 8B 550 33 000 550 11 000Explanation / Answer
4.1.1Total Payment to employees
$
Normal Wages 45*45 (A)
2,025
Extra Wages Payable (6*67.5)(B)
405
Gross payable©
2,430
Deduction from Employees
Pension Fund = (2025*8%)(E)
162
Medical Aid 2025*6% (F)
121.5
UIF 2430*1% (G)
24.3
Total Deduction (H = E+F+G)
307.8
Net payable Before PAYE Deduction (I = C-H)
2,122.2
PAYE Deduction (J)
381.99
Net Wages Paid (K =I-J)
1,740.21
4.1.2 Computation of Cost Allocated to Direct Labor
$
Normal Wages Allocated (45-3)*45(A)
1,890
The portion of overtime =45*6 (B)
270
Contribution b by Employer to be Allocated
Pension cost 2025*15% ©
303.75
Medical Aid 2025*9% (D)
182.25
UID To be allocated 2430*1% (E)
24.3
Total employer contribution to be allocated (F = C+D+E)
488.3
Total cost to be allocated (A+B+F)
2,918.30
4.1.3 Cost Allocated to overhead cost
Over time premium 6*22.5
135
Note.
For conveniences, it is treated that UTI is changed against Direct labor.
As ideal time due to the material shortage is not a normal ideal time so it has to be treated in a separate account not treated as factory overhead.
$
Normal Wages 45*45 (A)
2,025
Extra Wages Payable (6*67.5)(B)
405
Gross payable©
2,430
Deduction from Employees
Pension Fund = (2025*8%)(E)
162
Medical Aid 2025*6% (F)
121.5
UIF 2430*1% (G)
24.3
Total Deduction (H = E+F+G)
307.8
Net payable Before PAYE Deduction (I = C-H)
2,122.2
PAYE Deduction (J)
381.99
Net Wages Paid (K =I-J)
1,740.21
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