A manufacturer completed 3 000 units during the year at a unit cost of $100. Completed goods are transferred to the trading account at a mark up of 20% on cost. Calculate the profit on manufacture for the year.

Model answer

60000

Also accepted: 60 000, $60 000

Explanation

The units completed cost 3 000 x

100 =

300 000. At cost plus 20% they are transferred at 3 000 x

120 =

360 000, so the profit on manufacture is $360 000 - $300 000 = $60 000.

Derived from ZIMSEC Accounting 9197/2 Paper 2, June 2010, Q1

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