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IAS 2Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IAS 2L2 · Intermediate

Documents

Management accounting report 20X2

Schedule

Management accounting report 20X2

Management accounting report 20X2: materials consumed 600,000 (including the cast iron purchased on 2 January 20X2, measured at 200,000); direct labour 320,000; variable production overheads (furnace energy, supplies) 80,000; fixed production overheads (depreciation of the plant and equipment, maintenance, factory management) 500,000; production for the year 40,000 radiators, all held in inventories or sold after 31 December 20X2.

Costs of purchase and production cost of inventories

Manufacturing workshop: production cost, normal capacity and excluded costs

5 documents9 sections to document
0 / 6 sections completed
Guided mode

Section 1 of 9

Objective

In progress
Section brief
What to document
The engagement, its scope and the working mode chosen.
Why
A workpaper answers one precise question: framing it avoids off-topic work.
How
Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
Expected result
You know which question the workpaper must settle, and for which reporting date.
Your role
Preparer of the IAS 2 workpaper
Level
Intermediate
Estimated time
≈ 40 min
Progress
0 / 5 steps done (review excluded)

Context

Ferronord SAS (a fictitious entity) manufactures cast-iron radiators in a single plant. In the second quarter of 20X2, a breakdown of the main furnace sharply reduced production. You are preparing, for the year ended 31 December 20X2, the calculation of the production cost of the radiators manufactured during the year and the entries to recognise them in inventories.

Assignment

Cost of inventories workpaper (costs of conversion and excluded costs).

Purpose of the workpaper

Determine the costs of purchase (price, duties and non-recoverable taxes, directly attributable costs, discounts deducted), allocate fixed overheads on the basis of normal capacity, classify the other costs (included or expensed), isolate the financing element of a deferred settlement and record the entries.

Questions of the file covered by this workpaper

  • Which costs do you include in the cost of the radiators and which do you recognise as expenses?
  • Which allocation basis do you use for fixed production overheads?
  • Calculate the fixed production overheads allocated to the radiators.
  • Calculate the unallocated fixed production overheads.
  • Calculate the production cost of the radiators and the total cost recognised in inventories.
  • Calculate the financing element of the cast iron purchase.
  • Record the entries for the year.

Documents in the file

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