Production cost statement grade 12: questions and answers

New factory figures every time: the three cost notes, the production cost statement, unit costs and the break-even point, checked as you type.

Task

Set

How answers are marked
  • Statement and note amounts are whole rand. Spaces between thousands and an R are fine: 950 600, R950 600 and 950600 all count.
  • Lines that are subtracted (closing stock, closing work-in-process, cost of sales) may be typed with or without brackets. A net loss must be in brackets or have a minus.
  • Unit costs are rand and cents, right to the nearest cent (47,53 or 47.53). Percentages are right to one decimal place, rounded (1,68 is 1,7, not 1,6).
  • Round a break-even point up to the next whole unit. The exact figure to one or two decimals is accepted, as in the NSC memos; any other figure from the one rounded down up to the rounded-up one is marked close.
  • When a note or statement is checked, a line left empty in it is marked missing. Lines for items that do not belong in a note stay empty.
  • A total worked correctly from your own wrong figures above it is pointed out as such.

    Answers are saved on this device as you type.

    How the problems are made

    Each problem is an invented South African factory year that ends in February. The trial balance extract and the additional information follow the order of an NSC paper 2 question: unrecorded invoices and returns, the week of wages not recorded, overtime at one and a half times the rate, the foreman's salary inside factory wages, UIF, pension and medical aid contributions, rent split by floor area with an amount prepaid or owed, water and electricity owed, insurance prepaid, depreciation on cost or on the diminishing balance with new equipment for part of the year, and items that belong in no factory note at all.

    An example from set PCS274

    Problem 1 is Nandi Bags, for the year ended 29 February 2024. Direct materials cost is R170 100 + R1 906 950 + R35 600 − R236 575 = R1 876 075. The factory wages of R1 288 600 include the foreman's salary of 12 × R21 900, which belongs in factory overheads, and R18 600 of wages was not recorded, so direct wages are R1 044 400 and direct labour cost, with 1% UIF and 6% pension, is R1 117 508. Factory overhead cost comes to R801 383. Prime cost is R2 993 583, the total cost of production R3 794 966, and with R287 900 of work-in-process at the start and R231 825 at the end, the cost of production of finished goods is R3 851 041: R127,10 for each of the 30 300 school bags. Open set PCS274

    Questions

    What is the layout of a production cost statement?

    Direct materials cost (note 1) plus direct labour cost (note 2) gives prime cost. Add factory overhead cost (note 3) for the total cost of production. Add work-in-process at the beginning of the year and subtract work-in-process at the end to get the cost of production of finished goods.

    What goes in the factory overhead cost note?

    Every factory cost that is not direct materials or direct labour: indirect labour such as the foreman's salary and the employer's contributions for it, consumable stores used, the factory's share of rent, water and electricity and insurance, depreciation on factory equipment, and factory repairs. Office salaries, advertising and sales commission do not belong there.

    How do you work out cost of sales for a manufacturer?

    Cost of sales = finished goods stock at the beginning of the year + cost of production of finished goods − finished goods stock at the end of the year. It goes in the income statement under sales; gross profit is sales minus cost of sales.

    Which costs are fixed and which are variable in grade 12 Accounting?

    The DBE examination guidelines treat factory overhead cost and administration cost as fixed costs, and direct materials, direct labour and selling and distribution cost as variable costs. Semi-variable costs are not used.

    How do you calculate the break-even point?

    Break-even point = total fixed costs ÷ (selling price per unit − variable cost per unit). In the DBE guideline example, R220 000 ÷ (R93,00 − R43,00) = R220 000 ÷ R50,00 = 4 400 units. When the answer is not a whole number, round up: one unit fewer would not cover the fixed costs.

    How is depreciation worked in the factory overhead note?

    On cost, it is the rate times the cost. On the diminishing balance, it is the rate times cost minus accumulated depreciation at the start of the year. Equipment bought during the year is depreciated only for the months it was owned: cost × rate × months ÷ 12.

    Sources, checked 28 October 2026: CAPS Accounting, Further Education and Training phase, grades 10 to 12 (PDF), cost accounting and the formats for the production cost statement and notes; Accounting grade 12 examination guidelines 2021 (PDF), fixed and variable costs and the break-even point; Mind the Gap Accounting grade 12 (PDF), chapter 3; NSC Accounting paper 2, November 2023, answer book; Eastern Cape Department of Education, 2025 NSC chief marker's report for Accounting paper 2.