CASE STUDY:
Pinocchio Carpentry Pinocchio Carpentry specialises in making wooden item. Their top seller are custom made skateboards. They have been doing business for over 40 years and have loyal customers. They manufacturing facility are based in Barcelona. They have 23 employees working for them. The janitor has worked there since the establishment of the company. They recently bought a new belt sander from America. They use only the finest quality of glue and plywood to make the skateboards. They also use masking tape to hold the board in place during the moulding phase. When a new skateboard maker are employed, Pinocchio’s carpentry sends them on a special course in London, because they want to ensure that their skateboard makers have exceptional skills and all meet a certain standard of excellence. The Human resource manager checks in with the team on a weekly basis during a weekly meeting to establish if there are any problems or concerns for the factory employees and then she reports back to the managing director with her weekly report. Pinocchio also has a great team of marketing experts that run their social media advertising and ensure that they stay on top of the competitive game with the latest design trends. The receptionist works from 8 to 5 during office hours and customers can place orders with her directly. Pinocchio also has employed a security guard for the night shifts. Covid has had an effect on the profits of the company, due to the electricity costs of lighting and operating the machinery in the factory, but the financial director are still extremely happy with the past financial quarters performance, despite the pandemic. Property tax has also increased, but their profits still managed to cover the high tax. Pinocchio also uses high quality paint , that comes in a variety of colours for the skateboards. They have used 10 000 nails and 20 Litres of Varnish sealer in the past month to manufacture the skateboards. Pinocchio’s total sales of skateboards are increasing each month.
QUESTION 1: Define total manufacturing costs (Direct Material, Direct Labor, Manufacturing overhead) (10 Marks)
QUESTION 2: What is direct manufacturing costs (10 Marks)
QUESTION 3: What are indirect manufacturing costs (10 Marks)
QUESTION 4: Determine 5 direct materials used in Pinocchio’s Carpentry shop (30 Marks)
QUESTION 5: Identify three types of labour – identify it as direct or indirect (20 Marks)
QUESTION 6: Identify three types of overhead costs. (20 Marks)