Question Tag: Manufacturing

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  • 20 Marks

CML – OCT 2022 – L3 – Q1 – Lending to Iron Rod Manufacturing Company

Evaluate a request for GHC 3.0 million working capital finance from a long-term customer manufacturing iron rods, aiming to supply government projects, considering eroded profits and provided financials.

Joojo Metals Ltd… has been your customer for the past twenty years. The company manufactures iron rods used in the construction of roads and houses and supplies wholesalers in Accera, Akim Oda, Nkawkaw, Nsawam and its environs.

The company sources its raw materials of iron scraps and ingons both locally and abroad, withThe company hasThe company has has been its profits eroded in 20221 due to the rapidly depreciating exchange rate of the cedi against foreigni currencies. The company has also faced increasing competition from other producers in Accera and Takorardi as well as cheaper imports from China China.

Joojo Banful owns $60%$ of the shares of the the company, whilst the remaining $ 40%$ is held by his childhood friend Fifii Awotwe who takes no active part in the management of the company.

Joojo serves as the CEO and General Manager of the company, whilst his wife, Mama Nelson, a chartered accountant serves as the Finance Director of the company. His factory Manager is Jonas Dadzzie, aged 62, a vastly experienced factory manager he recruited only a year ago. In addition, he has a pool of twenty skilled workers many of whom were poached from other companies.

The principal shareholder of the company, Joojo Banful is a noted supporter of the ruling government though he persistently denies that he has provided funding for the government.

The company’s factory is located at Tema in the Greater Accera Region of the country on a wide expanse of land. It is fitted with three huge warehouses, which are well stocked at all times. The company also has three articulator trucks which it uses for its supplies.

Jonas comes to you with a business proposition involving the provision of working capital finance for the supply of of iron rods to major government building construction projects running across the country. He tells you that this could give the business a major breakthrough and bring gains also to your bank. He is asking for working capital finance of GHC 3.0 million for this major expansion in scope of operations.

How would you respond to this proposition with respect to the provided financial statements and ratios on pages 3.4 & 5?

Profit and Loss Extracts for the year ending 30 Dec

Ratios

2019

2020

2021

[30 Marks]

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  • 20 Marks

STP – Aug 2020 – L2 – Q5 – Tax Incentives for Manufacturing

Discuss tax incentives for a chocolate manufacturing plant in Ghana and the impact of factory location on these incentives.

The Swiss-Ghanaian Chamber of Commerce is organising a fair for some Swiss investors who intend to establish a chocolate manufacturing plant in Ghana. The investors intend to manufacture chocolates for the domestic and international markets.

Required
As an expert in strategic tax planning, the Chamber has invited you to speak on the tax incentives available for such investments and whether the location of the factory would have an impact on the tax incentives the investors can enjoy.

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  • 20 Marks

STP – Aug 2018 – L2 – Q3 – Tax Strategies for New Business Formation

State and explain four non-tax factors influencing an entrepreneur's decision on business location.

(a). State and explain four (4) non-tax factors which influence the decision of an entrepreneur as to where to establish a business.

(b). A Ghanaian entrepreneur is looking for an ideal location to establish an orange juice processing facility. The initial feasibility studies conducted by consultants for the entrepreneur indicate that Tema, Takoradi and Nsawam have comparable economic conditions which will make an investment in any of these cities financially prudent. With reference to the provisions of the Income Tax Act, 2015 (Act 896) discuss the tax implications of establishing a manufacturing entity in Tema, Takoradi and Nsawam and advise the entrepreneur on the most tax efficient location to establish the entity.

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  • 15 Marks

TAX – May 2024 – L2 – SA – Q5 – Value Added Tax (VAT)

Compute VAT payable by Havillah Manufacturing Limited and identify VAT-exempt goods and services.

Havillah Manufacturing Limited, engaged in manufacturing perfumes and other cosmetic products, has the following profit or loss statement for the year ended September 30, 2021:

Additional Information:

  1. Turnover includes N64,350,000 from export sales and N141,900,000 from local sales.
  2. Cost of Sales includes:
    • Opening inventory (VAT inclusive): N24,915,000
    • Closing inventory (VAT inclusive): N40,865,000
    • Purchase of raw materials: N94,600,000
    • Freight charges: N20,570,000
    • Other direct materials: N13,530,000
  3. Plant and machinery purchased for N24,750,000 is included in opening inventory, VAT inclusive.
  4. VAT and withholding tax remitted during the year amounted to N2,173,180 and N1,787,500, respectively.

Required: a. Compute the net VAT payable by Havillah Manufacturing Limited for the year. (10 Marks)
b. State FIVE VAT-exempt goods. (2½ Marks)
c. State FIVE VAT-exempt services. (2½ Marks)

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  • 11 Marks

TAX – Nov 2020 – L1 – SA – Q2a – Companies Income Tax (CIT)

Compute the income tax liability for three companies based on their total profits and provide reasons.

Alhaji Jimoh Abdulahi retired from public service in 2010 and went into business. His friend advised him to incorporate some companies.

The following information in respect of the companies is provided:

Name of Company Apex Manufacturing Co. Limited Zenith Foods Limited Base Nigeria Limited
Date of Commencement of Business January 2, 2010 January 2, 2017 January 2, 2017
Nature of Business Manufacturing Agriculture Trading
Date of Accounts Year ended December 31, 2018 Year ended December 31, 2018 Year ended December 31, 2018
Revenue (N) 990,400 896,400 900,500
Total Profit (N) 384,000 421,000 396,000

Required:
Compute the income tax liability of each of the companies for the relevant assessment year. Give reasons for your computations.
(11 Marks)

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  • 9 Marks

TAX – Nov 2021 – L2 – Q3a – Value Added Tax (VAT)

Calculation of total VAT payable by Adegboyega Enterprises to the Federal Inland Revenue Service (FIRS) for product sales.

Adegboyega Enterprise is a manufacturing outfit based in Jankara, Lagos State. In 2020, the company sold its vatable product to a wholesaler, Ikeja Venture, for N3,500,000. The wholesaler sold the products to a retailer, Mrs. Adeosun, for N4,900,000, who finally sold it to consumers for N6,300,000 (VAT inclusive). Assume there was no closing inventory at each stage of the transaction.

Required:
a. Compute the total VAT payable to the Federal Inland Revenue Service by Adegboyega Enterprises on the transactions stated above.

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  • 1 Marks

FA – May 2014 – L1 – SA – Q15 – Cost Classification

This question tests knowledge of classifying costs in a manufacturing context.

For your organisation which is engaged in the production of industrial blocks, bricks and construction, where would you classify the remuneration of a forklift truck operator and the cost of steel girders?

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  • 1 Marks

BMF – May 2021 – L1 – SA – Q7 – Basic Management Functions

Identifies which activity does not belong to the manufacturing function in an organization.

Which of the following activities may NOT be taken as part of manufacturing function in an organization?
A. Engineering and maintenance work
B. Physical delivery of goods to customers
C. Production planning and control
D. Quality control and checking
E. Inspection of finished goods

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  • 1 Marks

MI – Nov 2019 – L1 – SA – Q7 – Costing Methods

This question asks for the system designed to suit the way goods are manufactured or services are provided.

The system designed to suit the ways goods are manufactured or processed or the way services are provided is referred to as:
A. Job costing
B. Specific order costing
C. Costing methods
D. Process costing
E. Batch costing

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  • 5 Marks

PT – May 2021 – L2 – Q1a – Overview of the Ghanaian Tax System and Fiscal Policy

Discuss how location benefits young entrepreneurs aged 35 years or younger in manufacturing regarding tax planning.

The location of an entity is of importance in tax planning. How does location inure to the benefit of a young entrepreneur aged 35 years or younger in the manufacturing business?

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  • 20 Marks

CML – OCT 2022 – L3 – Q1 – Lending to Iron Rod Manufacturing Company

Evaluate a request for GHC 3.0 million working capital finance from a long-term customer manufacturing iron rods, aiming to supply government projects, considering eroded profits and provided financials.

Joojo Metals Ltd… has been your customer for the past twenty years. The company manufactures iron rods used in the construction of roads and houses and supplies wholesalers in Accera, Akim Oda, Nkawkaw, Nsawam and its environs.

The company sources its raw materials of iron scraps and ingons both locally and abroad, withThe company hasThe company has has been its profits eroded in 20221 due to the rapidly depreciating exchange rate of the cedi against foreigni currencies. The company has also faced increasing competition from other producers in Accera and Takorardi as well as cheaper imports from China China.

Joojo Banful owns $60%$ of the shares of the the company, whilst the remaining $ 40%$ is held by his childhood friend Fifii Awotwe who takes no active part in the management of the company.

Joojo serves as the CEO and General Manager of the company, whilst his wife, Mama Nelson, a chartered accountant serves as the Finance Director of the company. His factory Manager is Jonas Dadzzie, aged 62, a vastly experienced factory manager he recruited only a year ago. In addition, he has a pool of twenty skilled workers many of whom were poached from other companies.

The principal shareholder of the company, Joojo Banful is a noted supporter of the ruling government though he persistently denies that he has provided funding for the government.

The company’s factory is located at Tema in the Greater Accera Region of the country on a wide expanse of land. It is fitted with three huge warehouses, which are well stocked at all times. The company also has three articulator trucks which it uses for its supplies.

Jonas comes to you with a business proposition involving the provision of working capital finance for the supply of of iron rods to major government building construction projects running across the country. He tells you that this could give the business a major breakthrough and bring gains also to your bank. He is asking for working capital finance of GHC 3.0 million for this major expansion in scope of operations.

How would you respond to this proposition with respect to the provided financial statements and ratios on pages 3.4 & 5?

Profit and Loss Extracts for the year ending 30 Dec

Ratios

2019

2020

2021

[30 Marks]

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  • 20 Marks

STP – Aug 2020 – L2 – Q5 – Tax Incentives for Manufacturing

Discuss tax incentives for a chocolate manufacturing plant in Ghana and the impact of factory location on these incentives.

The Swiss-Ghanaian Chamber of Commerce is organising a fair for some Swiss investors who intend to establish a chocolate manufacturing plant in Ghana. The investors intend to manufacture chocolates for the domestic and international markets.

Required
As an expert in strategic tax planning, the Chamber has invited you to speak on the tax incentives available for such investments and whether the location of the factory would have an impact on the tax incentives the investors can enjoy.

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  • 20 Marks

STP – Aug 2018 – L2 – Q3 – Tax Strategies for New Business Formation

State and explain four non-tax factors influencing an entrepreneur's decision on business location.

(a). State and explain four (4) non-tax factors which influence the decision of an entrepreneur as to where to establish a business.

(b). A Ghanaian entrepreneur is looking for an ideal location to establish an orange juice processing facility. The initial feasibility studies conducted by consultants for the entrepreneur indicate that Tema, Takoradi and Nsawam have comparable economic conditions which will make an investment in any of these cities financially prudent. With reference to the provisions of the Income Tax Act, 2015 (Act 896) discuss the tax implications of establishing a manufacturing entity in Tema, Takoradi and Nsawam and advise the entrepreneur on the most tax efficient location to establish the entity.

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  • 15 Marks

TAX – May 2024 – L2 – SA – Q5 – Value Added Tax (VAT)

Compute VAT payable by Havillah Manufacturing Limited and identify VAT-exempt goods and services.

Havillah Manufacturing Limited, engaged in manufacturing perfumes and other cosmetic products, has the following profit or loss statement for the year ended September 30, 2021:

Additional Information:

  1. Turnover includes N64,350,000 from export sales and N141,900,000 from local sales.
  2. Cost of Sales includes:
    • Opening inventory (VAT inclusive): N24,915,000
    • Closing inventory (VAT inclusive): N40,865,000
    • Purchase of raw materials: N94,600,000
    • Freight charges: N20,570,000
    • Other direct materials: N13,530,000
  3. Plant and machinery purchased for N24,750,000 is included in opening inventory, VAT inclusive.
  4. VAT and withholding tax remitted during the year amounted to N2,173,180 and N1,787,500, respectively.

Required: a. Compute the net VAT payable by Havillah Manufacturing Limited for the year. (10 Marks)
b. State FIVE VAT-exempt goods. (2½ Marks)
c. State FIVE VAT-exempt services. (2½ Marks)

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  • 11 Marks

TAX – Nov 2020 – L1 – SA – Q2a – Companies Income Tax (CIT)

Compute the income tax liability for three companies based on their total profits and provide reasons.

Alhaji Jimoh Abdulahi retired from public service in 2010 and went into business. His friend advised him to incorporate some companies.

The following information in respect of the companies is provided:

Name of Company Apex Manufacturing Co. Limited Zenith Foods Limited Base Nigeria Limited
Date of Commencement of Business January 2, 2010 January 2, 2017 January 2, 2017
Nature of Business Manufacturing Agriculture Trading
Date of Accounts Year ended December 31, 2018 Year ended December 31, 2018 Year ended December 31, 2018
Revenue (N) 990,400 896,400 900,500
Total Profit (N) 384,000 421,000 396,000

Required:
Compute the income tax liability of each of the companies for the relevant assessment year. Give reasons for your computations.
(11 Marks)

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  • 9 Marks

TAX – Nov 2021 – L2 – Q3a – Value Added Tax (VAT)

Calculation of total VAT payable by Adegboyega Enterprises to the Federal Inland Revenue Service (FIRS) for product sales.

Adegboyega Enterprise is a manufacturing outfit based in Jankara, Lagos State. In 2020, the company sold its vatable product to a wholesaler, Ikeja Venture, for N3,500,000. The wholesaler sold the products to a retailer, Mrs. Adeosun, for N4,900,000, who finally sold it to consumers for N6,300,000 (VAT inclusive). Assume there was no closing inventory at each stage of the transaction.

Required:
a. Compute the total VAT payable to the Federal Inland Revenue Service by Adegboyega Enterprises on the transactions stated above.

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  • 1 Marks

FA – May 2014 – L1 – SA – Q15 – Cost Classification

This question tests knowledge of classifying costs in a manufacturing context.

For your organisation which is engaged in the production of industrial blocks, bricks and construction, where would you classify the remuneration of a forklift truck operator and the cost of steel girders?

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  • 1 Marks

BMF – May 2021 – L1 – SA – Q7 – Basic Management Functions

Identifies which activity does not belong to the manufacturing function in an organization.

Which of the following activities may NOT be taken as part of manufacturing function in an organization?
A. Engineering and maintenance work
B. Physical delivery of goods to customers
C. Production planning and control
D. Quality control and checking
E. Inspection of finished goods

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  • 1 Marks

MI – Nov 2019 – L1 – SA – Q7 – Costing Methods

This question asks for the system designed to suit the way goods are manufactured or services are provided.

The system designed to suit the ways goods are manufactured or processed or the way services are provided is referred to as:
A. Job costing
B. Specific order costing
C. Costing methods
D. Process costing
E. Batch costing

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  • 5 Marks

PT – May 2021 – L2 – Q1a – Overview of the Ghanaian Tax System and Fiscal Policy

Discuss how location benefits young entrepreneurs aged 35 years or younger in manufacturing regarding tax planning.

The location of an entity is of importance in tax planning. How does location inure to the benefit of a young entrepreneur aged 35 years or younger in the manufacturing business?

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