MAC1501
ASSIGNMENT 1
SOLUTIONS
PREPARED BY: MTHOMBENI
0767297208
, VERSION 1
1. Holding costs include costs such as insurance costs for inventory and rent of
storage space.
True
2 Cost drivers are those activities for which an increase in the level of activity will
lead to a decrease in the total of that variable cost.
False
3 The strategic plan is the long-term plan of an organisation.
True
4 Materials are those physical resources that a manufacturer requires to produce
finished goods to sell.
True
5 Management accounting is concerned with providing information to creditors,
lenders, SARS and others outside an organisation
False
6 Except for option _____ the following are key principles that ensure the
professional and ethical behaviour of management accountants.
Popularity
7 On the last day of the financial year, merchandise purchased on account was
delivered to the premises of Isizwe Limited. The items delivered were included in
the physical count of inventory, but the accounting staff neglected to record the
purchase in the accounting records of Isizwe. This oversight will result in _____
liabilities being reported at too low an amount, and profit being reported at
too high an amount
8________________ contains a summary of the detail transactions of transactions
recorded in the creditors' subsidiary ledger.
Creditors control account
9 According to the perpetual inventory system, ________.
a cost of sales account is updated throughout the year
,10 In absorption costing, input costs typically consist of ______
direct materials, direct labour and production overheads
11 In a periodic inventory system, material purchases will be recorded in which
account?
material purchases account
12 Sondeza Limited is a retailer and it sells its inventory of merchandise at a mark-
up of 30% on cost. There was no inventory of merchandise at the beginning of
March. During March, merchandise with a cost of R180 000 was purchased while
merchandise with a cost of R160 000 was sold. On 25 March a customer returned
merchandise she had purchased and Sondeza Limited gave her a full refund of R6
500 in cash. What was the gross profit of Sondeza Limited for March?
R46 500
13 Ziyakhala Limited manufactured 2 000 units during May 2022. The following costs
were incurred:
Direct material R14 per unit
Direct labour R6 per unit
Indirect labour R8 000
Other overhead costs R6 000
Administrative expenses R8 000
Which one of the following alternatives represents total prime costs for May 2022?
R40 000
, 14 Maphitha uses a periodic inventory system. The following information relates to the
year ended 30 June 2022:
R
Sales 1 863 000
Opening inventory of merchandise 200 000
Closing inventory of merchandise 280 000
A mark-up of 15% on cost is applied consistently to establish the selling price.
The purchases for the year amounts to ________.
R1 700 000
15 The following costs were incurred in July 2022:
R
Direct materials 29 000
Direct labour 24 000
Manufacturing overhead 14 000
Selling expenses 18 000
Administrative expenses 18 000
Product costs during the month of July amounted to:
R67 000
ASSIGNMENT 1
SOLUTIONS
PREPARED BY: MTHOMBENI
0767297208
, VERSION 1
1. Holding costs include costs such as insurance costs for inventory and rent of
storage space.
True
2 Cost drivers are those activities for which an increase in the level of activity will
lead to a decrease in the total of that variable cost.
False
3 The strategic plan is the long-term plan of an organisation.
True
4 Materials are those physical resources that a manufacturer requires to produce
finished goods to sell.
True
5 Management accounting is concerned with providing information to creditors,
lenders, SARS and others outside an organisation
False
6 Except for option _____ the following are key principles that ensure the
professional and ethical behaviour of management accountants.
Popularity
7 On the last day of the financial year, merchandise purchased on account was
delivered to the premises of Isizwe Limited. The items delivered were included in
the physical count of inventory, but the accounting staff neglected to record the
purchase in the accounting records of Isizwe. This oversight will result in _____
liabilities being reported at too low an amount, and profit being reported at
too high an amount
8________________ contains a summary of the detail transactions of transactions
recorded in the creditors' subsidiary ledger.
Creditors control account
9 According to the perpetual inventory system, ________.
a cost of sales account is updated throughout the year
,10 In absorption costing, input costs typically consist of ______
direct materials, direct labour and production overheads
11 In a periodic inventory system, material purchases will be recorded in which
account?
material purchases account
12 Sondeza Limited is a retailer and it sells its inventory of merchandise at a mark-
up of 30% on cost. There was no inventory of merchandise at the beginning of
March. During March, merchandise with a cost of R180 000 was purchased while
merchandise with a cost of R160 000 was sold. On 25 March a customer returned
merchandise she had purchased and Sondeza Limited gave her a full refund of R6
500 in cash. What was the gross profit of Sondeza Limited for March?
R46 500
13 Ziyakhala Limited manufactured 2 000 units during May 2022. The following costs
were incurred:
Direct material R14 per unit
Direct labour R6 per unit
Indirect labour R8 000
Other overhead costs R6 000
Administrative expenses R8 000
Which one of the following alternatives represents total prime costs for May 2022?
R40 000
, 14 Maphitha uses a periodic inventory system. The following information relates to the
year ended 30 June 2022:
R
Sales 1 863 000
Opening inventory of merchandise 200 000
Closing inventory of merchandise 280 000
A mark-up of 15% on cost is applied consistently to establish the selling price.
The purchases for the year amounts to ________.
R1 700 000
15 The following costs were incurred in July 2022:
R
Direct materials 29 000
Direct labour 24 000
Manufacturing overhead 14 000
Selling expenses 18 000
Administrative expenses 18 000
Product costs during the month of July amounted to:
R67 000
