MAC3701 - Application Of Management Accounting Techniques
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MAC3701 ECP ASSIGNMENT 2 – SEMESTER 1
OF 2021
QUESTION 1
(a) Business concerns
(i) Universal are incapacitated to carry out their duties due to incompetence as
they have inadequate qualifications and incapability caused by the high staff
turnover and inadequate staff numbers.
(ii) Universal are not professional and do not exercise due care as shown by
losing the company`s files which was stated to be a common occurrence.
(b) Calculation of corrected selling price
Day Night
R R
Basic ingredients 50 50
Sunscreen 12 -
Anti – ageing ingredients - 22
Variable manufacturing overheads 10.50 10.50
Empty bespoke acrylic jars, shrink – wrap and labels 35 35
50 30 30
Direct labour (3 ∗ 10 ∗ 2)
(1 970 000 − 720 000)
Variable distribution costs [ (300 000 + 200 000) ] 2.50 2.50
Contribution per unit [(
31 050 000
);(
50 850 000 − 31 050 000
) 115 110
270 000 180 000
Selling price per pack 255 260
Calculation of the corrected total budgeted sales
Product Number of Selling price Total sales
packs per pack
Packs R R
Day 300 000 255 76 500 000
Night 200 000 260 52 000 000
Total sales amount 128 500 000
Conclusion
The company should adopt the economic order quantity model as this will save R10
682.74 (95 000 − 84 317.26) in inventory management costs
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