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MAC3701/2016/Question bankQuestion bank for
APPLICATION OF MANAGEMENT
ACCOUNTING TECHNIQUES
MAC3701
Semester 1
Department of Management Accounting
This question bank is only available in English,
These questions must be used to improve examination technique
and topic understanding.
Define tomorrow
, MAC3701/2016/Question bank
CONTENT
Page
QUESTION 1 ................................................................................................................................................. 3
QUESTION 2 ................................................................................................................................................. 4
QUESTION 3 ................................................................................................................................................. 5
QUESTION 4 ................................................................................................................................................. 7
QUESTION 5 ................................................................................................................................................. 8
QUESTION 6 ................................................................................................................................................. 9
QUESTION 7 ...............................................................................................................................................10
QUESTION 8 ...............................................................................................................................................11
QUESTION 9 ...............................................................................................................................................12
QUESTION 10 .............................................................................................................................................14
QUESTION 11 .............................................................................................................................................16
QUESTION 12 .............................................................................................................................................17
QUESTION 13 .............................................................................................................................................19
QUESTION 14 .............................................................................................................................................21
QUESTION 15 .............................................................................................................................................22
SOLUTION - QUESTION 1 .........................................................................................................................24
SOLUTION - QUESTION 2 .........................................................................................................................28
SOLUTION - QUESTION 3 .........................................................................................................................32
SOLUTION - QUESTION 4 .........................................................................................................................33
SOLUTION - QUESTION 5 .........................................................................................................................35
SOLUTION - QUESTION 6 .........................................................................................................................40
SOLUTION - QUESTION 7 .........................................................................................................................43
SOLUTION - QUESTION 8 .........................................................................................................................46
SOLUTION - QUESTION 9 .........................................................................................................................47
SOLUTION - QUESTION 10 .......................................................................................................................49
SOLUTION - QUESTION 11 .......................................................................................................................52
SOLUTION - QUESTION 12 .......................................................................................................................54
SOLUTION - QUESTION 13 .......................................................................................................................57
SOLUTION - QUESTION 14 .......................................................................................................................60
SOLUTION - QUESTION 15 .......................................................................................................................62
2
, MAC3701/2016/Question bank
QUESTION 1 26 Marks
A South African company, Soda Ltd, currently makes use of a standard absorption costing system
for planning and control purposes.
This costing system is now under review by the newly appointed cost accountant. He has started
preparing a statement that reconciles the budgeted and actual profit of Soda Ltd based on the
information supplied below. He needs your help however to obtain the missing figures.
The following budget data relate to the production of Product SoDa for November. The product gets
manufactured by mixing two types of raw materials, So and Da.
Cost
Raw material input: So (0,4kg @ R6/kg) R2,40
Raw material input: Da (0,6kg @ R16/kg) R9,60
Raw material cost per kg input R12,00
Yield 96%
Raw materials cost per kg output R12,50
Fixed manufacturing overhead per kg of output R0,40
Total standard cost per kg of output R12,90
Budget data for product SoDa for the period is detailed below:
Sales 72 000kg
Production 70 000kg
SoDa opening inventory (valued at R25 800) 2 000kg
Selling price per kg R22
Fixed production overheads R28 000
The fixed production overhead absorption rate is based on the budgeted number of kilograms
produced. All inventories are valued at standard cost.
Actual data for product SoDa for the period was as follows:
Sales 71 000kg
Production 69 000kg
Selling price per kg R23,00
Fixed production overheads incurred R27 800
Purchase cost per kg of raw material So R6,50
Purchase cost per kg of raw material Da R15,80
Input of raw material So 29 900kg
Input of raw material Da 40 100kg
REQUIRED
Complete the statement that reconciles the budgeted and actual profit for product SoDa for
November. Show the missing variances as set out below. You needn’t rewrite the reconciliation (26)
statement, simply indicate the missing figures showing all your calculations clearly.
3
, MAC3701/2016/Question bank
Reconciliation statement R Marks
Budgeted profit: ? [1]
-Budgeted sales ? [1]
-Budgeted cost of sales
-Budgeted production cost ? [1]
-Opening inventory 25 800
Variances: F/A*
Sales margin price variance ? ? [2]
Sales margin volume variance ? ? [3]
Material price variance 6 930 A -
-So 14 950 A -
-Da 8 020 F -
Material mix variance 19 000 ? [½]
-So ? ? [3]
-Da ? ? [3]
Material yield variance ? F [½]
-So ? ? [3]
-Da ? ? [3]
Fixed overhead expenditure variance ? ? [1]
Fixed overhead volume variance ? ? [1]
Actual profit: ? [1]
-Actual sales revenue 1 633 000
-So (194 350)
-Da ? [1]
-Fixed overheads incurred (27 800)
-Opening inventory ? [1]
*F/A = “Favourable” / “Adverse” [CIMA adapted]
QUESTION 2 50 Marks
Soaps Ltd is a company that processes and distributes washing powders to wholesalers around the
Gauteng province. The company currently processes the Hand washing powder and the Auto washing
powder in 2kg packets. The company uses the direct costing method for inventory valuation purposes.
The standards per unit based on the monthly budgeted processing and sales units of 10 000 Hand
washing powders and 12 000 Auto washing powders are as follows:
Notes Hand Auto
Selling price R55 R75
Direct material A (R10 per kg) 1 R20 R30
Direct material B – Packet (2kg) R10 R12
Direct labour (R50 per hour) R8,34 R10
Manufacturing overheads (R5 per labour hour) 2 R8,66 R12
Selling and distribution costs 3 R3 R3
Notes
1. Direct material A – Available in limited supply. Only 50 000 kg will be available to Soaps Ltd
per month.
2. The total budgeted fixed manufacturing overheads per month is R150 000. These are allocated
on a ratio of 2:1 between Auto washing powder and Hand washing powder.
4
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