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mac1501 EXAM PACK
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ANSWERS,MAC1501 OCTOBER/NOVEMBER 2017
SUGGESTED SOLUTIONS
QUESTION 1
1.1 T
1.2 F
1.3 T
1.4 T
1.5 T
1.6 T
1.7 T
1.8 T
1.9 F
1.10 T
QUESTION 2
2.1 (C)
2.2 (d)
2.3 (d)
2.4 (c)
2.5 (b)
2.6 (d)
2.7 (b)
2.8 (c)
2.9 (c)
2.10 (a)
QUESTION 3
PART 3.1
3.1.1 Product costs are referred to as the costs used to manufacture a product. These costs include direct labour,
direct materials, consumable production supplies, and factory overheads. Product cost can also be
considered the cost of the labour required to deliver a service to a customer. Period costs are expenses that
are attributable to times and accounting periods than actual production processes or finished goods e.g.
rent.
3.1.2 Actual costing basis
Standard costing basis
Normal costing basis
PART 3.2
Baboo Lall
ANSWERS
MAC1501 – OCT/NOV 2016 SOLUTIONS
1|P age
,3.2.1 High – low method
Number of Hotdogs Sold Total Overhead Cost
(x) (y)
Units R
November 3 550 6 390
September 2 850 5 550
700 840
The high-low method assumes the variable portion of the costs causes the difference in the total costs, because fixed
costs are assumed to be the same at all levels of activity within the relevant range. The variable cost per unit is
therefore R1.20 (R840 ÷ 700units).
The equation y = a + bx to determine total fixed costs
y = a + bx
Total fixed cost, based on month of November Total fixed cost, based on month of September
6 390 = a + (1.20 x 3 550) 5 550 = a + (1.20 x 2 850)
a = 6 390 - 4 260 a = 5 550 – 3 420
= 2 130 = 2 130
Other Overhead Costs Fixed Variable
R R
September 2 130 3 420
October 2 130 3 670
November 2 130 4 260
3.2.2 Expected Profit for December
R
Total Sales (R15 x 3 500) 52 500
Less: Variable Costs [(1.20 x 3 500)+(R4 x 3 500)] (18 200)
Less: Fixed Costs (R12 000 + R16 000 + R2 130) (30 130)
Profit 4 170
QUESTION 4
PART 4.1
4.1.1 Mr Mkhize’s Net Wage Payable in a given week
R
Normal wages (45hrs X R45) 2 025
Overtime (6hrs X R45 X 1.5) 405
Total Gross Wages 2 430
Less: Pension Fund Contribution (R2 025 X 8%) (162)
Taxable Wages 2 268
Less: Other Deductions
PAYE (R2 268 x 18%) (408)
UIF (R2 430 x 1%) (24)
Medical Aid (R2 025 x 6%) (122)
Net wages payable 1 714
ANSWERS
MAC1501 – OCT/NOV 2016 SOLUTIONS
2|P age
, 4.1.2 Amount allocated to direct labour cost
WIP/FG POH (Pdn O/heads)
Direct Labour:
45 Hours at normal rate of R45 per hr 2 025
Overtime premium (6hrs x R45 x 1.5) 405
Total Employer Contributions (304 + 24 + 182) 510
915
WORKINGS:
Journal Entries DR CR
Work-in-progress/FG 2 025
Production overheads clearance (405 + 510) 915
Wages clearance account 2 940
Assignment of gross wages and benefits to production
Journal Entries
Wages Clearance Account 2 430
Wages payable 1 714
Pension Fund 162
PAYE 408
UIF 24
Medical Aid 122
Recording net wages and other liabilities
Wages Clearance Account 510
Pension Fund (15% x 2 025) 304
UIF (1% x 2 430) 24
Medical Aid (9% x 2 025) 182
Recording employer’s liability
Wages payable to Mr Mkhize 1 714
Pension Fund (162 + 304) 466
PAYE (18% x 2 268) 408
UIF (24 + 24) 48
Medical Aid (122 + 182) 304
Bank 2 940
Recording payment of wage related liabilities
PART 4.2
ANSWERS
Journal Entries DR CR
Inventory 125 400
3|P age
MAC1501 – OCT/NOV 2016 SOLUTIONS
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