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MAC3701 EXAM PACK 2023
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MAC3701 EXAM PACK 2023
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Semester 1 - (2019)Amon Munyukwi 0|
B A R B I C A N A C C O U N T I N G S C H[COMPANY
O O L NAME]
E:enquiries@barbicanac.co.za
, Semester 1 - (2019)
Table of contents
Topic Learning Unit Pages
Economic Order Quanty (EOQ) 1 3 - 10
Standard Costing and Variance Analysis 2 11 - 19
Multi- Volume Product Analysis 3 20 - 28
Transfer Pricing and Performance Measurement 4 29 - 34
Direct and Absorption Costing 5 31 - 36
Activity Based Costing (ABC) 6 35 - 49
Process Costing 7 50 - 53
Cost Estimation and Cost Behaviour 8 54 - 57
Typical Exam Questions and Solutions 58 - 100
LEARNING UNIT 1
ECONOMIC ORDER QUANTITY (EOQ) FORMULA AND ITS COMPONENTS
Exam Focus areas;
1. Application of the EOQ to determine production run size,
2. Decision making with regard to quantity discounts and the EOQ,
1|
BARBICANACCOUNTINGSCHOOL
E:enquiries@barbicanac.co.za
, Semester 1 - (2019)
3. Understanding key terms; Lead Time, Safety Stock and Re-order levels.
Examples addressing the Exam Focus Areas;
2xDxO
² H + (P x i)
ECONOMIC ORDER QUANTINTY (EOQ) =
Where D= Annual Demand
O= Ordering Cost per order
H = Holding Cost per annum P = Purchase Price i= After tax
cost of capital (required rate of return)
Learning Qn 1
Toyz (Pty) Ltd ts a distributor of battery operated toy cars for children under the age of five years. The cars are so popular that the company has at
times struggled to meet the demand. The average annual sales for these cars is 12 000 units and the sales are distributed evenly throughout the
year based on 345 operating days per annum.
The following additional information is available for these cars;
Safety Stock 250 cars
Lead time 5 days
Inventory holding cost R18 per car per annum
Purchase price R120 per car
Cost of capital (after tax) 10%
Ordering cost (irrespective of supplier) R200 per order
Assume that safety stock will be maintained throughout the period.
A supplier in the Middle East has offered Toyz (Pty) Ltd a price of R100 per car irrespective of the exchange rate provided it purchases 12 orders
of 1 000 cars per order (resulting in an order being placed each month). Management will no longer hold any safety stock if this offer is accepted.
Should the offer be accepted, inventory holding cost will increase from R13 500 per annum to R15 000 per annum. Import duties not refundable
by SARS will be R19 000 per order.
a) Calculate the economic order quantity of Toyz (Pty) Ltd Ignore the new offer [3]
b) Calculate the re-order point for the cars if the safety stock is maintained at 250 cars [2]
c) Advise the management of Toyz (Pty} Ltd whether they should accept the price offered by the Middle East supplier [6]
2|
BARBICANACCOUNTINGSCHOOL
E:enquiries@barbicanac.co.za
, Semester 1 - (2019)
c. Analysis R
3|
BARBICANACCOUNTINGSCHOOL
E:enquiries@barbicanac.co.za
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