MAC2601 - Principles of Management Accounting (MAC2601)
Exam (elaborations)
MAC2601 Exam Jun 2014 Paper & Solutions
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Course
MAC2601 - Principles of Management Accounting (MAC2601)
Institution
University Of South Africa (Unisa)
This is 2019 SOLUTION ASSIGNMENT 2 to be studied in conjunction with the other study materials. Once understood your chances of passing this module is greatly enhanced.
MAC2601 - Principles of Management Accounting (MAC2601)
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QUESTION 1
QUESTION 1
Nyathi Bio-Electric (Pty) Ltd
Company’s contribution margin ratio for July 2019
𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 100%
Contribution margin ratio = x
𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠 1
Contribution margin ratio = Contribution/sales x 100%
For the month of July 2019:
Contribution margin = R205/R500 x 100%
= 41%
Workings:
(1) Calculation of variable selling and administration expenses through the high-low method
Overheads Units Produced
(Y) (X)
High August R70 000 750 units
Low July R50 000 500 units
Differences R20 000 250 units
Variable Cost per Unit = (R20 000/250 units) = R80
Based on Month of July Based on Month of August
y= a+bx y= a+bx
R50 000 = a +(R80 x 500) R70 000 = a +(R80 x 750)
R50 000 = a + R40 000 R70 000 = a + R60 000
a = R50 000 – R40 000 a = R70 000 – R60 000
a = R10 000 a = R10 000
Fixed cost are R10 000 Total fixed cost is R 10 000
Variable Costs (R80 x 500) = R40 000 Variable Costs (R80 x 750) = R60 000
(2) Calculation of contribution:
July
2019
Per Unit
R
, Sales 500
Less : Variable costs 295
Direct Materials 110
Direct Labour 75
Variable production overheads 30
Variable selling and administration 80
expenses
Contribution 205
1 (b)
(i) Calculation of Breakeven point in units for the month of July
𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑠
Breakeven point in units =
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡
𝑅70 000
= 𝑅205
= 341.46
= 342 units
𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑠
Breakeven point rand value =
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑚𝑎𝑟𝑔𝑖𝑛 𝑟𝑎𝑡𝑖𝑜
𝑅70 000
= 41%
= R170 731.71
WORKINGS:
(1)
Calculation of total fixed costs :
Actual July 2 019
R
Fixed manufacturing overheads Fixed selling and administration 60 000
Other fixed costs 10 000
Total fixed costs 70 000
(ii)
𝑀𝑎𝑟𝑔𝑖𝑛 𝑜𝑓 𝑠𝑎𝑓𝑒𝑡𝑦 𝑢𝑛𝑖𝑡𝑠 100%
Margin of safety percentage = x
𝐴𝑐𝑡𝑢𝑎𝑙 𝑢𝑛𝑖𝑡𝑠 1
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