Exam (elaborations)
MAC3701 Assignment 2 semester 2 2023
- Institution
- University Of South Africa (Unisa)
Exam of 11 pages for the course Entrepreneurship and Small Business Management at Unisa (90% rate.)
[Show more]
1 review
By: zmatshiakgotshi • 1 year ago
By: SmarttutorR • 1 year ago
Thanks
Content preview
MAC3702 ASSIGNMENT 2APPLICATION OF FINANCIAL MANAGEMENT TECHNIQUES
PASS RATE 90%
UNISA
, QUESTION a(i)
Physical Units Method: This method allocates joint costs based on a physical measure such as weight,
volume, or units produced.
Appropriateness for Monate: Given that Monate's products have different yields (Raw sugar
30%, Molasses 45%, and Bagasse 25%), the physical units method may seem straightforward.
However, the challenge lies in the different values and profit margins associated with each
product. Allocating costs based solely on physical units may not capture the true economic value
of each product.
Net Realisable Value (NRV) at Split-off Point Method: This method allocates joint costs based on the
value of products at the split-off point, that is, the sales value minus any further processing costs.
Appropriateness for Monate: Monate uses this method, and it might be suitable given the
differences in the commercial viability of the products. Raw sugar and Molasses are crucial
for Monate's profitability, while Bagasse is incidental. Allocating costs based on NRV can
provide a clearer picture of profitability and can help in decision-making about further
processing or selling strategies.
Relative Sales Value at Split-off Point Method: Joint costs are allocated based on the sales value of
products at the split-off point without considering further processing costs.
Appropriateness for Monate: If Monate's products have a considerable difference in their
sales values and little subsequent processing is done post split-off, this method can be
appropriate. However, considering that Raw sugar undergoes further processing, ignoring
those costs might skew profitability metrics.
Constant Gross Margin Percentage NRV Method: This method involves allocating joint costs such that
each product achieves the same gross margin percentage.
Appropriateness for Monate: This might not be the best fit for Monate since the products
have different economic values, market demands, and processing needs. Achieving a
constant gross margin for each might distort the true profitability of each product.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller SmarttutorR. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R85,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
76669 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now