MAC2601 Assignment 5 Full Solutions Semester 2 2024

MAC2601 Assignment 5 (QUESTIONS & ANSWERS) Semester 2 2024 - DUE 11 October 2024 ;100 % TRUSTED workings, Expert Solved, Explanations and Solutions. For assistance call or W.h.a.t.s.a.p.p us on ...(.+.2.5.4.7.7.9.5.4.0.1.3.2)........... QUESTION 1 (15 Marks) (18 Minutes) Body Lotions (Pty) Ltd manufactures one type of body lotion. You are provided with the following costing information for the quarter ended 30 September 2024, which is representative of a typical quarter for the business: Total Per unit (lotion) R R Sales Less: Variable costs Contribution Less: Fixed expenses 180 000 Profit 15 000 REQUIRED Marks (a) Calculate the quarterly breakeven point in units and Rand amount. (4) (b) Determine the contribution margin at breakeven point. ( 2 ) (c) Calculate the number of Body lotions that are needed to be sold in each quarter to generate the quarterly target profit of R60 000. (2) (d) Calculate the margin of safety in Rand terms and percentage terms for the quarter ended 30 September 2024. (4) (e) By what percentage must Body Lotions increase its selling price for its profit for the quarter to increase by 100%? (2) (f) Define the term contribution. (1) Total [15] Question 2 (7 Marks) (8 Minutes) Corporate governance in South Africa is led by the King Report on Corporate GovernanceTM. This report tasks the governing body of an organisation with steering the direction of the organisation. The Board of Directors (BoD) is the governing body of a company. REQUIRED Marks (a) List seven concepts that form the foundation stones of King IVTM. (7) QUESTION 3 (25 Marks) (30 Minutes) Finish (Pty) Ltd (“Finish”) is a producer of plastic water bottles with a 31 December yearend. As part of planning, the following information is available for the budgeting process: Budgeted Statement of Comprehensive Income per month: October 2024 November 2024 December 2024 January 2025 R R R R Sales Cost of sales Distribution expenses 000 9 000 Depreciation and Amortisation (nonmanufacturing) 000 1 000 Taxation 050 5 940 Net Profit Purchases and labour R20 000 R30 000 R40 000 R45 000 Additional Information: 1. All sales are on credit. 80% collected in month of sales and 20% in next month. 2. Included in the Cost of sales amount for a month is the Purchases and labour amount for the month. 50% of Purchases and labour are on credit and the remainder thereof is paid one month later. The rest of the items included in the Cost of sales amount for a particular month are non-cash flow items. 3. The distribution expenses are paid in the month following the month in which the related expense is incurred. 4. On 30 September 2024, the bank had a favourable balance of R45 000. 5. In preparation for January 2025, machinery is scheduled to be purchased during December for R50 000. 6. Taxation is paid in the month that the specific tax expense is incurred. REQUIRED Marks (a) Prepare the Cash Budget of Finish for the (individual) months of November 2024, December 2024, and January 2025. (20) (b) Explain the terms cash budget and master budget. • Cash budget (3 Marks) • Master budget (2 Marks) (5) Total [25] QUESTION 4 (25 Marks) (30 Minutes) Victory (Pty) Ltd (“Victory”) is a producer of premium executive office chairs. Victory uses a standard costing system. Standard cost per chair R Direct material: oak wood 20 kg × R800 per kg 16 000 Direct material: leather 3 m2 × R600 per m2 1 800 Direct labour 20 hours × R300 per hour 6 000 Variable production overheads (varying with hours worked) 20 hours × R100 per hour 2 000 Variable selling costs 700 Budgeted selling price per chair R30 960 In September 2024, 300 chairs were manufactured and sold. Actual results -September 2024 per chair Total (R) Cost of direct material: oak wood 22 kg × R750 per kg 4 950 000 Cost of direct material: leather 4,5 m2 × R450 per m2 607 500 Cost of direct labour 25 hours × R280 per hour 2 100 000 Variable production overheads 750 000 Variable selling costs 213 000 Sales revenue 9 270 000 REQUIRED If applicable (where decimals are obtained), round to two decimal places throughout your calculations. Marks (a) Calculate the following for September 2024: i. Total variance – oak wood ii. Material purchase price variance – leather iii. Direct labour rate variance iv. Direct labour efficiency variance v. Variable manufacturing overhead rate variance vi. Variable manufacturing overhead efficiency variance (3) (3) (3) (3) (4) (3) (b) Based on whether you arrived at a favourable or unfavourable direct labour efficiency variance in your calculations to (a)(iv), provide two possible causes of (reasons for) the favourable or unfavourable (as applicable) labour efficiency variance. (2) (c) For answering question (c) only, assume the following: • The financial director of Victory mentioned to you that he would like to “play around” with the actual results so they look “good” against the standards set. (4) • The financial director also mentioned that this is good for the performance bonus. • You are a junior management accountant at Victory. Briefly explain any concerns and ethical issues based on the director’s proposed action above. Total [25] QUESTION 5 (28 Marks) (34 Minutes) Company PSG manufactures five different products (G1, G2, G3, D1 and D2) using the same resources (but in different quantities). Budgeted data for the 2025 financial year for G1, G2, G3, D1 and D2 are as follows: G1 G2 G3 D1 D2 Units demanded 400 R/ unit 500 R/ unit 600 R/ unit 300 R/ unit 100 R/ unit Selling price Direct Material (R50 per kilogram) Direct labour (R10 per hour) Variable production overhead (R40 per machine hour) Fixed production overhead allocated (R20 per labour hour) Gross profit 65 30 50 - - Further information for the 2025 financial year: • Direct material: 430 kilograms are expected to be available. • Direct labour: 4 200 hours are expected to be available. • Machine hours: No restrictions apply. REQUIRED Round to two decimal places throughout your calculations Marks (a) Calculate the budgeted optimal production mix for the 2025 financial year. (24) (b) Differentiate between the following concepts: (a) Risk and probability (2 Marks) (b) Sunk costs and opportunity costs (2 Marks)