MAC3701 Assignment 2 (QUALITY ANSWERS) Semester 2 2024

This document contains workings, explanations and solutions to the MAC3701 Assignment 2 (QUALITY ANSWERS) Semester 2 2024. For assistance whats-app us on 0.6.8..8.1.2..0.9.3.4... Company information Pinatech (Pty) Ltd (“Pina”), based in Isando, Gauteng, has a male-dominated executive team and manufactures two types of premium laptop models: 14-inch Deluxe and 16-inch Elite laptops (one laptop is equal to one unit) for professionals and gamers. Their products are known for superior performance and quality; hence, their laptops carry an above-industry four-year warranty. The company has a strong brand reputation and a loyal customer base. The company has a December financial year end, uses an absorption costing system, and values all its inventories using the first-in-first-out (FIFO) method. Pina’s operations occur in two production stages, firstly the enclosure stage and then the assembly stage. Enclosure stage Using advanced machinery and semi-skilled labour, this stage combines aluminium and magnesium alloys to mould and produce high-end, durable laptop casings. Assembly stage During this stage, highly skilled technical labourers carefully install the main circuit board and advanced component sets into the enclosure. Both production stages are complex and time-consuming and are managed by only one factory supervisor who monitors both operations and reports back to the production head. The company operates at only 75% production capacity and has opportunities to sell laptop casings as an additional product line. The company has been facing challenges from intense competition in a saturated market. Additionally, Pina relies on a global supply chain to source its critical raw materials, aluminium and magnesium. Recent geopolitical tensions and trade restrictions have led to delays and increased costs for these critical raw materials. The company was recently awarded a City of Ekurhuleni tender to supply the various departments with laptops. Pina received this tender after sponsoring a charity event hosted by an influential city government official. Page 3 of 9 MAC3701 Assessment 02/S2/2024 [TURN OVER] PART A (20 Marks; 36 Minutes) During the 2023 financial year, a standard costing system was in place, and the following information was extracted from Pina’s actual and budgeted information for the financial year ending 31 December 2023: Details Deluxe R Elite R Budgeted selling price per unit R38 500 R45 500 Budgeted contribution per unit R8 400 R8 700 Actual contribution per unit R8 200 R8 550 Budgeted gross profit per unit R6 810 R7 050 Actual gross profit per unit R6 580 R6 850 There was no budgeted opening and closing inventory of any type. Sales demand Pina budgeted to sell 57200 units and 25800 units of Deluxe and Elite laptops, respectively. Production delays occurred due to a global shortage of aluminium and magnesium during the 2023 financial year. Pina only managed to achieve 75% of the budgeted Deluxe sales and total company sales of only 62500 units. The actual selling price was equal to the budgeted selling price. Production demand The budgeted production was equal to the sales demand for both products. However, the actual production was 31850 Deluxe and 29550 Elite Laptops. Aluminium and Magnesium raw materials The following information was noted for raw materials used in the Enclosure stage: Raw materials Standard cost card Deluxe Elite Aluminium 3 kilograms (kg) @ R 45 per kg 3,5 kg @ R 45 per kg Magnesium 1 kg @ R 53 per kg 1,5 kg @ R 53 per kg Purchased Issued to production Aluminium 21 500 kg for R 1 032 000 11 850 kg 9 150 kg Magnesium 8 500 kg for R 467 500 4 150 kg 3 850 kg Human resource information Due to production delays, technical staff had to work overtime to meet the production budget. The budgeted and actual clock hours required to produce one Deluxe and Elite laptop were 1,25 and 1,755clock hours, respectively, and the allowed idle time was 8%. The standard clock hour rate per hour was R350 per clock hour. The wage records for December 2023 indicate an actual work hour rate of R364,58 per work hour. The actual idle time for December 2023 was 6%. No changes were noted for semi-skilled labour. Page 4 of 9 MAC3701 Assessment 02/S2/2024 [TURN OVER]