MAC3701 Assignment 2
(COMPLETE ANSWERS)
Semester 1 2026 - DUE 16
April
[Pick the date]
[Type the company name]
,Exam (elaborations)
MAC3701 Assignment 2 (COMPLETE
ANSWERS) Semester 1 2026 - DUE 16 April
MAC3701 Assignment 2 (COMPLETE ANSWERS) Semester 1 2026 - DUE 16
April 2026; 100% TRUSTED Complete, trusted solutions and explanations..
Company information CocoNutCo (CNC) (Pty) Ltd operates in South Africa’s
agro-processing sector, sourcing raw coconuts primarily from small-scale
local farmers to promote sustainable farming and support rural communities.
The company has expanded rapidly in recent years and now distributes its
products throughout Europe, where growing expectations for ethical sourcing
and environmental responsibility have begun to shape customer demand.
CNC consists of a head office and two operating divisions: • CocoNutCo
Processing Division (PD) • CocoPure Products Division (CPD) Processing
Division (PD): The Processing Division has the capacity to process 3 million
whole coconuts per year into three identifiable outputs: virgin coconut oil
(VCO), fresh coconut water (FCWater) and coconut husk (Husk). VCO and
FCWater are treated as joint products, while the Husk is classified as a by-
product. Joint costs are allocated using the physical measure method at split-
off. The production process involves washing, sorting and manually de-
husking coconuts, followed by cracking, water extraction, filtration, and
chilling. The coconut flesh is grated and cold-pressed to extract VCO. At the
completion of this stage, both VCO and FCWater reach the split-off point.
Minor handling and packaging costs are incurred before the Husk is sold to
agricultural and horticultural markets. However, the division has recently
encountered operational and ethical difficulties. Older workers employed in
the labour-intensive de-husking process have reported muscle strain and
related injuries. CNC has refused to cover medical expenses, leading to
threats of strike action and rising concerns about employee welfare. In
addition, adverse weather has pushed some coconut farmers to increase
pesticide use, resulting in raw coconuts that fail to meet CNC’s sustainability
standards and contributing to higher wastage. Page 3 of 12 MAC3701
Assessment 2_S1_2026 [TURN OVER] CocoPure Division (CPD): The CocoPure
Division produces coconut oil cooking spray (COSpray) and flavoured
coconut water (FCWater), both aimed at retail consumers. COSpray is made
from cold-pressed VCO and positioned as a premium convenience product,
while FCWater requires additional filtration, stabilisation, and natural
flavouring before packaging. Research activities in this division focus on
biotechnology and natural sciences to enhance product quality and promote
high-value, wellness-oriented innovations. Despite its innovative focus, CPD
has experienced pressure from increasing competition. Low-cost coconut
products imported from Thailand have resulted in declining sales,
challenging CNC’s ability to maintain its market share and premium
, positioning. Sourcing, Sustainability and Market Challenges CNC’s
commitment to local sourcing has come under strain. Small-scale farmers
have expressed dissatisfaction with compensation during periods of supply
shortages, leading to the loss of several high-quality suppliers. Reduced
supply quality—combined with pesticide-related issues—has led European
buyers to question CNC’s sustainability and ethical sourcing practices. Export
partners now require formal certification to verify compliance with
environmental and ethical standards. Costing System CNC uses an
absorption costing system and applies the FIFO method for inventory
valuation. The company’s financial year ends on 28 February. Page 4 of 12
MAC3701 Assessment 2_S1_2026 [TURN OVER] Part A (28 Marks; 50
Minutes) The following is the actual information for the PD for the month of
December: 1.1 220 000 whole coconuts were processed during the month.
Actual yields from processing were: Description Yield Virgin coconut oil (VCO)
0,35 litres per coconut Coconut water (FCWater) 0,45 litres per coconut
Coconut husk (Husk) 500 grams per coconut 1.2 Raw coconuts were
purchased at R18 per coconut. 1.3 Processing is performed in batches of 500
coconuts per batch. 1.4 Variable manufacturing overheads (VMO) were R440
per batch. 1.5 The standard labour clock rate was R90 per work hour, and it
takes 12 clock minutes to process one coconut. CNC allows for a 10% idle
time. 1.6 Fixed manufacturing overheads (FMO) for the month amounted to
R150 000, which was initially budgeted for at R120 000 for the same level of
production. 1.7 Coconut water is further purified and pasteurised to improve
its taste, clarity, and shelf-life at a cost of R12 000 per Kilolitre (KL). The
further-processed coconut water is sold for R70 a litre. 1.8 The selling price
at split off point for Virgin coconut oil is R120 per litre. 1.9 The Husk by-
product was dried and packaged at R1,20 per kg and sold for R5,00 per kg.
1.10 Total distribution costs for the month is based on the following
regression equation: Delivery costs (y) = R0,75x + R18 000, where x
represents the number of litres sold. 1.11 Administrative costs amount to R3
000 000 for the year. 1.12 There was no opening or closing inventory of raw
materials, work-in-progress, or finished goods. REQUIRED PART A (A - a)
Prepare PD’s actual statement of profit or loss and other comprehensive
income (income statement) for the month ended December 2025. • Provide
a column for each product and a total column. • 1 KL is 1 000L (20) (A - b)
From the company information only, Identify and briefly discuss any four
business and social risks associated with CNC. (8) Page 5 of 12 MAC3701
Assessment 2_S1_2026 [TURN OVER] PART B (25 Marks; 45 Minutes)
Management is evaluating the research team's proposal for a commercial
launch of a new premium product, “Probiotic VCO”. The research proposes
an initial production run of 35,000 litres, packaged in 1-litre bottles. The
Probiotic VCO is formulated by combining high-quality Virgin Coconut Oil
(VCO) with a carefully selected probiotic culture, creating a functional
product that blends the natural health benefits of coconut oil with the
digestive and immune support properties of probiotics. The following
information has been provided to assist management in determining the
(COMPLETE ANSWERS)
Semester 1 2026 - DUE 16
April
[Pick the date]
[Type the company name]
,Exam (elaborations)
MAC3701 Assignment 2 (COMPLETE
ANSWERS) Semester 1 2026 - DUE 16 April
MAC3701 Assignment 2 (COMPLETE ANSWERS) Semester 1 2026 - DUE 16
April 2026; 100% TRUSTED Complete, trusted solutions and explanations..
Company information CocoNutCo (CNC) (Pty) Ltd operates in South Africa’s
agro-processing sector, sourcing raw coconuts primarily from small-scale
local farmers to promote sustainable farming and support rural communities.
The company has expanded rapidly in recent years and now distributes its
products throughout Europe, where growing expectations for ethical sourcing
and environmental responsibility have begun to shape customer demand.
CNC consists of a head office and two operating divisions: • CocoNutCo
Processing Division (PD) • CocoPure Products Division (CPD) Processing
Division (PD): The Processing Division has the capacity to process 3 million
whole coconuts per year into three identifiable outputs: virgin coconut oil
(VCO), fresh coconut water (FCWater) and coconut husk (Husk). VCO and
FCWater are treated as joint products, while the Husk is classified as a by-
product. Joint costs are allocated using the physical measure method at split-
off. The production process involves washing, sorting and manually de-
husking coconuts, followed by cracking, water extraction, filtration, and
chilling. The coconut flesh is grated and cold-pressed to extract VCO. At the
completion of this stage, both VCO and FCWater reach the split-off point.
Minor handling and packaging costs are incurred before the Husk is sold to
agricultural and horticultural markets. However, the division has recently
encountered operational and ethical difficulties. Older workers employed in
the labour-intensive de-husking process have reported muscle strain and
related injuries. CNC has refused to cover medical expenses, leading to
threats of strike action and rising concerns about employee welfare. In
addition, adverse weather has pushed some coconut farmers to increase
pesticide use, resulting in raw coconuts that fail to meet CNC’s sustainability
standards and contributing to higher wastage. Page 3 of 12 MAC3701
Assessment 2_S1_2026 [TURN OVER] CocoPure Division (CPD): The CocoPure
Division produces coconut oil cooking spray (COSpray) and flavoured
coconut water (FCWater), both aimed at retail consumers. COSpray is made
from cold-pressed VCO and positioned as a premium convenience product,
while FCWater requires additional filtration, stabilisation, and natural
flavouring before packaging. Research activities in this division focus on
biotechnology and natural sciences to enhance product quality and promote
high-value, wellness-oriented innovations. Despite its innovative focus, CPD
has experienced pressure from increasing competition. Low-cost coconut
products imported from Thailand have resulted in declining sales,
challenging CNC’s ability to maintain its market share and premium
, positioning. Sourcing, Sustainability and Market Challenges CNC’s
commitment to local sourcing has come under strain. Small-scale farmers
have expressed dissatisfaction with compensation during periods of supply
shortages, leading to the loss of several high-quality suppliers. Reduced
supply quality—combined with pesticide-related issues—has led European
buyers to question CNC’s sustainability and ethical sourcing practices. Export
partners now require formal certification to verify compliance with
environmental and ethical standards. Costing System CNC uses an
absorption costing system and applies the FIFO method for inventory
valuation. The company’s financial year ends on 28 February. Page 4 of 12
MAC3701 Assessment 2_S1_2026 [TURN OVER] Part A (28 Marks; 50
Minutes) The following is the actual information for the PD for the month of
December: 1.1 220 000 whole coconuts were processed during the month.
Actual yields from processing were: Description Yield Virgin coconut oil (VCO)
0,35 litres per coconut Coconut water (FCWater) 0,45 litres per coconut
Coconut husk (Husk) 500 grams per coconut 1.2 Raw coconuts were
purchased at R18 per coconut. 1.3 Processing is performed in batches of 500
coconuts per batch. 1.4 Variable manufacturing overheads (VMO) were R440
per batch. 1.5 The standard labour clock rate was R90 per work hour, and it
takes 12 clock minutes to process one coconut. CNC allows for a 10% idle
time. 1.6 Fixed manufacturing overheads (FMO) for the month amounted to
R150 000, which was initially budgeted for at R120 000 for the same level of
production. 1.7 Coconut water is further purified and pasteurised to improve
its taste, clarity, and shelf-life at a cost of R12 000 per Kilolitre (KL). The
further-processed coconut water is sold for R70 a litre. 1.8 The selling price
at split off point for Virgin coconut oil is R120 per litre. 1.9 The Husk by-
product was dried and packaged at R1,20 per kg and sold for R5,00 per kg.
1.10 Total distribution costs for the month is based on the following
regression equation: Delivery costs (y) = R0,75x + R18 000, where x
represents the number of litres sold. 1.11 Administrative costs amount to R3
000 000 for the year. 1.12 There was no opening or closing inventory of raw
materials, work-in-progress, or finished goods. REQUIRED PART A (A - a)
Prepare PD’s actual statement of profit or loss and other comprehensive
income (income statement) for the month ended December 2025. • Provide
a column for each product and a total column. • 1 KL is 1 000L (20) (A - b)
From the company information only, Identify and briefly discuss any four
business and social risks associated with CNC. (8) Page 5 of 12 MAC3701
Assessment 2_S1_2026 [TURN OVER] PART B (25 Marks; 45 Minutes)
Management is evaluating the research team's proposal for a commercial
launch of a new premium product, “Probiotic VCO”. The research proposes
an initial production run of 35,000 litres, packaged in 1-litre bottles. The
Probiotic VCO is formulated by combining high-quality Virgin Coconut Oil
(VCO) with a carefully selected probiotic culture, creating a functional
product that blends the natural health benefits of coconut oil with the
digestive and immune support properties of probiotics. The following
information has been provided to assist management in determining the
