MAC3701 ASSIGNMENT 2 OF 2021
(a) Calculation of budgeted break - even units per backpack type for the 2021
financial year
Calculation of Fixed Costs
R
Fixed manufacturing overheads 8 000 000
Administrative building rental 2 400 000
Other fixed administration costs 1 600 000
Total fixed costs 12 000 000
Calculation of weighted contribution
LB TB
R R
Selling price 3 500 3 000
Less Variable costs (2 875) (2 335)
120 90
Variable manufacturing overheads [( ∗ 150) ; ( ∗ 150)] 300 225
60 60 25 25
Variable selling costs
380 320
Raw Leather [( ∗ 3 000) ; ( ∗ 3 000)] 1 140 960
1 000 1 000
282 225
Direct labour [( ∗ 300) ; ( ∗ 300)] 1 410 1 125
60 60
Contribution per unit 625 665
Sales mix = 20 000: 16 000 = 𝟓: 𝟒
Contribution per batch = [(625 ∗ 5) + (665 ∗ 4)
= 𝑹𝟓 𝟕𝟖𝟓 𝒑𝒆𝒓 𝒃𝒂𝒄𝒌𝒑𝒂𝒄𝒌
Break – even batches = 𝑻𝒐𝒕𝒂𝒍 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕𝒔
𝑾𝒆𝒊𝒈𝒉𝒕𝒆𝒅 𝒄𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒐𝒏 𝒑𝒆𝒓 𝒃𝒂𝒕𝒄𝒉
12 000 000
=
5 785
= 𝟐 𝟎𝟕𝟒. 𝟑𝟑 𝒃𝒂𝒕𝒄𝒉𝒆𝒔
For academic need contact: 065 160 9781/
, Break – even units
LB = (2 074.33 ∗ 5)
= 𝟏𝟎 𝟑𝟕𝟐 𝒖𝒏𝒊𝒕𝒔
TB = (2 074.33 ∗ 4)
= 𝟖 𝟐𝟗𝟖 𝒖𝒏𝒊𝒕𝒔
(b) Actual Income Statement for the 2021 financial year for the Traveller`s
backpack
R
Sales (𝟏𝟑 𝟎𝟎𝟎 ∗ 𝟑 𝟎𝟎𝟎 ∗ 𝟎. 𝟗𝟖) 38 220 000
Less Cost of Sales (34 870 500)
Opening Inventory -
Production cost 37 149 000
90
Variable manufacturing overheads ( ∗ 14 000 ∗ 140) 2 940 000
60
90
Fixed manufacturing overheads (125 ∗ 14 000 ∗ )
60 2 625 000
320
Raw leather ( ∗ 3 300 ∗ 14 000) 14 784 000
1 000
240
Direct labour ( ∗ 14 000 ∗ 300)
60 16 800 000
(14 000 − 13 000)
Closing inventory [ ∗ 37 149 000] (2 653 500)
14 000
Under – absorption (3 000 000 − 2 625 000) 375 000
Gross Profit 3 349 500
Less Expenses (1 052 000)
Variable selling costs (20 ∗ 13 000) 260 000
Other fixed administration costs 792 000
Net Profit 2 297 500
Calculations
𝑻𝒐𝒕𝒂𝒍 𝒃𝒖𝒅𝒈𝒆𝒕𝒆𝒅 𝒇𝒊𝒙𝒆𝒅 𝒎𝒂𝒏𝒖𝒇𝒂𝒄𝒕𝒖𝒓𝒊𝒏𝒈 𝒐𝒗𝒆𝒓𝒉𝒆𝒂𝒅𝒔
C1. Fixed manufacturing overheads OAR=
𝑻𝒐𝒕𝒂𝒍 𝒃𝒖𝒅𝒈𝒆𝒕𝒆𝒅 𝒍𝒆𝒂𝒕𝒉𝒆𝒓 𝒄𝒖𝒕𝒕𝒊𝒏𝒈 𝒎𝒂𝒄𝒉𝒊𝒏𝒆 𝒉𝒐𝒖𝒓𝒔
8 000 000
=
64 000
= 𝟏𝟐𝟓 𝒑𝒆𝒓 𝒎𝒂𝒄𝒉𝒊𝒏𝒆 𝒉𝒐𝒖𝒓
For academic need contact: 065 160 9781/
(a) Calculation of budgeted break - even units per backpack type for the 2021
financial year
Calculation of Fixed Costs
R
Fixed manufacturing overheads 8 000 000
Administrative building rental 2 400 000
Other fixed administration costs 1 600 000
Total fixed costs 12 000 000
Calculation of weighted contribution
LB TB
R R
Selling price 3 500 3 000
Less Variable costs (2 875) (2 335)
120 90
Variable manufacturing overheads [( ∗ 150) ; ( ∗ 150)] 300 225
60 60 25 25
Variable selling costs
380 320
Raw Leather [( ∗ 3 000) ; ( ∗ 3 000)] 1 140 960
1 000 1 000
282 225
Direct labour [( ∗ 300) ; ( ∗ 300)] 1 410 1 125
60 60
Contribution per unit 625 665
Sales mix = 20 000: 16 000 = 𝟓: 𝟒
Contribution per batch = [(625 ∗ 5) + (665 ∗ 4)
= 𝑹𝟓 𝟕𝟖𝟓 𝒑𝒆𝒓 𝒃𝒂𝒄𝒌𝒑𝒂𝒄𝒌
Break – even batches = 𝑻𝒐𝒕𝒂𝒍 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕𝒔
𝑾𝒆𝒊𝒈𝒉𝒕𝒆𝒅 𝒄𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒐𝒏 𝒑𝒆𝒓 𝒃𝒂𝒕𝒄𝒉
12 000 000
=
5 785
= 𝟐 𝟎𝟕𝟒. 𝟑𝟑 𝒃𝒂𝒕𝒄𝒉𝒆𝒔
For academic need contact: 065 160 9781/
, Break – even units
LB = (2 074.33 ∗ 5)
= 𝟏𝟎 𝟑𝟕𝟐 𝒖𝒏𝒊𝒕𝒔
TB = (2 074.33 ∗ 4)
= 𝟖 𝟐𝟗𝟖 𝒖𝒏𝒊𝒕𝒔
(b) Actual Income Statement for the 2021 financial year for the Traveller`s
backpack
R
Sales (𝟏𝟑 𝟎𝟎𝟎 ∗ 𝟑 𝟎𝟎𝟎 ∗ 𝟎. 𝟗𝟖) 38 220 000
Less Cost of Sales (34 870 500)
Opening Inventory -
Production cost 37 149 000
90
Variable manufacturing overheads ( ∗ 14 000 ∗ 140) 2 940 000
60
90
Fixed manufacturing overheads (125 ∗ 14 000 ∗ )
60 2 625 000
320
Raw leather ( ∗ 3 300 ∗ 14 000) 14 784 000
1 000
240
Direct labour ( ∗ 14 000 ∗ 300)
60 16 800 000
(14 000 − 13 000)
Closing inventory [ ∗ 37 149 000] (2 653 500)
14 000
Under – absorption (3 000 000 − 2 625 000) 375 000
Gross Profit 3 349 500
Less Expenses (1 052 000)
Variable selling costs (20 ∗ 13 000) 260 000
Other fixed administration costs 792 000
Net Profit 2 297 500
Calculations
𝑻𝒐𝒕𝒂𝒍 𝒃𝒖𝒅𝒈𝒆𝒕𝒆𝒅 𝒇𝒊𝒙𝒆𝒅 𝒎𝒂𝒏𝒖𝒇𝒂𝒄𝒕𝒖𝒓𝒊𝒏𝒈 𝒐𝒗𝒆𝒓𝒉𝒆𝒂𝒅𝒔
C1. Fixed manufacturing overheads OAR=
𝑻𝒐𝒕𝒂𝒍 𝒃𝒖𝒅𝒈𝒆𝒕𝒆𝒅 𝒍𝒆𝒂𝒕𝒉𝒆𝒓 𝒄𝒖𝒕𝒕𝒊𝒏𝒈 𝒎𝒂𝒄𝒉𝒊𝒏𝒆 𝒉𝒐𝒖𝒓𝒔
8 000 000
=
64 000
= 𝟏𝟐𝟓 𝒑𝒆𝒓 𝒎𝒂𝒄𝒉𝒊𝒏𝒆 𝒉𝒐𝒖𝒓
For academic need contact: 065 160 9781/
