MAC2601 ASSIGNMENT 2 OF 2021

MAC2601 ASSIGNMENT 2 OF 2021
QUESTION 1
(a) Economic order quantity = √𝟐 ∗𝑼 ∗𝑪
𝑯 + (𝑷 ∗ 𝒊)


2 ∗ 100 000 ∗ 25
=√
1.10 + (3 ∗ 12%)


= 𝟏 𝟖𝟓𝟏 𝒖𝒏𝒊𝒕𝒔

Calculation of total inventory costs

R
Purchase costs (100 000 ∗ 3) 300 000.00
Ordering cost (𝑖) 1 350.62
Holding 1 351.23
Total inventory cost 302 701.85


100 000
(i) Ordering cost =( ∗ 25)
1 851

= 𝑹𝟏 𝟑𝟓𝟎. 𝟔𝟐
1 851
(ii) Holding Cost =[ ∗ (1.10 + 3 ∗ 12%)]
2
= 𝑹𝟏 𝟑𝟓𝟏. 𝟐𝟑

(b) Calculation of total labour costs

R
Normal wages (5 ∗ 45 ∗ 48 ∗ 50) 540 000
Overtime [(4 ∗ 20 ∗ 50 ∗ 2.5) + (25 ∗ 50 ∗ 2.5)] 13 125
Gross wages 553 125
Pension fund employer contribution (9% ∗ 540 000) 48 600
UIF employer contribution (1% ∗ 553 125) 5 531.25
Medical aid employer contribution 42 743.75
Total labour cost 650 000




FOR ACCADEMIC NEEDS CONTACT 065 160 9781/

, (c) Calculation of manufacturing overhead recovery rates

Total Apple Banana Servicing General
Factory
R R R R R
Manufacturing overheads (𝑪𝟏) 2 680 000 804 000 670 000 938 000 268 000
General factory division (𝐶2) 134 000 67 000 67 000 (268 000)
Servicing (𝐶3) 452 250 552 750 (1 005 000) -
Total overheads allocated 2 680 000 1 390250 1 289 750 - -

Machine Hours 25 000 30 000

Manufacturing overhead recovery R55.61 per R42.99 per
𝟏 𝟑𝟗𝟎 𝟐𝟓𝟎 𝟏 𝟐𝟖𝟗 𝟕𝟓𝟎 machine machine
rate ( ; )
𝟐𝟓 𝟎𝟎𝟎 𝟑𝟎 𝟎𝟎𝟎 hour hour


Calculation

C1. Manufacturing overheads

Apple = (2 680 000 ∗ 30%) = 𝑹𝟖𝟎𝟒 𝟎𝟎𝟎
Banana = (2 680 000 ∗ 25%) = 𝑹𝟔𝟕𝟎 𝟎𝟎𝟎
Servicing = (2 680 000 ∗ 35%) = 𝑹𝟗𝟑𝟖 𝟎𝟎𝟎
General Factory = (2 680 000 ∗ 10%) = 𝑹𝟐𝟔𝟖 𝟎𝟎𝟎

C2. Allocation of General factory division overheads

Apple = (268 000 ∗ 50%) = 𝑹𝟏𝟑𝟒 𝟎𝟎𝟎
Banana = (268 000 ∗ 25%) = 𝑹𝟔𝟕 𝟎𝟎𝟎
Servicing = (268 000 ∗ 25%) = 𝑹𝟔𝟕 𝟎𝟎𝟎

C3. Allocation of servicing division
27 000
Apple = (1 005 000 ∗ ) = 𝑹𝟒𝟓𝟐 𝟐𝟓𝟎
60 000
33 000
Banana = (1 005 000 ∗ ) = 𝑹𝟓𝟓𝟐 𝟕𝟓𝟎
60 000

(d) Opening inventory & closing inventory




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