MAC2601 Assignment 3 (COMPLETE ANSWERS) Semester 2 2026 - DUE 15 September 2026

MAC2601 Assignment 3 (COMPLETE ANSWERS) Semester 2 2026 - DUE 15 September 2026; 100% TRUSTED Complete, trusted solutions and explanations. For assistance, Whats-App 0.8.1..2.7.8..3.3.7.2... Ensure your success with us..... QUESTION 1 (24 MARKS) T & T Mofokeng (Pty) Ltd (“T & T Mofokeng”) makes and sells soccer boots. The company was established by twin brothers Thabo and Thabang Mofokeng, and it is based in Setsing Qwaqwa in the Free State Province. The founders of the company grew up playing soccer and noticed that other soccer players played on gravel without suitable soccer boots. They used their savings to fund their business. T & T Mofokeng has a 31 December financial year-end. 1. The previous management accountant prepared the following budgeted figures for the 2025 financial year at the beginning of 2025: Budgeted sales units 20 000 Budgeted production units 20 000 R Direct materials cost per unit 80 Direct labour cost per unit 60 Manufacturing overheads per unit (mixed cost) ? Variable selling costs (per unit sold) 30 Fixed selling costs for the year 360 000 2. Variable manufacturing overhead per unit did not increase from 2023 to 2024 and was also not expected to increase in 2025 when the 2025 budgeted was prepared. Fixed manufacturing overheads in total did not increase from 2023 to 2024 and were also not expected to increase in 2025 when the 2025 budgeted was prepared. The manufacturing overheads for the 2025 financial year were budgeted based on the following actual information from the 2024 and 2023 financial years: Total manufacturing overheads R800 000 R Manufacturing activity (in units) . The actual fixed manufacturing overheads incurred during 2025 and the actual units produced for the 2025 financial year were as follows: Actual fixed manufacturing overheads R700 000 Actual units produced 20 000 4. The following comparison of the 2025 budgeted and 2025 actual figures is available: • The actual variable selling cost per unit sold and the actual total fixed selling expenses were as budgeted. [CONFIDENTIAL] Page 5 of 12 [TURN OVER] MAC2601 SEPTEMBER 2026 • The actual selling price per unit was 25% more than the budgeted selling price of R280 per unit. • Actual variable manufacturing costs per unit were as budgeted. • The actual sales in units were 2 000 units less than the budgeted sales units. 5. In terms of both the budgeted and actual information, there was no opening inventory of any type for the year ended 31 December 2025. There was, however, actual closing inventory of finished goods as at 31 December 2025. 6. The pre-determined fixed manufacturing overhead rate for 2025 still needs to be calculated and will be based on the budgeted production units for 2025. REQUIRED Round to the nearest Rand throughout your calculations. Marks (a) Prepare the actual income statement (Statement of Profit or Loss) for the year ended 31 December 2025 according to the following: i) Absorption costing method ii) Direct costing method (15) (6) (b) Reconcile the differences between the net profits calculated in (a) above. (3) TOTAL [24] QUESTION 2 (16 MARKS) Ngungunyane (Pty) Ltd manufactures a single product and used a process costing system to value its production or control costs. The company is based in Nkowankowa in the Limpopo Province. The following information is available for the month of June 2026: Units Opening work-in-progress ("opening WIP"): 50% complete 10 000 Closing work- in- progress ("closing WIP"): 80% complete 9 000 New units put into production in June Completed and transferred during June Costs information was as follows: Opening WIP: R Raw materials 145 000 Conversion costs 55 000 Added in June 2026: Raw materials 450 000 Conversion costs 250 000 Additional information: • Normal losses are estimated at 4% of the units that reach the wastage point. • Normal losses occur when the process is 60% complete. • Raw materials are added at the beginning of the process and conversion takes place evenly throughout the process. [CONFIDENTIAL] Page 6 of 12 [TURN OVER] MAC2601 SEPTEMBER 2026 REQUIRED Marks (a) Prepare the quantity statement for June 2026 based on the weighted average method of inventory valuation. (6) (b) Prepare the production cost statement for June 2026 based on the weighted average method of inventory valuation. (3) (c) Assume now that losses occur when the process is 90% complete. Prepare the quantity statement for June 2026 based on this new wastage point and the first-in-first-out (FIFO) method of inventory valuation. (7) TOTAL [16] QUESTION 3 (12 marks) PureTide Processing (Pty) Ltd processes locally caught tuna at its plant on the South Coast of South Africa. The financial year-end is 30 June each year. The company uses a joint and by-product costing system. Tuna are fast-swimming, torpedoshaped fish that are rich in high-quality protein. L During the joint production process, joint products Tuna Loins and Tuna Steaks are produced. These products are produced from the same raw tuna and share the same production process up to the split-off point. Tuna skins are also recovered during the joint production process. The company calculates the net realisable value (NRV) of the tuna skins to account for Tuna Skin as a by-product. The financial and other information for the month of April 2026 are as follows: 1. Joint costs: The total joint production cost incurred was R. 2. Joint products: Products Yield in kilogram (kg) Further processing cost (in total) (R) Selling price per kg of the final product (R) Tuna Loins Tuna Steaks [CONFIDENTIAL] Page 7 of 12 [TURN OVER] MAC2601 SEPTEMBER 2026 3. By-product: Selling price per kg of the final product (R) Tuna Skin Product Yield in kg Further processing cost (in total) (R) Additional information: • Joint costs are allocated using the physical measures method based on the total kilograms (kg) of the joint products at the split-off point. • The joint products and by-product undergo further processing after the split-off point. • There is no inventory at the beginning or the end of a month. Picture Reference: REQUIRED Round Rand amounts to the nearest Rand throughout your workings (if applicable). (a) Calculate the net realisable value (NRV) for the by-product, Tuna Skin, for April 2026. (2) (b) Calculate the profit or loss of PureTide Processing (Pty) Ltd for April 2026 per joint product and in total. (10) TOTAL [12] QUESTION 4 (13 Marks) Gatsheni (Pty) Ltd specialises in producing custom-made office furniture and uses a job costing system. The company was established by Majazana Ndlovu in 2023. The company applies fixed manufacturing overhead using a predetermined overhead rate based on direct labour hours. For the year ending 31 December 2026, the company estimated (budgeted figures): • Fixed manufacturing overhead costs: R • Direct labour hours: 30 000 hours • Machine hours: 15 000 hours During September 2026, the company actually completed Job 405, a special order for a corporate client. The following information relates to Job 405: Direct Materials Material Cost per unit of material (R) Timber Panels Quantity 150 units 450 Steel Components 80 units 250 Finishing Materials 50 units 120 [CONFIDENTIAL] Page 8 of 12 [TURN OVER] MAC2601 SEPTEMBER 2026 Direct Labour Department Labour Hours Hourly Rate (R) Cutting 120 85 Assembly 150 95 Finishing 80 90 Additional Information: 1. Job 405 was completed and delivered to the customer during September. 2. The company adds a mark-up of 35% on total manufacturing cost when determining the selling price. REQUIRED Marks (a) Prepare a Job Cost Sheet for Job 405 showing: i) Direct materials ii) Direct labour iii) Applied fixed manufacturing overhead iv) Total manufacturing cost (2) (2) (2) (1) (b) Calculate the selling price of Job 405. (2) (c) Assume the total actual fixed manufacturing overhead incurred by the company during September 2026 (for all jobs) amounted to R108 000 and total actual direct labour hours worked in the factory were 2 600 hours. i) Calculate the fixed manufacturing overhead applied by the company during September. ii) Calculate the under- or over-applied overhead for the company for September. (2) (2) TOTAL [13] QUESTION 5 (10 MARKS) Lesikhumba (Pty) Ltd (“Lesikhumba”) makes and sells leather wallets. The company applies direct costing principles and uses a standard costing system. The standard selling price and standard variable costs per wallet (“unit”) for the month ended 30 April 2026 were as follows: R Selling price per unit 800 Variable production costs per unit: Direct materials: Leather (80 centimetres (cm) @ R300 per metre) 240 Direct labour (R80 per hour) 160 Variable manufacturing overheads (VMO) 120 Some further information: • Lesikhumba did not budget to have any opening or closing inventory for April 2026. • The company budgeted to produce and sell 80 wallets during April 2026. • Variable manufacturing overheads vary with the number of units produced. • The budgeted fixed manufacturing overheads amounted to R8 000 for April 2026. [CONFIDENTIAL] Page 9 of 12 [TURN OVER] MAC2601 SEPTEMBER 2026 Actual information for the month ended 30 April 2026 were as follows: • 76 wallets were actually produced and sold during April 2026. The actual selling price was R830 per wallet. • Actual leather cost was R320 per metre and 0,9 metres of leather was used per wallet. • Actual direct labour costs amounted to R171 per wallet and each wallet took 1,9 hours to produce. • Actual VMO for April 2026 amounted to R9 728 in total. • Actual fixed manufacturing overheads amounted to R7 200 for April 2026. • No opening inventory existed at the beginning of April 2026. No closing inventory existed at the end of April 2026. REQUIRED Round to two decimal places throughout your workings (if applicable). Marks (a) Calculate the following variances: i) Materials purchase price variance ii) Direct labour efficiency variance iii) Variable manufacturing overheads efficiency variance iv) Fixed manufacturing overheads spending variance (2) (3) (1) (2) (2) v) Selling price variance TOTAL [10] QUESTION 6 (25 MARKS) Fenitshara (Pty) Ltd (“Fenitshara”) produces and sells two product types, coffee tables and bookshelves. All the coffee tables are identical, and all the bookshelves are identical. Production of the two product types takes place in a single workshop. Production is done in batches of 5 units each for Coffee Tables and 15 units each for Bookshelves. Fenitshara has a 31 July year-end and uses an absorption system. The company is considering whether to use activity-based costing (“ABC”) to allocate fixed manufacturing overheads to products as part of its absorption costing system instead of the traditional costing that is currently in use. The following information is available regarding budgeted production units and budgeted prime costs for the 2026 financial year: Coffee tables Bookshelves Budgeted production in units Budgeted prime costs per unit R1 400 R1 000 [CONFIDENTIAL] Page 10 of 12 [TURN OVER] MAC2601 SEPTEMBER 2026 If ABC was applied, the following budgeted information for the 2026 financial year would have been applicable: Activity Fixed Note Cost driver manufacturin g overhead cost in Rand Purchasing and storing wood and other materials 675 000 Number of material orders placed Cleaning the workshop 1. 540 000 2. Number of clean-ups Inspecting the work done 3. Number of inspections Setting up the woodwork equipment . Setting-up hours Notes: 1. The budgeted number of material orders placed for the 2026 financial year were 12 in total for Coffee Tables and 18 in total for Bookshelves. 2. One clean-up of the workshop is performed per batch of products produced. 3. Inspection of the work carried out by direct labourers is done after every thirty hours of work done on Coffee Tables and after every fifteen hours of work done on Bookshelves. Each Coffee Table requires five hours of direct labour work and each Bookshelf requires four-and-a-half (4,5) hours. (The hours as stated are cumulative for multiple direct labourers working at the same time.) 4. One set-up of woodwork equipment is performed for every batch produced. A set-up for a batch of Coffee Tables takes 12 minutes and a set-up for a batch of Bookshelves takes 36 minutes. REQUIRED Marks (a) Calculate the total budgeted fixed manufacturing costs per unit of the Coffee Table product type and the total budgeted fixed manufacturing costs per unit of the Bookshelf product type for the financial year ended 31 July 2026 using activity-based costing (“ABC”) to apportion fixed manufacturing overheads. Note: Round to two decimal places throughout your workings (if applicable). (15) (b) In terms of the “identifying activities” step of ABC: i) describe what batch-level activity means in terms of the ABC cost hierarchy; ii) (1) (1) (1) identify whether the activity of setting up the woodwork equipment is a batch-level activity or not; and iii) mention which step involved in the designing of ABC systems comes after (i.e. follows) the step of “identifying activities”. [CONFIDENTIAL] Page 11 of 12 [TURN OVER] MAC2601 SEPTEMBER 2026 (c) Assume now that the: - Budgeted fixed manufacturing overheads (FMO) per unit will be R510 (blanket rate) if traditional costing is applied; - Budgeted FMO per Coffee Table is R300 and budgeted FMO per Bookshelf is R1 000 if ABC is used; and - The budgeted number of units produced per product type and the prime costs per unit remain as in the scenario. Indicate whether traditional costing or ABC will be better for decisionmaking for Fenitshara and explain why you say so. (4) (d) Assume now that: - Traditional costing was applied and that the FMO per unit is R510 (blanket rate); - The budgeted number of units produced per product type remains as in the scenario. - Actual FMO amounted to R for the 2026 financial year and 5 200 units in total (including all product types) were actually produced. Calculate the over/under recovered fixed manufacturing overheads for the 2026 financial year. (3) TOTAL [25] Grand total 100 marks OF WHICH 30-40 MARKS WILL BE SELECTED FOR MARKING