MAC3701 Assignment 2 (DETAILED ANSWERS) Semester 2 2023 - DUE 11 September 2023

MAC3701 Assignment 2 (DETAILED ANSWERS) Semester 2 2023 - DUE 11 September 2023 100% TRUSTED workings, explanations and solutions. For assistance call or us on . QUESTION 1 (continued) REQUIRED For each question below, remember to: • Clearly show all your calculations in detail; • Where necessary, indicate irrelevant amounts/adjustments with an R0 (nil-value); • Round all your workings to two decimals, except where otherwise stated; and • Ignore all the taxation implications. (a) Draft a memorandum (2 format marks) to the management of Monate wherein you: (i) Briefly discuss the appropriateness of each of the methods available to Monate to allocate joint costs to the joint products. (ii) Prepare the budgeted statement of profit or loss (income statement) for the 2023 financial year. The statement of profit or loss must include a column for each joint product and a Total column. Round your final amounts to the nearest Rand. (2) (8) (20) (b) In answering question (b) only, assume the following for the 2023 financial year: 1. The variable component of the budgeted joint costs allocated to each product was as follows: R50 per 10 kg of Raw sugar and R110 per 25 kg of Molasses. 2. The fixed component of the budgeted joint costs is R2 000 000. 3. No inventory of any type is budgeted for. 4. Except for points 1; 2; and 3 above, all the other applicable information remains as given in the scenario. Calculate the total budgeted break-even units for the Raw sugar product only for the 2023 financial year. (11) (c) Briefly describe five key performance indicators (KPIs) that can be used to measure Monate’s social, ethical and/or environmental performance. (5) (d) Assume that a standard costing system is in place at Monate and where applicable the standard gross profit percentage is 20% for each product. Calculate the following standard costing variances for the 2023 financial year: (i) Sales mix variance (tonnes) for products Raw sugar, Molasses and in total. (ii) Sugarcane purchase price variance. (iii) Fixed administrative costs expenditure variance. (5) (3) (2) (e) Briefly discuss three possible reasons for a favourable sugarcane purchase price variance. (3) (g) From a quantitative perspective, advise Monate on whether to further process the Raw sugar into White sugar during the 2024 financial year. As part of this advice, you must provide a reason, based on relevant costing principles, for the inclusion/exclusion of each item used in your calculation. Ignore qualitative factors. (18) (h) Assume that Monate resolved to acquire Best Fertilisers and subsequently establishes two divisions managed by two independent management teams: (i) Determine the budgeted minimum transfer price per tonne at which the selling division will be willing to transfer the required 1 700 tonnes of Bagasse for the 2024 financial year. (13) (ii) From a controllable profit perspective, briefly discuss how the minimum transfer price you calculated in (h)(i) above can impact the performance of each of the two divisions. (i.e. the seller of the Bagasse and the buyer of Bagasse). (4) (i) Briefly discuss three qualitative factors Monate should consider before acquiring Best Fertilisers. (6) Total question one [100]