MAC2601 Assignment 6 (COMPLETE ANSWERS) 2024 - DUE 30 May 2024

MAC2601 Assignment 6 (COMPLETE ANSWERS) 2024 - DUE 30 May 2024 ;100 % TRUSTED workings, explanations and solutions. For assistance call or W.h.a.t.s.a.p.p us on ...(.+.2.5.4.7.7.9.5.4.0.1.3.2)........... QUESTION 1 (25 MARKS) (30 MINUTES) Futhumala (Pty) Ltd (“FTM”) was founded in the year 2000 by the sisters Mandy and Dineo. FTM produces and sells one type of electric bar heater. The FTM heaters have heating bars on three sides and on top and one heater is normally sold to retailers at R700 each. FTM received a request for a special once-off order of 3 000 lower-quality heaters from Gaze Hope at a 10% discount from the normal price. Mandy suggested using relevant costing principles to assess if they should accept the order from Gaze Hope. The sisters provided you with the following information: Details Notes Requirements per heater Steel sleeves 1 4 square meters (m2) Nails 2 40 nails Heating bars 3 8 heating bars Accessories (wheels, handle, switch) 4 1 pack Labour 5 2 hours 1. FTM has some steel sleeves on hand totalling 3 600 m2, and it is not intended to be used anywhere, as it is of low quality. The original cost of the steel sleeves was R50 per m2, while new steel sleeves currently cost R70 per m2. The steel sleeves on hand will be scrapped if not used for this order and FTM will receive R20 per m2 of steel sleeves scrapped. 2. Nails are purchased at R1 each. There are no nails on hand. MAC2601 MAY 2024 [CONFIDENTIAL] Page 6 of 10 [TURN OVER] 3. Heating bars can be purchased in bundles of ten heating bars per bundle at R102 per bundle. FTM has 420 bundles on hand at an original cost of R90 per bundle. 4. The accessories are purchased in a pack which consists of all the accessories required to complete one heater. The accessory pack is currently purchased at R200 per pack. 5. Only 8 weeks remain until the heaters must be delivered to Gaze Stores. FTM’s 70 workers are currently busy with other orders and each of these workers has idle time of only 10 hours a week available. They are full-time employees, and each gets paid a monthly salary of R11 000 for 4 weeks, 5 working days a week and 8 working hours a day. Should they be required to work overtime they would get paid R138 per hour, as opposed to the normal equivalent hourly rate. REQUIRED Round to the nearest Rand throughout your calculations. Marks (a) Discuss five qualitative (non-financial) factors FTM should consider before accepting the special order from Gaze Stores. (5) (b) From a quantitative (financial) perspective advise the sisters whether FTM should accept the special order from Gaze Hope. Note: You must provide a reason (applicable costing principle) for each cost/revenue not included in your calculation. (20) TOTAL: [25] QUESTION 2 (25 MARKS) (30 MINUTES) DoneDeal (Pty) Ltd (“DD”) was founded by the couple Mr A Winner and Mrs Best Winner in 2010. DD manufactures two types of laptops, namely “Tobetsa” (“TT”) and “Penya” (“PN”). DD uses activity-based costing (“ABC”) and has a 31 May financial year-end. TT laptops are thinner and have a touchscreen function. MAC2601 MAY 2024 [CONFIDENTIAL] Page 7 of 10 [TURN OVER] PN are thicker and only have the conventional keyboard click functions. The budgeted financial information correctly identified the following main activities, cost drivers and the related manufacturing overhead costs for the financial year ended 31 May 2024: Activity Cost driver Overhead costs R Machining Machine hours 2 160 000 Assembling Number of production runs 1 350 000 Stores receiving direct material Number of deliveries received 1 215 000 Stores issuing direct materials to manufacturing Number of issues 810 000 Quality inspection Number of inspections ? Total R6 367 500 Details TT PN Budgeted production and sales (units) Machine hours per unit 44 24 Number of units manufactured per production run 10 25 Number of direct material deliveries received to manufacture one unit 9 4 Number of issues of direct material from stores to manufacturing 50 30 Quality inspections of units are performed as follows: every 4th TT and every 12th PN unit manufactured are inspected. Additional information: 1. TT’s total budgeted direct material and direct labour costs are R3 million and R1 million, respectively. 2. PN’s total budgeted prime costs are R1,7 million. 3. The budgeted selling price is R8 000 and R5 000 per unit for TT and PN respectively. MAC2601 MAY 2024 [CONFIDENTIAL] Page 8 of 10 [TURN OVER] REQUIRED Round to the nearest Rand throughout your calculations. (a) Calculate the budgeted total profit for TT for the financial year ending 31 May 2024 using activity-based costing (“ABC”). Note: You are required to show all the workings in detail. (23) (b) Explain the use of traditional costing and activity-based costing in a manufacturing organisation. (2) TOTAL: [25]