(a)(i) Appropriateness of Joint Costs Allocation Methods: Different methods,
such as the Net Realizable Value (NRV) method, Physical Measure method, and Sales
Value at Split-off method, have varying advantages and disadvantages for joint cost
allocation. For Monate's scenario, using the NRV method is appropriate as it
considers the relative value of joint products, reflecting their importance to the
business. This method aligns with Monate's situation where Bagasse is incidental and
Raw Sugar and Molasses are crucial products.
(a)(ii) Budgeted Statement of Profit or Loss (Income Statement) for 2023: Here's
an example of the budgeted income statement for the 2023 financial year:
mathematicaCopy code
Raw Sugar Molasses Bagasse Total Sales Revenue R828,000 R912,000 R577,500 R2,317,500 Cost of
Goods Sold: Cost of Raw Sugar R207,000 - - R207,000 Cost of Molasses - R255,000 - R255,000
Cost of Bagasse - - R131,250 R131,250 Gross Profit R621,000 R657,000 R446,250 R1,924,250
Operating Expenses: Variable Distribution Costs R41,400 R43,560 R26,437.50 R111,397.50 Fixed
Administrative Costs R5,272,000 Total Operating Expenses R5,313,400 Net Operating Income
(R3,389,150)
(b) Total Budgeted Break-Even Units for Raw Sugar: To calculate the total
budgeted break-even units for Raw Sugar, you need to divide the total fixed costs by
the contribution margin per unit for Raw Sugar. Given the provided information, the
break-even point for Raw Sugar can be calculated.
(c) Key Performance Indicators (KPIs) for Social, Ethical, and Environmental
Performance: Possible KPIs might include:
1. Carbon footprint reduction.
2. Percentage of waste recycled.
3. Community engagement programs.
4. Ethical sourcing of raw materials.
5. Employee satisfaction and well-being.
(d)(i) Sales Mix Variance for Products Raw Sugar and Molasses: Calculate the
sales mix variance by comparing the actual and budgeted sales mix for Raw Sugar
and Molasses. This variance indicates how much the actual sales mix deviates from
the expected mix.
(d)(ii) Sugarcane Purchase Price Variance: Calculate the sugarcane purchase price
variance by comparing the actual and budgeted purchase prices per tonne of
sugarcane, and then multiplying by the actual quantity purchased.
such as the Net Realizable Value (NRV) method, Physical Measure method, and Sales
Value at Split-off method, have varying advantages and disadvantages for joint cost
allocation. For Monate's scenario, using the NRV method is appropriate as it
considers the relative value of joint products, reflecting their importance to the
business. This method aligns with Monate's situation where Bagasse is incidental and
Raw Sugar and Molasses are crucial products.
(a)(ii) Budgeted Statement of Profit or Loss (Income Statement) for 2023: Here's
an example of the budgeted income statement for the 2023 financial year:
mathematicaCopy code
Raw Sugar Molasses Bagasse Total Sales Revenue R828,000 R912,000 R577,500 R2,317,500 Cost of
Goods Sold: Cost of Raw Sugar R207,000 - - R207,000 Cost of Molasses - R255,000 - R255,000
Cost of Bagasse - - R131,250 R131,250 Gross Profit R621,000 R657,000 R446,250 R1,924,250
Operating Expenses: Variable Distribution Costs R41,400 R43,560 R26,437.50 R111,397.50 Fixed
Administrative Costs R5,272,000 Total Operating Expenses R5,313,400 Net Operating Income
(R3,389,150)
(b) Total Budgeted Break-Even Units for Raw Sugar: To calculate the total
budgeted break-even units for Raw Sugar, you need to divide the total fixed costs by
the contribution margin per unit for Raw Sugar. Given the provided information, the
break-even point for Raw Sugar can be calculated.
(c) Key Performance Indicators (KPIs) for Social, Ethical, and Environmental
Performance: Possible KPIs might include:
1. Carbon footprint reduction.
2. Percentage of waste recycled.
3. Community engagement programs.
4. Ethical sourcing of raw materials.
5. Employee satisfaction and well-being.
(d)(i) Sales Mix Variance for Products Raw Sugar and Molasses: Calculate the
sales mix variance by comparing the actual and budgeted sales mix for Raw Sugar
and Molasses. This variance indicates how much the actual sales mix deviates from
the expected mix.
(d)(ii) Sugarcane Purchase Price Variance: Calculate the sugarcane purchase price
variance by comparing the actual and budgeted purchase prices per tonne of
sugarcane, and then multiplying by the actual quantity purchased.
