,MAC3701-assignment 2 [COMPLETE ANSWERS ]
SEMESTER 1 2025-DUE 16 APRIL 2025; 100% trusted,
comprehensive and complete reliable solution with clear
explanation
QUESTION 1 (100 Marks; 180 Minutes)
The Company information below applies to Parts A, B, C, D,
and E of assessment 02. The additional information provided in
each Part only applies to that part of assessment 02.
For each Part below, you must:
• Clearly show all your calculations in detail (marks are awarded
for calculations);
• Where necessary, indicate irrelevant amounts/adjustments with
an R0 (nil-value);
• Round all your workings to two decimals, except where
otherwise stated, and
• Ignore the time value of money and all taxation implications.
Company information
Pedal Pump (Pty) Ltd (PP) is a South African company that
manufactures and sells both Standard (SPump) and Booster
(BPump) bike floor pumps. The company prides itself on
producing high-quality, durable products catering to urban and
professional cyclists. The company's manufacturing plant is
based in Benoni; they sell locally and export their products to
,various African and European markets. The BPump has an
added high-pressure aluminium air chamber that quickly
releases air to seat tubeless tyres on the tyre rim.
The manufacturing process primarily involves the melting and
extrusion of aluminium into the pump body and valve head
tubing, while reinforced rubber and rubberised composite are
heated and injected into moulds to create durable handles, hoses,
and base plates. PP purchases other minor components
separately and adds them to the manufacturing process.
The company relies on dollar-denominated imports of high-
quality aluminium and rubber, which also have a high carbon
footprint. The industry has low barriers to entry, with stiff
competition putting pressure on profit margins. New South
African manufacturing regulations require stricter quality
control and product safety testing, likely increasing operational
costs. PP’s management is considering using cheaper materials
to reduce costs and dependence on imported materials. After
paying a generous facilitation fee, the company obtained a
"compliant" compliance rating for a recent compliance
inspection.
The company uses an absorption costing system, values all its
inventory items using the first-in-first-out (FIFO) method and
has a 31 December financial year-end.
PART A (20 Marks; 36 Minutes)
PP is finalising budgets for the 2025 financial year and budgeted
to achieve a profit of R28,5 million for the 2025 financial year.
The cost accountant presented the following calculation for the
, budgeted amount of units to achieve the target profit for the
2025 financial year:
Details per unit
SPUMP
R
BPUMP
R
Note
Selling price
2 500
4 500
1.2
Less: Total Prime costs
1 500
2 700
1.3
Less: Manufacturing overheads
230
230
1.4
Less: Selling and distribution costs
SEMESTER 1 2025-DUE 16 APRIL 2025; 100% trusted,
comprehensive and complete reliable solution with clear
explanation
QUESTION 1 (100 Marks; 180 Minutes)
The Company information below applies to Parts A, B, C, D,
and E of assessment 02. The additional information provided in
each Part only applies to that part of assessment 02.
For each Part below, you must:
• Clearly show all your calculations in detail (marks are awarded
for calculations);
• Where necessary, indicate irrelevant amounts/adjustments with
an R0 (nil-value);
• Round all your workings to two decimals, except where
otherwise stated, and
• Ignore the time value of money and all taxation implications.
Company information
Pedal Pump (Pty) Ltd (PP) is a South African company that
manufactures and sells both Standard (SPump) and Booster
(BPump) bike floor pumps. The company prides itself on
producing high-quality, durable products catering to urban and
professional cyclists. The company's manufacturing plant is
based in Benoni; they sell locally and export their products to
,various African and European markets. The BPump has an
added high-pressure aluminium air chamber that quickly
releases air to seat tubeless tyres on the tyre rim.
The manufacturing process primarily involves the melting and
extrusion of aluminium into the pump body and valve head
tubing, while reinforced rubber and rubberised composite are
heated and injected into moulds to create durable handles, hoses,
and base plates. PP purchases other minor components
separately and adds them to the manufacturing process.
The company relies on dollar-denominated imports of high-
quality aluminium and rubber, which also have a high carbon
footprint. The industry has low barriers to entry, with stiff
competition putting pressure on profit margins. New South
African manufacturing regulations require stricter quality
control and product safety testing, likely increasing operational
costs. PP’s management is considering using cheaper materials
to reduce costs and dependence on imported materials. After
paying a generous facilitation fee, the company obtained a
"compliant" compliance rating for a recent compliance
inspection.
The company uses an absorption costing system, values all its
inventory items using the first-in-first-out (FIFO) method and
has a 31 December financial year-end.
PART A (20 Marks; 36 Minutes)
PP is finalising budgets for the 2025 financial year and budgeted
to achieve a profit of R28,5 million for the 2025 financial year.
The cost accountant presented the following calculation for the
, budgeted amount of units to achieve the target profit for the
2025 financial year:
Details per unit
SPUMP
R
BPUMP
R
Note
Selling price
2 500
4 500
1.2
Less: Total Prime costs
1 500
2 700
1.3
Less: Manufacturing overheads
230
230
1.4
Less: Selling and distribution costs
