MAC2601 ASSIGNMENT 3 2026
DUE 15 SEPTEMBER 2026
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.
Direct and Absorption Costing – T & T Mofokeng (Pty) Ltd
High-Low method (manufacturing overheads)
Year Activity (units) Total MOH (R)
High (2023) 25 000 1 000 000
Low (2024) 15 000 800 000
Difference 10 000 200 000
Variable MOH per unit = 200 000/10 000 = R20
Fixed MOH (using 2024):
800 000−(15 000×20) = R500 000
, 800 000−(15 000×20)=R500 000
Budgeted fixed MOH rate for 2025 (based on budgeted production 20 000 units):
500 00020 000= R25 per units
Actual 2025 data
Production = 20 000 units
Sales = 20 000 – 2 000 = 18 000 units
Closing FG inventory = 2 000 units
Actual SP = 280×1.25 = R350
Variable manufacturing cost per unit = DM 80 + DL 60 + VMOH 20 = R160
Absorption unit cost = 160 + 25 = R185
Variable selling = R30; Fixed selling = R360 000 (as budgeted)
Actual fixed MOH incurred = R700 000
(a)(i) Absorption Costing – Statement of Profit or Loss
Description R R
Sales (18 000 × 350) 6 300 000
Less: Cost of sales
Opening inventory –
Variable manufacturing costs (20 000 × 160) 3 200 000
Fixed manufacturing overheads absorbed (20 000 × 25) 500 000
Cost of goods manufactured 3 700 000
Less: Closing inventory (2 000 × 185) (370 000)
Unadjusted COS 3 330 000
Under-absorbed fixed MOH (700 000 – 500 000) 200 000
Cost of sales 3 530 000
DUE 15 SEPTEMBER 2026
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.
Direct and Absorption Costing – T & T Mofokeng (Pty) Ltd
High-Low method (manufacturing overheads)
Year Activity (units) Total MOH (R)
High (2023) 25 000 1 000 000
Low (2024) 15 000 800 000
Difference 10 000 200 000
Variable MOH per unit = 200 000/10 000 = R20
Fixed MOH (using 2024):
800 000−(15 000×20) = R500 000
, 800 000−(15 000×20)=R500 000
Budgeted fixed MOH rate for 2025 (based on budgeted production 20 000 units):
500 00020 000= R25 per units
Actual 2025 data
Production = 20 000 units
Sales = 20 000 – 2 000 = 18 000 units
Closing FG inventory = 2 000 units
Actual SP = 280×1.25 = R350
Variable manufacturing cost per unit = DM 80 + DL 60 + VMOH 20 = R160
Absorption unit cost = 160 + 25 = R185
Variable selling = R30; Fixed selling = R360 000 (as budgeted)
Actual fixed MOH incurred = R700 000
(a)(i) Absorption Costing – Statement of Profit or Loss
Description R R
Sales (18 000 × 350) 6 300 000
Less: Cost of sales
Opening inventory –
Variable manufacturing costs (20 000 × 160) 3 200 000
Fixed manufacturing overheads absorbed (20 000 × 25) 500 000
Cost of goods manufactured 3 700 000
Less: Closing inventory (2 000 × 185) (370 000)
Unadjusted COS 3 330 000
Under-absorbed fixed MOH (700 000 – 500 000) 200 000
Cost of sales 3 530 000
