MAC2601 Assignment 3 2026 - Distinction | Due 15 September 2026

MAC2601 Assignment 3 2026 - Distinction | Due 15 September 2026 MAC2601 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. 1. The previous management accountant prepared the following budgeted figures for the 2025 financial year at the beginning of 2025: Budgeted sales units 20 000 Budgeted production units 20 000 R Direct materials cost per unit 80 Direct labour cost per unit 60 Manufacturing overheads per unit (mixed cost) ? Variable selling costs (per unit sold) 30 Fixed selling costs for the year 360 000 2. Variable manufacturing overhead per unit did not increase from 2023 to 2024 and was also not expected to increase in 2025 when the 2025 budgeted was prepared. Fixed manufacturing overheads in total did not increase from 2023 to 2024 and were also not expected to increase in 2025 when the 2025 budgeted was prepared. The manufacturing overheads for the 2025 financial year were budgeted based on the following actual information from the 2024 and 2023 financial years: 2024 2023 Total manufacturing overheads R800 000 R1 000 000 Manufacturing activity (in units) 15 000 25 000 3. The actual fixed manufacturing overheads incurred during 2025 and the actual units produced for the 2025 financial year were as follows: Actual fixed manufacturing overheads R700 000 Actual units produced 20 000 4. The following comparison of the 2025 budgeted and 2025 actual figures is available: • The actual variable selling cost per unit sold and the actual total fixed selling expenses were as budgeted. [CONFIDENTIAL] Page 5 of 12 [TURN OVER] MAC2601 SEPTEMBER 2026 • The actual selling price per unit was 25% more than the budgeted selling price of R280 per unit. • Actual variable manufacturing costs per unit were as budgeted. • The actual sales in units were 2 000 units less than the budgeted sales units. 5. In terms of both the budgeted and actual information, there was no opening inventory of any type for the year ended 31 December 2025. There was, however, actual closing inventory of finished goods as at 31 December 2025. 6. The pre-determined fixed manufacturing overhead rate for 2025 still needs to be calculated and will be based on the budgeted production units for 2025. REQUIRED Round to the nearest Rand throughout your calculations. Marks (a) Prepare the actual income statement (Statement of Profit or Loss) for the year ended 31 December 2025 according to the following: i) Absorption costing method ii) Direct costing method (15) (6) (b) Reconcile the differences between the net profits calculated in (a) above. (3) TOTAL [24] QUESTION 2 (16 MARKS) Ngungunyane (Pty) Ltd manufactures a single product and used a process costing system to value its production or control costs. The company is based in Nkowankowa in the Limpopo Province. The following information is available for the month of June 2026: Units Opening work-in-progress ("opening WIP"): 50% complete 10 000 Closing work- in- progress ("closing WIP"): 80% complete 9 000 New units put into production in June 2026 80 000 Completed and transferred during June 2026 70 000 Costs information was as follows: Opening WIP: R Raw materials 145 000 Conversion costs 55 000 Added in June 2026: Raw materials 450 000 Conversion costs 250 000 Additional information: • Normal losses are estimated at 4% of the units that reach the wastage point. • Normal losses occur when the process is 60% complete. • Raw materials are added at the beginning of the process and conversion takes place evenly throughout the process. [CONFIDENTIAL] Page 6 of 12 [TURN OVER] MAC2601 SEPTEMBER 2026 REQUIRED Marks (a) Prepare the quantity statement for June 2026 based on the weighted average method of inventory valuation. (6) (b) Prepare the production cost statement for June 2026 based on the weighted average method of inventory valuation. (3) (c) Assume now that losses occur when the process is 90% complete. Prepare the quantity statement for June 2026 based on this new wastage point and the first-in-first-out (FIFO) method of inventory valuation. (7) TOTAL [16] QUESTION 3 (12 marks) PureTide Processing (Pty) Ltd processes locally caught tuna at its plant on the South Coast of South Africa. The financial year-end is 30 June each year. The company uses a joint and by-product costing system. Tuna are fast-swimming, torpedoshaped fish that are rich in high-quality protein. L During the joint production process, joint products Tuna Loins and Tuna Steaks are produced. These products are produced from the same raw tuna and share the same production process up to the split-off point. Tuna skins are also recovered during the joint production process. The company calculates the net realisable value (NRV) of the tuna skins to account for Tuna Skin as a by-product. The financial and other information for the month of April 2026 are as follows: 1. Joint costs: The total joint production cost incurred was R7 000 000. 2. Joint products: Products Yield in kilogram (kg) Further processing cost (in total) (R) Selling price per kg of the final product (R) Tuna Loins 375 000 25 000 380 Tuna Steaks 315 000 15 000 350