,MAC3701 Assignment 2 (COMPLETE ANSWERS)
Semester 1 2025 - DUE 16 April 2025; 100%
TRUSTED Complete, trusted solutions and
explanations.
QUESTION 1; PART A
Critical Evaluation of the Cost Accountant's Calculation of Units
Required to Achieve the Target Profit for the Year-End Ending 31
December 2025:
To evaluate the cost accountant’s calculation for the units required to
achieve the target profit of R28.5 million, we need to carefully review
each part of the information provided and the calculations involved.
Step 1: Understanding the Key Information Provided
The company is budgeting for two types of pumps: SPump and BPump.
For both products, we have the following information:
1. Selling Prices:
o SPump: R2,500
o BPump: R4,500
2. Prime Costs:
o SPump: R1,500
o BPump: R2,700
o Prime costs are noted as 70% of the sale price, so this part
aligns with the selling price.
3. Manufacturing Overheads:
o Both products have a total of R230 per unit, consisting of:
Fixed manufacturing overheads = R150 per unit
, Variable manufacturing overheads = R80 per unit
4. Selling and Distribution Costs:
o Fixed S&D costs: Total of R10 million for the year
o Variable S&D costs: R35 per unit for both products
5. Fixed Administrative Costs:
o Budgeted at R12.5 million for the financial year.
Step 2: Calculation of Contribution Margin per Unit
Contribution per unit for each pump is calculated as:
Contribution per unit=Selling price−Total Prime Costs−Manufactu
ring Overheads−Selling and Distribution Costs\text{Contribution
per unit} = \text{Selling price} - \text{Total Prime Costs} -
\text{Manufacturing Overheads} - \text{Selling and Distribution
Costs}Contribution per unit=Selling price−Total Prime Costs−Man
ufacturing Overheads−Selling and Distribution Costs
For SPump:
Contribution per unit=2,500−1,500−230−35=735\text{Contribution per
unit} = 2,500 - 1,500 - 230 - 35 =
735Contribution per unit=2,500−1,500−230−35=735
For BPump:
Contribution per unit=4,500−2,700−230−35=1,535\text{Contribution
per unit} = 4,500 - 2,700 - 230 - 35 =
1,535Contribution per unit=4,500−2,700−230−35=1,535
These amounts are provided in the question as correct: R735 for
SPump and R1,535 for BPump.
Semester 1 2025 - DUE 16 April 2025; 100%
TRUSTED Complete, trusted solutions and
explanations.
QUESTION 1; PART A
Critical Evaluation of the Cost Accountant's Calculation of Units
Required to Achieve the Target Profit for the Year-End Ending 31
December 2025:
To evaluate the cost accountant’s calculation for the units required to
achieve the target profit of R28.5 million, we need to carefully review
each part of the information provided and the calculations involved.
Step 1: Understanding the Key Information Provided
The company is budgeting for two types of pumps: SPump and BPump.
For both products, we have the following information:
1. Selling Prices:
o SPump: R2,500
o BPump: R4,500
2. Prime Costs:
o SPump: R1,500
o BPump: R2,700
o Prime costs are noted as 70% of the sale price, so this part
aligns with the selling price.
3. Manufacturing Overheads:
o Both products have a total of R230 per unit, consisting of:
Fixed manufacturing overheads = R150 per unit
, Variable manufacturing overheads = R80 per unit
4. Selling and Distribution Costs:
o Fixed S&D costs: Total of R10 million for the year
o Variable S&D costs: R35 per unit for both products
5. Fixed Administrative Costs:
o Budgeted at R12.5 million for the financial year.
Step 2: Calculation of Contribution Margin per Unit
Contribution per unit for each pump is calculated as:
Contribution per unit=Selling price−Total Prime Costs−Manufactu
ring Overheads−Selling and Distribution Costs\text{Contribution
per unit} = \text{Selling price} - \text{Total Prime Costs} -
\text{Manufacturing Overheads} - \text{Selling and Distribution
Costs}Contribution per unit=Selling price−Total Prime Costs−Man
ufacturing Overheads−Selling and Distribution Costs
For SPump:
Contribution per unit=2,500−1,500−230−35=735\text{Contribution per
unit} = 2,500 - 1,500 - 230 - 35 =
735Contribution per unit=2,500−1,500−230−35=735
For BPump:
Contribution per unit=4,500−2,700−230−35=1,535\text{Contribution
per unit} = 4,500 - 2,700 - 230 - 35 =
1,535Contribution per unit=4,500−2,700−230−35=1,535
These amounts are provided in the question as correct: R735 for
SPump and R1,535 for BPump.
