MAC1501
ASSIGNMENT 2 2025
DUE 17 APRIL 2025
SEMESTER 1 2025
, MAC1501/103
QUESTION 1 (45 marks)
Mbali Creations (Pty) Ltd manufactures high-quality leather handbags. The company has a 31st March
financial year-end. The direct materials used in the manufacturing process are leather, fabric lining,
metal hardware, and bubble wrap. The manufacturing process occurs in three production departments
as follows:
Production Department 1 (Leather and Fabric Preparation):
Large sheets of leather are cut into smaller pieces according to the handbag design. The pieces are
then treated and dyed to achieve the desired colour and texture. Each piece is inspected for quality
before being transferred to the assembly department.
Rolls of fabric are cut into pieces that will be used as the lining for the handbags. The fabric pieces are
sewn together to form the interior compartments and pockets of the handbags. The completed fabric
linings are transferred to the assembly department.
Production Department 2 (Assembly):
The prepared leather pieces and fabric linings are stitched together to form the body of the handbag.
Metal hardware such as zippers, buckles, and handles are attached. The assembled handbags are then
inspected for quality, and any necessary adjustments are made.
Production Department 3 (Finishing):
The handbags are cleaned and polished to ensure they meet the company's high standards. Glue is
applied to the brand logo and attached to each handbag. The completed handbags are then covered in
bubble wrap for shipping.
Direct materials:
The leather used for the handbags is imported from India at R120 per square meter (m²), with each
handbag requiring 1,5 m² (square meters) of leather. Fabric lining is locally sourced at R190 per 10-
metre roll, and each handbag uses 150 centimetres of fabric. Metal hardware costs R82 per set in a
packet, with one set in a packet required per handbag. The bubble wrap used for packing costs R130
per 50-metre roll, and each handbag requires 250 centimetres of bubble wrap.
These prices were fixed for the financial years ending 31 March 2024 and 31 March 2025.
Direct labour and production overheads:
The handbags take 3 hours each to manufacture. The current direct labour cost rate is R28,50 per hour.
Variable overhead costs are apportioned to production at a rate of R35 per handbag manufactured.
Fixed overhead costs are absorbed at a plant-wide rate of R19,50 per direct labour hour.
5
ASSIGNMENT 2 2025
DUE 17 APRIL 2025
SEMESTER 1 2025
, MAC1501/103
QUESTION 1 (45 marks)
Mbali Creations (Pty) Ltd manufactures high-quality leather handbags. The company has a 31st March
financial year-end. The direct materials used in the manufacturing process are leather, fabric lining,
metal hardware, and bubble wrap. The manufacturing process occurs in three production departments
as follows:
Production Department 1 (Leather and Fabric Preparation):
Large sheets of leather are cut into smaller pieces according to the handbag design. The pieces are
then treated and dyed to achieve the desired colour and texture. Each piece is inspected for quality
before being transferred to the assembly department.
Rolls of fabric are cut into pieces that will be used as the lining for the handbags. The fabric pieces are
sewn together to form the interior compartments and pockets of the handbags. The completed fabric
linings are transferred to the assembly department.
Production Department 2 (Assembly):
The prepared leather pieces and fabric linings are stitched together to form the body of the handbag.
Metal hardware such as zippers, buckles, and handles are attached. The assembled handbags are then
inspected for quality, and any necessary adjustments are made.
Production Department 3 (Finishing):
The handbags are cleaned and polished to ensure they meet the company's high standards. Glue is
applied to the brand logo and attached to each handbag. The completed handbags are then covered in
bubble wrap for shipping.
Direct materials:
The leather used for the handbags is imported from India at R120 per square meter (m²), with each
handbag requiring 1,5 m² (square meters) of leather. Fabric lining is locally sourced at R190 per 10-
metre roll, and each handbag uses 150 centimetres of fabric. Metal hardware costs R82 per set in a
packet, with one set in a packet required per handbag. The bubble wrap used for packing costs R130
per 50-metre roll, and each handbag requires 250 centimetres of bubble wrap.
These prices were fixed for the financial years ending 31 March 2024 and 31 March 2025.
Direct labour and production overheads:
The handbags take 3 hours each to manufacture. The current direct labour cost rate is R28,50 per hour.
Variable overhead costs are apportioned to production at a rate of R35 per handbag manufactured.
Fixed overhead costs are absorbed at a plant-wide rate of R19,50 per direct labour hour.
5
