2022
PRINCIPLES OF MANAGEMENT
ACCOUNTING(MAC2601)ASSIGNMENT 2
SEMESTER 1 2021
, Question 1
(a) Fixed manufacturing overheads over/under recovery.
Date Details Debit Credit
28 Feb Absorbed Fixed Manufacturing 240 000 000
2022 Overheads
- (300 000 000/500) = 60 000
- 4000 * 60 000 = 240 000 000
Under Absorbed Fixed Overheads 35 000 000
(275 000 000 – 240 000 000)
Actual Fixed Overheads 275 000 000
(137 500 000+ 62 500 000+
75 000 000)
Calculation of Almandine’s total fixed manufacturing overheads over/under
recovery amount for the financial year ended 28 February 2022.
(b) Three possible causes of over/under applied overheads.
• Underapplied overheads occurs when overheads expenses are more than what
the company actually budgets.
• Faulty estimation of overhead cost
• Unforeseen changes in the production capacity.
(c) Direct costing income statement for project Garnet
• Sales (1 875 000*(4 000 – 1 125)) 5 390 625 000
Sales commission (5 390 625 000 * 17,5%) (943 359 375)
• Variable expenses (3 450 000 000)
- Direct material (625 000*2 875) = 1 796 875 000
- Direct labour (575 000*2 875) = 1 653 125 000
Contribution margin 997 265 625
• Fixed manufacturing overheads (275 000 000 * 2875/4000) (197 656 250)
Net Profit 799 609 375
(d) Effects an increase in the in the sale of apartments would have had on each of the following:
i. Fixed costs – Remain constant
ii. Break-even units – Decrease
iii. Margin of safety – Increase
1|P age
PRINCIPLES OF MANAGEMENT
ACCOUNTING(MAC2601)ASSIGNMENT 2
SEMESTER 1 2021
, Question 1
(a) Fixed manufacturing overheads over/under recovery.
Date Details Debit Credit
28 Feb Absorbed Fixed Manufacturing 240 000 000
2022 Overheads
- (300 000 000/500) = 60 000
- 4000 * 60 000 = 240 000 000
Under Absorbed Fixed Overheads 35 000 000
(275 000 000 – 240 000 000)
Actual Fixed Overheads 275 000 000
(137 500 000+ 62 500 000+
75 000 000)
Calculation of Almandine’s total fixed manufacturing overheads over/under
recovery amount for the financial year ended 28 February 2022.
(b) Three possible causes of over/under applied overheads.
• Underapplied overheads occurs when overheads expenses are more than what
the company actually budgets.
• Faulty estimation of overhead cost
• Unforeseen changes in the production capacity.
(c) Direct costing income statement for project Garnet
• Sales (1 875 000*(4 000 – 1 125)) 5 390 625 000
Sales commission (5 390 625 000 * 17,5%) (943 359 375)
• Variable expenses (3 450 000 000)
- Direct material (625 000*2 875) = 1 796 875 000
- Direct labour (575 000*2 875) = 1 653 125 000
Contribution margin 997 265 625
• Fixed manufacturing overheads (275 000 000 * 2875/4000) (197 656 250)
Net Profit 799 609 375
(d) Effects an increase in the in the sale of apartments would have had on each of the following:
i. Fixed costs – Remain constant
ii. Break-even units – Decrease
iii. Margin of safety – Increase
1|P age
