MAC3701 Assignment 1 Semester 1 2023

MAC3701 Assignment 1 Semester % TRUSTED workings, explanations and solutions. For assistance call or us on 079 811 9845 . QUESTION 1 Which one of the following is not a characteristic of activity-based-costing (��ABC”) system? A. Because of the extensive number of cost drivers that must be identified and measured, this costing system can be prohibitively expensive to implement and operate. B. The allocation basis is referred to as ‘cost driver’, as a cause-and-effect relationship exists between cost and allocation basis. C. Multiple overhead rates can be calculated, one per department or cost centre. D. Overhead costs are accumulated and assigned to products in accordance with activities, based on the number of resources used by each product. Multiple overhead rates are calculated: one per activity QUESTION 2 Earth (Pty) Ltd (“Earth”) produces and sells chicken products and is based in Bloemfontein in the Free State province. Earth’s production process is recognised as a joint manufacturing process, and the related joint production costs are allocated to the joint products based on the net realisable value (NRV) at split-off point method. The company uses the direct costing method, and all its inventory items are valued using the first-in-first-out (FIFO) method. Earth has a 31 December 2023 financial year-end. The company operated for 30 days during January 2023. The actual results for the month ended 31 January 2023 were as follows: A total of 200 tons of broiler chickens were processed at the plant, this represents 90% of the plant’s capacity. The actual yields at the split-off point were Chicken carcass 70%, Livers 25% and Feathers 5%. The actual variable costs incurred in the slaughtering process were as follows: Description R/ton Broiler chicken purchase price 4 000 Water and electricity 200 Direct labour costs 400 Slaughtering processing 100 Additional information: 1. The chicken carcasses are treated with sodium nitrite to preserve the meat. Each ton of chicken carcasses requires 50 kilograms of sodium nitrite, at R2,50 per kilogram of sodium nitrite. The other total costs relating to the preservation processing were R250 000. The preserved chicken was packaged at a total cost of R20 000. The addition of sodium nitrite and the packaging do not increase the weight (tons) of the chicken. The selling price per ton of Chicken was R60 000 in January 2023. The related selling and administration cost was 2,5% of the selling price per ton. 2. The Livers were further cleaned and then preserved at a total cost of R345 000 during January 2023. Livers are packed in hard containers and sealed at a cost of R600 per ton. The cleaning, preserving, and packaging processes do not change the weight (tons) of the livers. The actual selling price per ton of Livers in January 2023 was R20 000. The selling and administration cost per ton was 5% of the selling price. 3. The Feathers do not undergo any further processing. The company sells Feathers to Arts and Culture Centres at a selling price of R200 per ton. The Feathers are delivered at a cost of R110 per ton. No other costs relating to the Feathers are incurred. 4. Total fixed selling and administration cost is R150 000. 5. There is no opening or closing inventory of any kind. Earth’s actual statement of profit or loss (income statement) for the month ended 31 January 2023 would reflect the total sales value as ________. A. R B. R8 460 000 C. R9 402 000 D. R9 400 000 E. None of the options QUESTION 3 1. Use the following information to answer this question: Pluto (Pty) Ltd (“Pluto”) is a medium-sized manufacturer of local beer, Bodila drink. The Bodila drink is available in two different flavours namely Sukari and Suur. The two beers require the following costs per month: • The total fixed labour costs are R600 000. • Direct raw materials are budgeted to be R17 per Sukari unit and R25 per Suur unit. • Direct labour costs are R200 per direct labour clock hour. 12% idle time is allowed for both products, and it takes 4,5 and 7,5 direct labour clock minutes to manufacture one unit of Sukari and one unit of Suur, respectively. • Variable manufacturing overhead (VMO) costs are allocated based on machine time used in the manufacturing of each product. The variable manufacturing overhead rate per machine hour is R1 600 per hour. • It takes 0,75 machine-hours to produce 120 units of Sukari and 1,35 machine-hours to 135 units of Suur. • The selling and administration costs: Sukari’s selling and administration follow this formula, y = R15 000 + R5,5x, where x indicates the number of units sold. Suur: An amount of R20 000 is paid each month and for every unit of Suur an amount of R4 is incurred. • The other fixed manufacturing overheads are two-thirds of fixed labour costs. • The sale price per unit is R65 and R90 for Sukari and Suur respectively. • The budgeted sales mix was 3:2 for Sukari and Suur. The total fixed costs to be used to calculate break-even units for a month is ________ A. R1 835 000 B. R1 000 000 C. R600 000 D. R1 035 00 E. None of the options QUESTION 4 Use the following information to answer this question: Neptune (Pty) Ltd (“Neptune”) manufactures and sells two types of energy drinks, namely: The More-Joy (“MJ”) and Kick-On (“KO”). The following information is for the 2023 financial year. Neptune’s financial statements are prepared using the absorption costing system, valuing all its inventory items using the first-in-first-out (FIFO) method and having a 31 December financial year-end. • The report from the storage manager indicated that there were 60 000 units (at R15 per unit) and 62 500 units (at R18 per unit) of MJ and KO respectively as closing inventory for the financial year 2022. • The budgeted selling prices are R20 and R25 per unit of MJ and KO respectively. • The sales manager budgeted sales volumes for the 2023 financial year to be 300 000 and 270 000 units of MJ and KO respectively. • The production manager stated that the 2023 budget production units for MJ should be 6 times more than the 2022 closing inventory and for KO 480% of the 2022 closing inventory. • The total budgeted fixed costs for the 2023 financial year are reflected in the table below: Details R Production line batch set-up cost 950 000 Rental of factory premises 750 000 Permanent manufacturing staff salaries 700 000 Depreciation of manufacturing machinery 400 000 Selling and administration 140 000 Total 2 940 000 The fixed manufacturing overheads (“FMO”) are allocated to products based on the machine hours it takes to produce each unit. It takes 15 machine minutes and 10 machine minutes to produce a unit of MJ and KO respectively. It is budgeted that all manufacturing overhead costs will be absorbed. • The variable costs per unit are R10 and R12 for MJ and KO respectively. For this Question only assume that the following: i. The budgeted fixed manufacturing overhead absorption rate is R25 per machine hour. ii. The total machine hours are budgeted to be 115 200 machine hours and 75 000 machine hours for MJ and KO respectively. iii. All other information remains as given. The total budgeted gross profit of MJ is ________ for the 2023 financial year. A. R780 000 B. R1 080 000 C. R1 680 000 D. R180 000 E. None of the options QUESTION 5 Uranus (Pty) Ltd (“Uranus”)’s management is busy budgeting for the month of March 2023. It is expected that the total labour hours for March 2023 will be 24 000 hours. Total labour costs include both fixed salaries and variable wages. The following information is available: Month Labour hours Total labour costs (R) November 000 December 000 January 000 February 000 Using the high-low method, the total budgeted direct labour costs for the month of March 2023 will be ________. A. R441 563 B. R444 000 C. R435 000 D. R300 000 E. None of the options QUESTION 6 7Use the following information to answer this question: Mars (Pty) Limited (“Mars”) is a family-owned company that operates from Midrand in Gauteng Province. Mars manufactures two products namely M-Chair and M-table. Mars’s management financial statements are prepared using a direct costing system, valuing all its inventory items using the first-in-first-out (FIFO) method and having a 31 December financial year-end. EXTRACT FROM THE BUDGET INFORMATION FOR THE YEAR ENDING 31 DECEMBER 2023: Details Notes M-Chair M-Table Total Production units 000 Selling price per unit 1.1. R100 R350 Total direct material costs 1.2. R600 000 R1 320 000 ? Direct labour costs 1.3. ? R1 200 000 ? Variable manufacturing overheads R300 000 ? R1 455 000 Fixed manufacturing overheads 40% 60% R800 000 Sales commission 1.4. ? ? ? Additional information relating to the budget for the year ending 31 December 2023: 1.1 Mars budgeted to sell 95% of the units manufactured. 1.2 No direct materials or any other losses occur during the manufacturing process. 1.3 The direct labour time is 75 clock minutes for each M-Chair manufactured and four clock hours for each M-Table manufactured. The direct labour rate per clock hour is the same for both products. 1.4 The sales commission is budgeted to be 10% of the selling price of each product. 1.5 No opening finished goods or materials were budgeted for the 2023 financial year. M-Chair’s budgeted total product costs per unit for the year ending 31 December 2023 is A. R105 B. R70 C. R80 D. R86 E. None of the options QUESTION 7 Use the following information to answer this question: Pluto (Pty) Ltd (“Pluto”) is a medium-sized manufacturer of local beer, Bodila drink. The Bodila drink is available in two different flavours namely Sukari and Suur. The two beers require the following costs per month: • The total fixed labour costs are R600 000. • Direct raw materials are budgeted to be R17 per Sukari unit and R25 per Suur unit. • Direct labour costs are R200 per direct labour clock hour. 12% idle time is allowed for both products, and it takes 4,5 and 7,5 direct labour clock minutes to manufacture one unit of Sukari and one unit of Suur, respectively. • Variable manufacturing overhead (VMO) costs are allocated based on machine time used in the manufacturing of each product. The variable manufacturing overhead rate per machine hour is R1 600 per hour. • It takes 0,75 machine-hours to produce 120 units of Sukari and 1,35 machine-hours to 135 units of Suur. · The selling and administration costs: • Sukari’s selling and administration follow this formula, y = R15 000 + R5,5x, where x indicates the number of units sold. • Suur: An amount of R20 000 is paid each month and for every unit of Suur an amount of R4 is incurred. • The other fixed manufacturing overheads are two-thirds of fixed labour costs. • The sale price per unit is R65 and R90 for Sukari and Suur respectively. • The budgeted sales mix was 3:2 for Sukari and Suur. For this Question only assume that the following: i. The total fixed costs is R900 000 ii. The weighted average contribution margin is R200. iii. All other information remains as given. To achieve the estimated annual target profit of R1 200 000 per month, Pluto must sell _________ Sukari beers and _______ Suur beers respectively. A. 2 700 and 1 800 B. 6 300 and 4 200 C. 10 500 and 10 500 D. 31 500 and 21 000 E. None of the options QUESTION 8 Use the following information to answer this question: Pluto (Pty) Ltd (“Pluto”) is a medium-sized manufacturer of local beer, Bodila drink. The Bodila drink is available in two different flavours namely Sukari and Suur. The two beers require the following costs per month: • The total fixed labour costs are R600 000. • Direct raw materials are budgeted to be R17 per Sukari unit and R25 per Suur unit. • Direct labour costs are R200 per direct labour clock hour. 12% idle time is allowed for both products, and it takes 4,5 and 7,5 direct labour clock minutes to manufacture one unit of Sukari and one unit of Suur, respectively. • Variable manufacturing overhead (VMO) costs are allocated based on machine time used in the manufacturing of each product. The variable manufacturing overhead rate per machine hour is R1 600 per hour. • It takes 0, 75 machine-hours to produce 120 units of Sukari and 1, 35 machine-hours to 135 units of Suur. • The selling and administration costs: o Sukari’s selling and administration follow this formula, y = R15 000 + R5,5x, where x indicates the number of units sold. o Suur: An amount of R20 000 is paid each month and for every unit of Suur an amount of R4 is incurred. • The other fixed manufacturing overheads are two-thirds of fixed labour costs. • The sale price per unit is R65 and R90 for Sukari and Suur respectively. • The budgeted sales mix was 3:2 for Sukari and Suur. For this Question only assume the following: i. The total fixed cost is R900 000 per month. ii. The contribution per unit is R22 and R18 for Sukari and Suur respectively. iii. All other information remains as given. Using the weighted average contribution margin method, the break-even units for Suur are ________ units per month. A. 17 648 B. 26 472 C. 26 469 D. 17 646 E. None of the options QUESTION 9 Use the following information to answer this question: Earth (Pty) Ltd (“Earth”) produces and sells chicken products and is based in Bloemfontein in the Free State province. Earth’s production process is recognised as a joint manufacturing process, and the related joint production costs are allocated to the joint products based on the net realisable value (NRV) at split-off point method. The company uses the direct costing method, and all its inventory items are valued using the first-in-first-out (FIFO) method. Earth has a 31 December 2023 financial year-end. The company operated for 30 days during January 2023. The actual results for the month ended 31 January 2023 were as follows: A total of 200 tons of broiler chickens were processed at the plant, this represents 90% of the plant’s capacity. The actual yields at the split-off point were Chicken carcass 70%, Livers 25% and Feathers 5%. The actual variable costs incurred in the slaughtering process were as follows: Description R/ton Broiler chicken purchase price 4 000 Water and electricity 200 Direct labour costs 400 Slaughtering processing 100 Additional information: 1. The chicken carcasses are treated with sodium nitrite to preserve the meat. Each ton of chicken carcasses requires 50 kilograms of sodium nitrite, at R2,50 per kilogram of sodium nitrite. The other total costs relating to the preservation processing were R250 000. The preserved chicken was packaged at a total cost of R20 000. The addition of sodium nitrite and the packaging do not increase the weight (tons) of the chicken. The selling price per ton of Chicken was R60 000 in January 2023. The related selling and administration cost was 2,5% of the selling price per ton. 2. The Livers were further cleaned and then preserved at a total cost of R345 000 during January 2023. Livers are packed in hard containers and sealed at a cost of R600 per ton. The cleaning, preserving, and packaging processes do not change the weight (tons) of the livers. The actual selling price per ton of Livers in January 2023 was R20 000. The selling and administration cost per ton was 5% of the selling price. 3. The Feathers do not undergo any further processing. The company sells Feathers to Arts and Culture Centres at a selling price of R200 per ton. The Feathers are delivered at a cost of R110 per ton. No other costs relating to the Feathers are incurred. 4. Total fixed selling and administration cost is R150 000. 5. There is no opening or closing inventory of any kind. For this Question 18 only assume that the following: i. The total actual joint costs to be allocated to the joint products is R1 000 000. ii. The actual total sales amounts are R8 500 000, R2 500 000 and R3 000 for Chicken, Livers and Feathers, respectively. iii. All other information remains as given. The total net profit of Earth as reflected in the actual statement of profit (income statement) for the month ended 31 January 2023 is ________. A. R8 850 000 B. R9 850 000 C. R9 000 000 D. R8 850 900 E. None of the options QUESTION 10 Neptune (Pty) Ltd (“Neptune”) manufactures and sells two types of energy drinks, namely: The More-Joy (“MJ”) and Kick-On (“KO”). The following information is for the 2023 financial year. Neptune’s financial statements are prepared using the absorption costing system, valuing all its inventory items using the first-in-first-out (FIFO) method and having a 31 December financial year-end. • The report from the storage manager indicated that there were 60 000 units (at R15 per unit) and 62 500 units (at R18 per unit) of MJ and KO respectively as closing inventory for the financial year 2022. • The budgeted selling prices are R20 and R25 per unit of MJ and KO respectively. • The sales manager budgeted sales volumes for the 2023 financial year to be 300 000 and 270 000 units of MJ and KO respectively. • The production manager stated that the 2023 budget production units for MJ should be 6 times more than the 2022 closing inventory and for KO 480% of the 2022 closing inventory. • The total budgeted fixed costs for the 2023 financial year are reflected in the table below: Details R Production line batch set-up cost 950 000 Rental of factory premises 750 000 Permanent manufacturing staff salaries 700 000 Depreciation of manufacturing machinery 400 000 Selling and administration 140 000 Total 2 940 000 • The fixed manufacturing overheads (“FMO”) are allocated to products based on the machine hours it takes to produce each unit. It takes 15 machine minutes and 10 machine minutes to produce a unit of MJ and KO respectively. It is budgeted that all manufacturing overhead costs will be absorbed • The variable costs per unit are R10 and R12 for MJ and KO respectively. The 2023 budget fixed manufacturing overhead absorption rate is ________. A. R20,00 per machine hour B. R21,00 per machine hour C. R0,33 per machine hour D. R0,35 per machine hour E. None of the options QUESTION 11 Use the following information to answer this question: Earth (Pty) Ltd (“Earth”) produces and sells chicken products and is based in Bloemfontein in the Free State province. Earth’s production process is recognised as a joint manufacturing process, and the related joint production costs are allocated to the joint products based on the net realisable value (NRV) at split-off point method. The company uses the direct costing method, and all its inventory items are valued using the first-in-first-out (FIFO) method. Earth has a 31 December 2023 financial year-end. The company operated for 30 days during January 2023. The actual results for the month ended 31 January 2023 were as follows: A total of 200 tons of broiler chickens were processed at the plant, this represents 90% of the plant’s capacity. The actual yields at the split-off point were Chicken carcass 70%, Livers 25% and Feathers 5%. The actual variable costs incurred in the slaughtering process were as follows: Description R/ton Broiler chicken purchase price 4 000 Water and electricity 200 Direct labour costs 400 Slaughtering processing 100 Additional information: 6. The chicken carcasses are treated with sodium nitrite to preserve the meat. Each ton of chicken carcasses requires 50 kilograms of sodium nitrite, at R2,50 per kilogram of sodium nitrite. The other total costs relating to the preservation processing were R250 000. The preserved chicken was packaged at a total cost of R20 000. The addition of sodium nitrite and the packaging do not increase the weight (tons) of the chicken. The selling price per ton of Chicken was R60 000 in January 2023. The related selling and administration cost was 2,5% of the selling price per ton. 7. The Livers were further cleaned and then preserved at a total cost of R345 000 during January 2023. Livers are packed in hard containers and sealed at a cost of R600 per ton. The cleaning, preserving, and packaging processes do not change the weight (tons) of the livers. The actual selling price per ton of Livers in January 2023 was R20 000. The selling and administration cost per ton was 5% of the selling price. 8. The Feathers do not undergo any further processing. The company sells Feathers to Arts and Culture Centres at a selling price of R200 per ton. The Feathers are delivered at a cost of R110 per ton. No other costs relating to the Feathers are incurred. 9. Total fixed selling and administration cost is R150 000. 10. There is no opening or closing inventory of any kind. For this Question 18 only assume that the following: iv. The total actual joint costs to be allocated to the joint products is R1 000 000. v. The actual total sales amounts are R8 500 000, R2 500 000 and R3 000 for Chicken, Livers and Feathers, respectively. vi. All other information remains as given. The joint costs allocated to the Livers as reflected in the actual statement of profit and loss (income statement) for the month ended 31 January 2023 is ________ (round your answer to the nearest Rand). A. R200 000 B. R212 500 C. R250 000 D. R199 962 E. None of the options QUESTION 12 Use the following information to answer this question: Venus (Pty) Limited (“Venus”) manufactures two products namely V-Chair and V-Table. Venus uses an absorption costing system and allocates fixed manufacturing overheads (FMO) using an activity-based costing (“ABC”) system. The identified main activities are as follows testing; adding glue and nails; and the factory rental. The total budgeted FMO for 2023 amounts to R720 000. Of the total FMO budget, R300 000 relates to testing activities, R230 000 relates to adding glue and nails activities and the remainder relates to the rent of the productive factory floor space. The factory floor space measures 5 000m2, 4% of which relates to the common space made up of the kitchen, reception, and break-out area. Venus expects to utilise 3 000m2 of the productive factory floor space for V-Chair while the remainder will be used for the productive factory floor space of V-Table and the common areas. Venus budgeted to produce 20 000 V-Chair units and 15 000 V-Table units during the 2023 financial year. To ensure that the quality of its products is of the highest standard every 50th V-Chair and every 75th V-Table will be tested. The addition of glue and nails is done in batches. One V-chair batch contains 10 units, and one V-table batch contains 5 units. The total number of tests conducted for V-Table is ________. A. 1 125 000 tests B. 15 000 tests C. 75 tests D. 200 tests E. None of the options QUESTION 13 Use the following information to answer this question: Venus (Pty) Limited (“Venus”) manufactures two products namely V-Chair and V-Table. Venus uses an absorption costing system and allocates fixed manufacturing overheads (FMO) using an activity-based costing (“ABC”) system. The identified main activities are as follows testing; adding glue and nails; and the factory rental. The total budgeted FMO for 2023 amounts to R720 000. Of the total FMO budget, R300 000 relates to testing activities, R230 000 relates to adding glue and nails activities and the remainder relates to the rent of the productive factory floor space. The total factory floor space measures 5 000m2, 4% of which relates to the general space made up of the kitchen, reception, and break-out area. Venus expects to utilise 3 000m2 of the productive factory floor space for V-Chair while the remainder will be used for the productive factory floor space of V-Table and the common areas. Venus budgeted to produce 20 000 V-Chair units and 15 000 V-Table units during the 2023 financial year. To ensure that the quality of its products is of the highest standard every 50th V-Chair and every 75th V-Table will be tested. The addition of glue and nails is done in batches. One V-chair batch contains 10 units, and one V-table batch contains 5 units. The allocated factory rental Rand value allocated to V-Chair is ________. A. R76 000 B. R114 000 C. R450 000 D. R118 750 E. None of the options QUESTION 14 Use the following information to answer this question: Neptune (Pty) Ltd (“Neptune”) manufactures and sells two types of energy drinks, namely: The More-Joy (“MJ”) and Kick-On (“KO”). The following information is for the 2023 financial year. Neptune’s financial statements are prepared using the absorption costing system, valuing all its inventory items using the first-in-first-out (FIFO) method and having a 31 December financial year-end. • The report from the storage manager indicated that there were 60 000 units (at R15 per unit) and 62 500 units (at R18 per unit) of MJ and KO respectively as closing inventory for the financial year 2022. • The budgeted selling prices are R20 and R25 per unit of MJ and KO respectively • The sales manager budgeted sales volumes for the 2023 financial year to be 300 000 and 270 000 units of MJ and KO respectively. • The production manager stated that the 2023 budget production units for MJ should be 6 times more than the 2022 closing inventory and for KO 480% of the 2022 closing inventory. • The total budgeted fixed costs for the 2023 financial year are reflected in the table below: Details R Production line batch set-up cost 950 000 Rental of factory premises 750 000 Permanent manufacturing staff salaries 700 000 Depreciation of manufacturing machinery 400 000 Selling and administration 140 000 Total 2 940 000 The fixed manufacturing overheads (“FMO”) are allocated to products based on the machine hours it takes to produce each unit. It takes 15 machine minutes and 10 machine minutes to produce a unit of MJ and KO respectively. It is budgeted that all manufacturing overhead costs will be absorbed. The variable costs per unit are R10 and R12 for MJ and KO respectively. The closing inventory for both MJ and KO will be ________ units and ________ units respectively. A. 360 000 and 300 000 B. 300 000 and 237 500 C. 120 000 and 92 500 D. 0 and 32 500 E. None of the options QUESTION 15 Use the following information to answer this question: Mars (Pty) Limited (“Mars”) is a family-owned company that operates from Midrand in Gauteng Province. Mars manufactures two products namely M-Chair and M-table. Mars’s management financial statements are prepared using a direct costing system, valuing all its inventory items using the first-in-first-out (FIFO) method and having a 31 December financial year-end. EXTRACT FROM THE BUDGET INFORMATION FOR THE YEAR ENDING 31 DECEMBER 2023: Details Notes M-Chair M-Table Total Production units 000 Selling price per unit 1.1. R100 R350 Total direct material costs 1.2. R600 000 R1 320 000 ? Direct labour costs 1.3. ? R1 200 000 ? Variable manufacturing overheads R300 000 ? R1 455 000 Fixed manufacturing overheads 40% 60% R800 000 Sales commission 1.4. ? ? ? Additional information relating to the budget for the year ending 31 December 2023: 1.1. Mars budgeted to sell 95% of the units manufactured. 1.2. No direct materials or any other losses occur during the manufacturing process. 1.3. The direct labour time is 75 clock minutes for each M-Chair manufactured and four clock hours for each M-Table manufactured. The direct labour rate per clock hour is the same for both products. 1.4. The sales commission is budgeted to be 10% of the selling price of each product. 1.5. No opening finished goods or materials were budgeted for the 2023 financial year. M-Table’s budgeted contribution per unit of the M-Table for the year ending 31 December 2023 is ________. A. R70 B. R105 C. R174 D. R127 E. None of the options QUESTION 16 Pluto (Pty) Ltd (“Pluto”) is a medium-sized manufacturer of local beer, Bodila drink. The Bodila drink is available in two different flavours namely Sukari and Suur. The two beers require the following costs per month: • The total fixed labour costs are R600 000. • Direct raw materials are budgeted to be R17 per Sukari unit and R25 per Suur unit. • Direct labour costs are R200 per direct labour clock hour. 12% idle time is allowed for both products, and it takes 4,5 and 7,5 direct labour clock minutes to manufacture one unit of Sukari and one unit of Suur, respectively. • Variable manufacturing overhead (VMO) costs are allocated based on machine time used in the manufacturing of each product. The variable manufacturing overhead rate per machine hour is R1 600 per hour. • It takes 0,75 machine-hours to produce 120 units of Sukari and 1,35 machine-hours to 135 units of Suur. • The selling and administration costs: o Sukari’s selling and administration follow this formula, y = R15 000 + R5,5x, where x indicates the number of units sold. o Suur: An amount of R20 000 is paid each month and for every unit of Suur an amount of R4 is incurred. • The other fixed manufacturing overheads are two-thirds of fixed labour costs. • The sale price per unit is R65 and R90 for Sukari and Suur respectively. The budgeted sales mix was 3:2 for Sukari and Suur. The total variable cost per unit of Sukari is ________. A. R42,00 B. R47,50 C. R37,00 D. R38,25 E. None of the options QUESTION 17 Use the following information to answer this question: Venus (Pty) Limited (“Venus”) manufactures two products namely V-Chair and V-Table. Venus uses an absorption costing system and allocates fixed manufacturing overheads (FMO) using an activity-based costing (“ABC”) system. The identified main activities are as follows testing; adding glue and nails; and the factory rental. The total budgeted FMO for 2023 amounts to R720 000. Of the total FMO budget, R300 000 relates to testing activities, R230 000 relates to adding glue and nails activities and the remainder relates to the rent of the productive factory floor space. The factory floor space measures 5 000m2, 4% of which relates to the common space made up of the kitchen, reception, and break-out area. Venus expects to utilise 3 000m2 of the productive factory floor space for V-Chair while the remainder will be used for the productive factory floor space of V-Table and the common areas. Venus budgeted to produce 20 000 V-Chair units and 15 000 V-Table units during the 2023 financial year. To ensure that the quality of its products is of the highest standard every 50th V-Chair and every 75th V-Table will be tested. The addition of glue and nails is done in batches. One V-chair batch contains 10 units, and one V-table batch contains 5 units. The glue and nail FMO costs allocated to V-Chair is ________. A. R92 000 B. R115 000 C. R138 000 D. R153 333 E. None of the options QUESTION 18 Use the following information to answer this question: Mars (Pty) Limited (“Mars”) is a family-owned company that operates from Midrand in Gauteng Province. Mars manufactures two products namely M-Chair and M-table. Mars’s management financial statements are prepared using a direct costing system, valuing all its inventory items using the first-in-first-out (FIFO) method and having a 31 December financial year-end. EXTRACT FROM THE BUDGET INFORMATION FOR THE YEAR ENDING 31 DECEMBER 2023: Details Notes M-Chair M-Table Total Production units 000 Selling price per unit 1.1. R100 R350 Total direct material costs 1.2. R600 000 R1 320 000 ? Direct labour costs 1.3. ? R1 200 000 ? Variable manufacturing overheads R300 000 ? R1 455 000 Fixed manufacturing overheads 40% 60% R800 000 Sales commission 1.4. ? ? ? Additional information relating to the budget for the year ending 31 December 2023: 1.1. Mars budgeted to sell 95% of the units manufactured. 1.2. No direct materials or any other losses occur during the manufacturing process. 1.3. The direct labour time is 75 clock minutes for each M-Chair manufactured and four clock hours for each M-Table manufactured. The direct labour rate per clock hour is the same for both products. 1.4. The sales commission is budgeted to be 10% of the selling price of each product. 1.5. No opening finished goods or materials were budgeted for the 2023 financial year. For this Question only assume the following: i. M-Table’s budgeted variable production cost is R215,50 per unit. ii. M-Table’s budgeted fixed manufacturing overhead is R25,00 per unit. iii. The absorption costing system is used. iv. All other information remains as given. M-Table’s total budgeted closing inventory value for the 2023 financial year is ________. A. R3 607 500 B. R180 375 C. R7 034 625 D. R161 625 E. None of the options QUESTION 19 Use the following information to answer this question: Earth (Pty) Ltd (“Earth”) produces and sells chicken products and is based in Bloemfontein in the Free State province. Earth’s production process is recognised as a joint manufacturing process, and the related joint production costs are allocated to the joint products based on the net realisable value (NRV) at split-off point method. The company uses the direct costing method, and all its inventory items are valued using the first-in-first-out (FIFO) method. Earth has a 31 December 2023 financial year-end. The company operated for 30 days during January 2023. The actual results for the month ended 31 January 2023 were as follows: A total of 200 tons of broiler chickens were processed at the plant, this represents 90% of the plant’s capacity. The actual yields at the split-off point were Chicken carcass 70%, Livers 25% and Feathers 5%. The actual variable costs incurred in the slaughtering process were as follows: Description R/ton Broiler chicken purchase price 4 000 Water and electricity 200 Direct labour costs 400 Slaughtering processing 100 Additional information: 1. The chicken carcasses are treated with sodium nitrite to preserve the meat. Each ton of chicken carcasses requires 50 kilograms of sodium nitrite, at R2,50 per kilogram of sodium nitrite. The other total costs relating to the preservation processing were R250 000. The preserved chicken was packaged at a total cost of R20 000. The addition of sodium nitrite and the packaging do not increase the weight (tons) of the chicken. The selling price per ton of Chicken was R60 000 in January 2023. The related selling and administration cost was 2,5% of the selling price per ton. 2. The Livers were further cleaned and then preserved at a total cost of R345 000 during January 2023. Livers are packed in hard containers and sealed at a cost of R600 per ton. The cleaning, preserving, and packaging processes do not change the weight (tons) of the livers. The actual selling price per ton of Livers in January 2023 was R20 000. The selling and administration cost per ton was 5% of the selling price. 3. The Feathers do not undergo any further processing. The company sells Feathers to Arts and Culture Centres at a selling price of R200 per ton. The Feathers are delivered at a cost of R110 per ton. No other costs relating to the Feathers are incurred. 4. Total fixed selling and administration cost is R150 000. 5. There is no opening or closing inventory of any kind. The total joint costs allocated to the joint products to be reflected in the actual statement of profit or loss (income statement) for the month ended 31 January 2023 is ________. A. R939 100 B. R1 089 100 C. R940 000 D. R941 100 QUESTION 20 Mercury (Pty) Ltd (“Mercury”), is charged R500 each month for water and additionally needs to pay R2 per litre of water used per the metre readings. The water cost behaves as a _______. A. variable cost B. mixed cost C. fixed cost D. step cost