1(a)
Mpumalanga Bericks (Pty) Ltd
Statement of comprehensive income for Mpumalanga Bericks (Pty) Ltd
for the year ending 31 September 2018 in accordance with direct costing principles
May
R
Sales 39 400 000
Less :Variable cost of sales 18 945 200
Opening inventory [R1 020 000 –(500 000 x r0,25)] 895 000
Manufacturing cost:
Direct materials 5 500 000
Direct Labor 9 400 000
Variable overheads (10 000 000 x R0.30) 3 000 000
Cost of goods available for sale 18 795 000
Less closing stock (650 000/10 000 000 x R17 900 000/1) 1 163 500
Variable Manufacturing cost of sales 17 631 500
Add :Variable Non-Manufacturing costs :
Selling costs (0,60 x r89 500) 53 700
Administration costs (0,60 x r2 100 000) 1 260 000
Contribution 20 454 800
Less Fixed costs 4 825 800
Manufacturing overheads (R6 000 000 –R3 000 000 - R50 000) 2 950 000
Selling (0,40 x r89 500) 35 800
Administration costs (0,40 x r2 100 000) 840 000
Distribution costs 1 000 000
Net profit before tax 15 629 000
Closing stock units = Opening stock +Production units less Sales units
=500 000 + 10 000 000 -9 850 000 = 650 000 units
Based on FIFO ,
Closing stock value = 650 000/10 000 000 x R17 900000
. = R1 163 500
OR R1 358 500 – (650 000 X R0.30) =R1 163 500
(b)
, R
Absorption costing profit 15 699 000
Add : Differences in opening stock (R1 020 000 – R895 000) 125 000
15 824 000
Less :Differences in closing stock (R1 358 500 – R1 163 500) 195 000
Direct costing profit 15 629 000
(c)
(i) Increase
(ii) Stay the same
(iii) Stay the same
(Iv) Increase
(d)
Go to page 1701 of the study guide.
Question two
Pfaranani (pty) Ltd
(a) Standard cost per unit of Mini- Musy applying the principles of absorption costing principles
R
Standard material cost (SQXSP),(R1 400 000/28 000kgs x 28 000kgs/5 600 units) 250
Standard Labor cost (SCXShrs),(R1 680 000/56 000hrs x 56 000hrs/5 600 units) 300
Standard Variable M.O cost (SRXShrs),(R280 000/56 000hrs x 56 000hrs/5 600 units) 50
Prime cost 600
Standard Fixed M.O cost (Budgeted Fixed Overheads/Budgeted output) (R840 000/5 600) 150
Standard cost per unit 750
(b) Variances :
(I) Material Quantity Variance = (AQ-SQ)SP
= [26 000 kgs – (5 000 X 28 000kgs/5 600 units)] R1 400 000/28 000kgs
= (26 000 kgs- 25 000 kgs) R50
= R50 000 (Unfavorable)
Mpumalanga Bericks (Pty) Ltd
Statement of comprehensive income for Mpumalanga Bericks (Pty) Ltd
for the year ending 31 September 2018 in accordance with direct costing principles
May
R
Sales 39 400 000
Less :Variable cost of sales 18 945 200
Opening inventory [R1 020 000 –(500 000 x r0,25)] 895 000
Manufacturing cost:
Direct materials 5 500 000
Direct Labor 9 400 000
Variable overheads (10 000 000 x R0.30) 3 000 000
Cost of goods available for sale 18 795 000
Less closing stock (650 000/10 000 000 x R17 900 000/1) 1 163 500
Variable Manufacturing cost of sales 17 631 500
Add :Variable Non-Manufacturing costs :
Selling costs (0,60 x r89 500) 53 700
Administration costs (0,60 x r2 100 000) 1 260 000
Contribution 20 454 800
Less Fixed costs 4 825 800
Manufacturing overheads (R6 000 000 –R3 000 000 - R50 000) 2 950 000
Selling (0,40 x r89 500) 35 800
Administration costs (0,40 x r2 100 000) 840 000
Distribution costs 1 000 000
Net profit before tax 15 629 000
Closing stock units = Opening stock +Production units less Sales units
=500 000 + 10 000 000 -9 850 000 = 650 000 units
Based on FIFO ,
Closing stock value = 650 000/10 000 000 x R17 900000
. = R1 163 500
OR R1 358 500 – (650 000 X R0.30) =R1 163 500
(b)
, R
Absorption costing profit 15 699 000
Add : Differences in opening stock (R1 020 000 – R895 000) 125 000
15 824 000
Less :Differences in closing stock (R1 358 500 – R1 163 500) 195 000
Direct costing profit 15 629 000
(c)
(i) Increase
(ii) Stay the same
(iii) Stay the same
(Iv) Increase
(d)
Go to page 1701 of the study guide.
Question two
Pfaranani (pty) Ltd
(a) Standard cost per unit of Mini- Musy applying the principles of absorption costing principles
R
Standard material cost (SQXSP),(R1 400 000/28 000kgs x 28 000kgs/5 600 units) 250
Standard Labor cost (SCXShrs),(R1 680 000/56 000hrs x 56 000hrs/5 600 units) 300
Standard Variable M.O cost (SRXShrs),(R280 000/56 000hrs x 56 000hrs/5 600 units) 50
Prime cost 600
Standard Fixed M.O cost (Budgeted Fixed Overheads/Budgeted output) (R840 000/5 600) 150
Standard cost per unit 750
(b) Variances :
(I) Material Quantity Variance = (AQ-SQ)SP
= [26 000 kgs – (5 000 X 28 000kgs/5 600 units)] R1 400 000/28 000kgs
= (26 000 kgs- 25 000 kgs) R50
= R50 000 (Unfavorable)
