SECTION A [100 MARKS] Answer ALL the questions in this section. Question 1 Use the information provided to answer the qu
Posted: Tue Jul 05, 2022 11:24 am
SECTION A
[100 MARKS]
Answer ALL the questions in this section.
Question 1
Use the information provided to answer the questions.
Calculate the annual economic order quantity from the information provided below. (4 marks)
INFORMATION
GM Electronics expects to sell 800 alarm systems each month of 2022 at R4 000 each. The cost price of each alarm system is R2 000. The inventory holding cost of an alarm system is 1% of the unit cost price. The cost of placing an order for the alarm systems is estimated at R60.
Use the information provided below to calculate Samantha’s remuneration for 17 March 2022.
(4 marks)
INFORMATION
Samantha’s normal wage is R300 per hour and her normal working day is 8 hours. The standard production time for each employee is 4 units for every 30 minutes. On 17 March 2022, Samantha’s production was 76 units. Using the Halsey bonus system, a bonus of 50% of the time saved is given to employees.
1.3 Use the information provided below to calculate Samantha’s remuneration for 17 March 2022. (4 marks)
INFORMATION
Samantha’s normal wage is R300 per hour and her normal working day is 8 hours. The standard production time for each employee is 4 units for every 30 minutes. On 17 March 2022, Samantha’s production was 76 units. Using the Halsey bonus system, a bonus of 50% of the time saved is given to employees
1.4 Calculate the earnings of G. Henry using the straight piecework incentive scheme from the information provided below. (4 marks)
INFORMATION
G. Henry is employed by Royal Manufacturers and is paid R250 per hour. His normal working day is 9 hours. The standard time to produce a product is 5 minutes. If G. Henry produces more than his quota, he receives 1½ times the hourly rate on the additional output. G. Henry produced 132 units for the day.
1.5 valuation: (4 marks)
Purchased Issues and returns, Balance Date Quantity, Price Amount Quantity ,Price Amount Quantity, Price Amount
The following transactions of Franco Manufacturers took place during March 2022:
Question 2
Answer the questions from the information provided.
Use the information given below to prepare the Income Statement for March 2022 according to the absorption costing method.
INFORMATION
The following information was extracted from the accounting records of Alpha Enterprises for the month ended 31 March 2022:
Sales 3 200
units Selling price per unit R100
Finished products on 01 March 2022 400 units
Products manufactured during the month 3 600 units
Variable manufacturing costs per unit R26
Variable selling and administrative costs per unit sold R12
Fixed manufacturing costs R25 200
Fixed selling and administrative costs R12 400
Additional information
The variable manufacturing cost per unit and total manufacturing cost per unit of the finished goods on 01 March 2022 was R21.60 and R26.20 respectively.
Use the information provided below to calculate the following manufacturing variances for March 2022. Note: Each answer must state whether the variance is favourable or unfavourable.
2.2 2.2.1 Labour rate variance (2 marks)
2.2.2 Labour efficiency variance (2 marks)
2.2.3 Variable overheads efficiency variance (2 marks)
2.2.4 Variable overheads expenditure variance (2 marks)
INFORMATION
Nevada Limited set a standard labour rate of R32 per hour and a standard variable overhead rate of R3.80 per labour hour.
Actual hours worked for March 2022 were 4 910 at a cost of R149 264. The actual variable overhead cost incurred was R19 640. The standard allowance of labour hours for the output achieved was 5 000 hours.
Question 3
Study the information given below and answer each of the following questions independently:
3.1 Calculate the total Marginal Income and Net Profit/Loss if all the tables are sold. (4 marks) 3.2 Use the marginal income ratio to calculate the break-even value. (4 marks)
Calculate the new total Marginal Income and Net Profit/Loss, if an increase in advertising expense by R100 000 is expected to increase sales by 400 units. 3.3 (4 marks)
3.4 How many units must be sold if the company wishes to earn a net profit of R298 920. (4 marks)
3.5 Based on the expected sales volume of 2 400 units, determine the sales price per unit (expressed in rands and cents) that will enable the company to break even.
INFORMATION
Samcor Limited manufactures tables. The following information was extracted from the budget for the year ended 30 June 2022:
1. Total production and sales 2 400 units
2. Selling price per table R1 200
3. Variable manufacturing costs per table: Direct material R288 Direct labour R192 Overheads R96
4. Fixed manufacturing overheads R216 960
5. Other costs: Fixed marketing and administrative costs R144 000 Sales commission 5%
Question 4
Use the information provided below to prepare the following for January and February 2023
: 4.1 Debtors Collection Schedule (4 marks)
4.2 Cash Budget
INFORMATION
The following information was provided by Intel Enterprises:
1. The bank balance on 31 December 2022 is expected to be R40 000 (unfavourable).
2. Credit sales are expected to be as follows:
December 2022 R576 00
January 2023 R540 00
February 2023 R648 000
3. Credit sales usually make up 40% of the total sales. Cash sales make up the balance. Cash customers receive a 10% discount.
4. Credit sales are normally collected as follows: * 30% in the month in which the transaction takes place, and these customers are entitled to a 5% discount.
* 65% in the following month The rest is usually written off as bad debts.
5. Budgeted purchases of inventory are as follows:
December 2022 R1 000 000
January 2023 R800 000
February 2023 R920 000
6. Fifty percent (50%) of the purchases are for cash. The remainder is paid in the month after the purchase.
7. The monthly salaries amount to R150 000. Salaries are expected to increase by 9% with effect from 01 February 2023 for those employees who presently make up 80% of the salary bill. The salaries of the remaining 20% are expected to increase by 6%.
8. Interest at 18% per annum on the loan balance is paid at the end of each month. The loan balance on 31 December 2022 was R400 000 and a capital repayment of R100 000 will be made on 01 February 2023.
9. Part of the building is sublet to a tenant and rent is collected monthly. The lease agreement for the year ended 31 January 2023 reflected the rental as R180 000 per annum. The rental will increase by 10% with effect from 01 February 2023.
10. Other operating expenses are budgeted at R40 000 per month. This amount includes R5 000 for depreciation. Operating expenses are paid for in the month in which they are incurred.
Question 5
Use the information provided to answer the questions.
5.1 Use the information provided below to calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5.
5.1.1 Calculate the Payback Period of Project A (expressed in years, months and days). (3 marks)
5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places).
5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). (6 marks)
5.1.4 Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivate your choice.
NFORMATION
Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data:
Project A Project B
Initial cost A -R300 000 B- R300 000
Scrap value A -R40 000 B- 0
Depreciation per year A- R52 000 B - R60 000
Net profit
Year 1 R20 000
Year 2 R30 000
Year 3 R50 000
Year 4 R60 000
Year 5 R10 000
Net cash flows
Year 1 R90 000 Year
2 R90 000 Year
3 R90 000 Year
4 R90 000 Year
5 R90 000
Additional information
The discount rate used by the company is 12%.
5.2 Use the information provided below to calculate the Internal Rate of Return (expressed to two decimal places) using interpolation. (5 marks)
INFORMATION
A machine with a purchase price of R1 200 000 is estimated to eliminate manual operations by R400 000 per year. The machine is expected to have a useful life of four years.
APPENDIX 1: PRESENT VALUE OF R1
[100 MARKS]
Answer ALL the questions in this section.
Question 1
Use the information provided to answer the questions.
Calculate the annual economic order quantity from the information provided below. (4 marks)
INFORMATION
GM Electronics expects to sell 800 alarm systems each month of 2022 at R4 000 each. The cost price of each alarm system is R2 000. The inventory holding cost of an alarm system is 1% of the unit cost price. The cost of placing an order for the alarm systems is estimated at R60.
Use the information provided below to calculate Samantha’s remuneration for 17 March 2022.
(4 marks)
INFORMATION
Samantha’s normal wage is R300 per hour and her normal working day is 8 hours. The standard production time for each employee is 4 units for every 30 minutes. On 17 March 2022, Samantha’s production was 76 units. Using the Halsey bonus system, a bonus of 50% of the time saved is given to employees.
1.3 Use the information provided below to calculate Samantha’s remuneration for 17 March 2022. (4 marks)
INFORMATION
Samantha’s normal wage is R300 per hour and her normal working day is 8 hours. The standard production time for each employee is 4 units for every 30 minutes. On 17 March 2022, Samantha’s production was 76 units. Using the Halsey bonus system, a bonus of 50% of the time saved is given to employees
1.4 Calculate the earnings of G. Henry using the straight piecework incentive scheme from the information provided below. (4 marks)
INFORMATION
G. Henry is employed by Royal Manufacturers and is paid R250 per hour. His normal working day is 9 hours. The standard time to produce a product is 5 minutes. If G. Henry produces more than his quota, he receives 1½ times the hourly rate on the additional output. G. Henry produced 132 units for the day.
1.5 valuation: (4 marks)
Purchased Issues and returns, Balance Date Quantity, Price Amount Quantity ,Price Amount Quantity, Price Amount
The following transactions of Franco Manufacturers took place during March 2022:
Question 2
Answer the questions from the information provided.
Use the information given below to prepare the Income Statement for March 2022 according to the absorption costing method.
INFORMATION
The following information was extracted from the accounting records of Alpha Enterprises for the month ended 31 March 2022:
Sales 3 200
units Selling price per unit R100
Finished products on 01 March 2022 400 units
Products manufactured during the month 3 600 units
Variable manufacturing costs per unit R26
Variable selling and administrative costs per unit sold R12
Fixed manufacturing costs R25 200
Fixed selling and administrative costs R12 400
Additional information
The variable manufacturing cost per unit and total manufacturing cost per unit of the finished goods on 01 March 2022 was R21.60 and R26.20 respectively.
Use the information provided below to calculate the following manufacturing variances for March 2022. Note: Each answer must state whether the variance is favourable or unfavourable.
2.2 2.2.1 Labour rate variance (2 marks)
2.2.2 Labour efficiency variance (2 marks)
2.2.3 Variable overheads efficiency variance (2 marks)
2.2.4 Variable overheads expenditure variance (2 marks)
INFORMATION
Nevada Limited set a standard labour rate of R32 per hour and a standard variable overhead rate of R3.80 per labour hour.
Actual hours worked for March 2022 were 4 910 at a cost of R149 264. The actual variable overhead cost incurred was R19 640. The standard allowance of labour hours for the output achieved was 5 000 hours.
Question 3
Study the information given below and answer each of the following questions independently:
3.1 Calculate the total Marginal Income and Net Profit/Loss if all the tables are sold. (4 marks) 3.2 Use the marginal income ratio to calculate the break-even value. (4 marks)
Calculate the new total Marginal Income and Net Profit/Loss, if an increase in advertising expense by R100 000 is expected to increase sales by 400 units. 3.3 (4 marks)
3.4 How many units must be sold if the company wishes to earn a net profit of R298 920. (4 marks)
3.5 Based on the expected sales volume of 2 400 units, determine the sales price per unit (expressed in rands and cents) that will enable the company to break even.
INFORMATION
Samcor Limited manufactures tables. The following information was extracted from the budget for the year ended 30 June 2022:
1. Total production and sales 2 400 units
2. Selling price per table R1 200
3. Variable manufacturing costs per table: Direct material R288 Direct labour R192 Overheads R96
4. Fixed manufacturing overheads R216 960
5. Other costs: Fixed marketing and administrative costs R144 000 Sales commission 5%
Question 4
Use the information provided below to prepare the following for January and February 2023
: 4.1 Debtors Collection Schedule (4 marks)
4.2 Cash Budget
INFORMATION
The following information was provided by Intel Enterprises:
1. The bank balance on 31 December 2022 is expected to be R40 000 (unfavourable).
2. Credit sales are expected to be as follows:
December 2022 R576 00
January 2023 R540 00
February 2023 R648 000
3. Credit sales usually make up 40% of the total sales. Cash sales make up the balance. Cash customers receive a 10% discount.
4. Credit sales are normally collected as follows: * 30% in the month in which the transaction takes place, and these customers are entitled to a 5% discount.
* 65% in the following month The rest is usually written off as bad debts.
5. Budgeted purchases of inventory are as follows:
December 2022 R1 000 000
January 2023 R800 000
February 2023 R920 000
6. Fifty percent (50%) of the purchases are for cash. The remainder is paid in the month after the purchase.
7. The monthly salaries amount to R150 000. Salaries are expected to increase by 9% with effect from 01 February 2023 for those employees who presently make up 80% of the salary bill. The salaries of the remaining 20% are expected to increase by 6%.
8. Interest at 18% per annum on the loan balance is paid at the end of each month. The loan balance on 31 December 2022 was R400 000 and a capital repayment of R100 000 will be made on 01 February 2023.
9. Part of the building is sublet to a tenant and rent is collected monthly. The lease agreement for the year ended 31 January 2023 reflected the rental as R180 000 per annum. The rental will increase by 10% with effect from 01 February 2023.
10. Other operating expenses are budgeted at R40 000 per month. This amount includes R5 000 for depreciation. Operating expenses are paid for in the month in which they are incurred.
Question 5
Use the information provided to answer the questions.
5.1 Use the information provided below to calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5.
5.1.1 Calculate the Payback Period of Project A (expressed in years, months and days). (3 marks)
5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places).
5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). (6 marks)
5.1.4 Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivate your choice.
NFORMATION
Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data:
Project A Project B
Initial cost A -R300 000 B- R300 000
Scrap value A -R40 000 B- 0
Depreciation per year A- R52 000 B - R60 000
Net profit
Year 1 R20 000
Year 2 R30 000
Year 3 R50 000
Year 4 R60 000
Year 5 R10 000
Net cash flows
Year 1 R90 000 Year
2 R90 000 Year
3 R90 000 Year
4 R90 000 Year
5 R90 000
Additional information
The discount rate used by the company is 12%.
5.2 Use the information provided below to calculate the Internal Rate of Return (expressed to two decimal places) using interpolation. (5 marks)
INFORMATION
A machine with a purchase price of R1 200 000 is estimated to eliminate manual operations by R400 000 per year. The machine is expected to have a useful life of four years.
APPENDIX 1: PRESENT VALUE OF R1