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Questions and Answers
Calculate the Internal Rate of Return (IRR) for the machine investment (expressed to two decimal places).
Approximately 23.80%
Based on IRR, should the company consider purchasing the machine?
Yes
Calculate the remuneration of Molly for 08 February 2024 using Taylor’s differential piecework system.
R119.40
Calculate the economic order quantity for the item.
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Complete the table reflecting the value of issues to production and inventory balances.
| Purchases | Issues/Returns | Balance |
|---|---|---|
| January 01: Opening inventory | 4 000 units | R3.00 per unit |
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Determine the expected productive working hours of Anna for 2023.
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Calculate the earnings of Amanda for the day using the straight piecework incentive scheme.
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Calculate the break-even sales value using the marginal income ratio.
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Calculate the sales volume required to achieve a net profit of R1,740,000.
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Calculate the total Marginal Income and Net Profit/Loss given the increase in advertising expense and expected sales volume growth.
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Calculate the margin of safety in units considering the specified cost increases.
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Determine the sales price per unit to break even at the expected sales volume of 40,000 units.
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Prepare the Debtors Collection Schedule for April, May, and June 2025.
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Prepare the Cash Budget for April, May, and June 2025.
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Recommend a project based on given information considering the time value of money.
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Calculate the Accounting Rate of Return on average investment for Universal Limited.
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Study Notes
Management Accounting: Final Online Summative Assessment
- Bachelor of Business Administration, Bachelor of Commerce in Entrepreneurship, Bachelor of Commerce in Retail Management, Bachelor of Commerce in Project Management, Bachelor of Commerce in Marketing Management, and Bachelor of Commerce in Supply Chain Management
- Module: Management Accounting
- Year: Two (2)
- Intake: January 2024 Semester 1
- Date: 18 June 2024
- Total Marks: 100
Question 1: Calculations and Inventory Valuation
- Calculate the remuneration of Molly using Taylor's differential piecework system (4 marks)
- Standard time allowed: 20 minutes per unit
- Standard workday: 8 hours
- Normal wage rate: R120 per hour
- Premium: 90% of piecework rate if below standard, 110% of piecework rate if standard or above standard
- Calculate the economic order quantity (4 marks)
- Average monthly usage: 600 units
- Cost of each item: R2
- Selling price: R4.50
- Holding cost: 10% of the cost of the item
- Cost to place an order: R20
- Calculate the earnings of Amanda using the straight piecework incentive scheme (4 marks)
- Standard time to produce a product: 10 minutes
- Amanda's hourly rate: R120
- Normal working day: 8 hours
- Incentive: 1.5 times the hourly rate on additional output
- Complete the table for inventory valuation using the first-in-first-out method (4 marks)
- Purchases: 4,000 units on January 01, 1,600 units on January 06, 3,000 units on January 20
- Issues/Returns: 3,200 units on January 07, 4,000 units on January 27
Question 2: Income Statement and Variances
- Prepare the Income Statement for the year ended 31 December 2023 using the marginal costing method (11 marks)
- Marburg Manufacturers started operations on 02 January 2023
- Produced 50,000 units and sold 80% of the units produced at a price of R150 per unit
- Variable manufacturing costs: R50 per unit
- Variable marketing costs: R30 per unit
- Fixed costs: R1,200,000 (70% for manufacturing, 30% for administration and marketing)
- Calculate the following variances:
- Material quantity variance (3 marks)
- Total labour variance (without using labour rate and efficiency variances) (3 marks)
- Variable manufacturing overheads expenditure variance (3 marks)
- Sona Manufacturers uses the standard costing system
- Direct material: 3 kg @ R8 per kg
- Labour: 5 hours at R100 per hour
- Variable manufacturing overheads: R20 per labour hour
- Fixed overheads: R30,000
- Normal production: 19,000 units
Question 3: Break-Even Analysis and Marginal Income
- Calculate the break-even value using the marginal income ratio (4 marks)
- Calculate the sales volume required to achieve a net profit of R1,740,000 (4 marks)
- Calculate the total Marginal Income and Net Profit/Loss if an increase in advertising expense by R200,000 is expected to increase sales by 3,000 units (4 marks)
- Calculate the margin of safety (in units) if the variable manufacturing costs increase by 10% and fixed manufacturing overheads cost increase by R24,450 (4 marks)
- Determine the sales price per unit that will allow the company to break even (4 marks)
- Peryton Limited produces only one product
- Expected sales: 40,000 units per year
- Sales price: R150 per unit
- Relevant costs: direct materials, direct labour, manufacturing overheads, marketing expenses, and administrative expenses
Question 4: Debtors Collection Schedule and Cash Budget
- Prepare the Debtors Collection Schedule for April, May, and June 2025 (6 marks)
- Prepare the Cash Budget for April, May, and June 2025 (14 marks)
- Bentall Limited is a retail outlet
- Expected sales values: R1,035,000 (April), R915,000 (May), and R1,020,000 (June)
- 70% of sales are for cash, and the balance is on credit
- Customers who purchase for cash are entitled to a 10% discount
- 40% of credit sales are usually collected in the month of the sale, and these debtors receive a 5% discount
- Labour costs: 10% of the current month's sales (excluding discounts)
- General and administrative expenses: R792,000 for 2025
- Property taxes: paid in four equal instalments in the last month of each quarter
- Directors' fees: expected to increase by 10% with effect from 01 May 2025
Question 5: Capital Budgeting
- Recommend which project to invest in, considering the time value of money (8 marks)
- MK Enterprises has R200,000 to invest
- Three projects: Project X, Project Y, and Project Z
- Each project will cost R200,000 to commence
- Determine whether the company should accept the investment opportunity or not, calculating the Accounting Rate of Return on average investment (5 marks)
- Universal Limited is a manufacturing company
- Purchase of a new machine: R1,200,000 (cost price) and R200,000 (expected scrap/salvage value)
- Net cash flows: R300,000 per year for eight years
- Depreciation: R125,000 per year
- Cost of capital: 18%
- Calculate the Internal Rate of Return (IRR) and determine whether the company should consider purchasing the machine (6 marks)
- Venus Limited is investigating an opportunity to purchase a machine for R640,000
- Machine expected to generate net cash flows of R180,000 per annum for five years
- Company's cost of capital: 16%### Present Value of R1
- The present value of R1 table shows the present value of a single amount of R1 for a given number of periods at different interest rates.
- The table provides the present value of R1 for 1 to 60 periods at interest rates ranging from 1% to 25%.
Present Value of a Regular Annuity of R1
- The present value of a regular annuity of R1 table shows the present value of a series of R1 payments made at the end of each period for a given number of periods at different interest rates.
- The table provides the present value of a regular annuity of R1 for 1 to 60 periods at interest rates ranging from 1% to 25%.
- The present value of a regular annuity of R1 is the sum of the present values of each individual payment of R1.
Key Observations
- As the number of periods increases, the present value of R1 and the present value of a regular annuity of R1 both decrease.
- As the interest rate increases, the present value of R1 and the present value of a regular annuity of R1 both decrease.
- The present value of a regular annuity of R1 is higher than the present value of R1 for the same number of periods and interest rate, because it takes into account the series of payments made over time.
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Description
Test your knowledge of various Bachelor of Commerce programmes and Management Accounting concepts in this quiz.
