Management Accounting Final OSA-1.pdf

FINAL ONLINE SUMMATIVE ASSESSMENT Bachelor of Business Administration Bachelor of Commerce in Entrepreneurship Bachelor of Commerce in Retail Management PROGRAMME Bachelor of Commerce in Project Management Bachelor of Commer...

FINAL ONLINE SUMMATIVE ASSESSMENT Bachelor of Business Administration Bachelor of Commerce in Entrepreneurship Bachelor of Commerce in Retail Management PROGRAMME Bachelor of Commerce in Project Management Bachelor of Commerce in Marketing Management Bachelor of Commerce in Supply Chain Management Bachelor of Commerce in Information and Technology Management MODULE Management Accounting YEAR Two (2) INTAKE January 2024 Semester 1 DATE 18 June 2024 TOTAL MARKS 100  Answer ALL the questions. (100 MARKS) QUESTION 1 (20 Marks) 1.1 REQUIRED Calculate the remuneration of Molly for 08 February 2024 using Taylor’s differential piecework system. (4 marks) INFORMATION The following information relates to the remuneration of Molly for 08 February 2024: 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 Molly’s production for the day 27 units 1.2 REQUIRED Use the information provided below to calculate the economic order quantity. (4 marks) INFORMATION The average monthly usage of an item that costs R2 each and sells for R4.50 each is 600 units. The holding cost is 10% of the cost of the item. The cost to place an order is R20. 1.3 REQUIRED Calculate the earnings of Amanda for the day using the straight piecework incentive scheme. (4 marks) INFORMATION The standard time to produce a product is 10 minutes. Amanda is paid R120 per hour and the normal working day is 8 hours. If Amanda produces more than her quota, she receives 1.5 times the hourly rate on the additional output. Amanda produced 54 units for the day. 1.4 REQUIRED Complete the following table that would reflect the value of issues to production and inventory balances using the first-in-first out method of inventory valuation: Purchases Issues/Returns Balance Date Quantity Price Amount Quantity Price Amount Quantity Price Amount (4 marks) INFORMATION The transactions of Kerman Manufacturers for January 2024 are as follows: January Transaction Units Price per unit 01 Opening inventory 4 000 R3.00 06 Purchased from a supplier 1 600 R3.20 20 Purchased from a supplier 3 000 R3.30 07 Issued to production 3 200 ? 27 Issued to production 4 000 ? 1.5 REQUIRED Use the information provided below to determine the expected productive working hours of Anna for 2023. Commence your calculations with the number of days in the year. (4 marks) INFORMATION Anna worked for 9 hours per day from Monday to Friday during 2023. She is entitled to 28 days paid vacation leave. There were 13 public holidays, 12 of which fell on weekdays. The business is closed on public holidays.  QUESTION 2 (20 Marks) 2.1 REQUIRED Study the information provided below and prepare the Income Statement for the year ended 31 December 2023 using the marginal costing method. (11 marks) INFORMATION Marburg Manufacturers started operations on 02 January 2023. It produced 50 000 units of the only product that it manufactures and sold 80% of the units produced at a price of R150 per unit during 2023. Variable manufacturing costs amounted to R50 per unit and variable marketing costs amounted to R30 per unit. Fixed costs totalled R1 200 000 of which 70% was for manufacturing and 30% was for administration and marketing. 2.2 REQUIRED Use the information given below to calculate the following variances. In each case also state whether the variance is favourable or unfavourable. 2.2.1 Material quantity variance (3 marks) 2.2.2 Total labour variance (without using the labour rate and efficiency variances) (3 marks) 2.2.3 Variable manufacturing overheads expenditure variance (3 marks) INFORMATION Sona Manufacturers uses the standard costing system. The standards are as follows: 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 Actual information for March 2024: Direct material used 61 000 kg at R7.80 per kg Labour 98 000 hours at R105 per hour Variable manufacturing overheads R1 862 000 Fixed overheads R32 000 Actual production 20 000 units QUESTION 3 (20 Marks) REQUIRED Study the information given below and answer the following questions independently: 3.1 Use the marginal income ratio to calculate the break-even value. (4 marks) 3.2 Calculate the sales volume required to achieve a net profit of R1 740 000. (4 marks) 3.3 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) 3.4 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) 3.5 Based on the expected sales volume of 40 000 units, determine the sales price per unit that will allow the company to break even. (4 marks) INFORMATION Peryton Limited produces only one product. Expected sales are 40 000 units per year and sales price is R150 per unit. The relevant costs are as follows: Unit Variable cost Total fixed cost Direct materials R30 - Direct labour R36 - Manufacturing overheads R15 R450 000 Marketing expenses R9 R150 000 Administrative expenses - R180 000 QUESTION 4 (20 Marks) REQUIRED Prepare the following for April, May and June 2025: 4.1 Debtors Collection Schedule (6 marks) 4.2 Cash Budget. (14 marks) Note: The items that comprise General and administrative expenses must be shown separately. INFORMATION Bentall Limited is a retail outlet that is formulating its plans for the first half of 2025. The following information is available: 1. The figures below show the expected sales values of the products (excluding discounts): 2025 R January 900 000 February 945 000 March 990 000 April 1 035 000 May 915 000 June 1 020 000 2. Seventy percent (70%) of the sales is for cash and the balance is on credit. Customers who purchase for cash are entitled to a discount of 10%. Forty percent (40%) of the credit sales is usually collected in the month of the sale and these debtors receive a 5% discount. The balance is collected in the month after the sale. 3. The products are sold at cost plus 50% and a fixed inventory level of R150 000 is maintained at the end of each month. All purchases are on credit and creditors are paid three months after the purchase. 4. Labour costs are estimated to equal 10% of the current month’s sales (excluding discounts). These are paid for in the applicable month. 5. General and administrative expenses are projected to be R792 000 for 2025. Except for property taxes and directors’ fees all other expenses are incurred evenly throughout the year. Property taxes are paid in four equal instalments in the last month of each quarter. Directors’ fees are expected to increase by 10% with effect from 01 May 2025. General and administrative expenses comprise the following:  R Directors’ fees 144 000 Advertising 198 000 Property taxes 72 000 Insurance 108 000 Electricity and water 90 000 Depreciation 180 000 Total 792 000 6. A company tax payment will be made on 01 April 2025 based on 50% of the estimated profit of R300 000 for the financial year. The company’s tax rate is 27%. 7. The closing bank balance on 31 March 2025 is expected to be R15 000. QUESTION 5 (20 Marks) Note: Where discount factors are required, use only the present value tables (Appendix 1 and 2) that appear after QUESTION 5. 5.1 REQUIRED From the information provided below which project would you recommend? Substantiate your answer by showing the relevant calculations that take the time value of money into account. Note: The IRR is not required. (8 marks) INFORMATION MK Enterprises has R200 000 which it will invest if the investment earns at least 16% per annum. Three projects are being considered, each of which will cost R200 000 to commence. Project X would earn R220 000 at the end of the first year. Project Y would earn R250 000 at the end of the second year. Project Z would earn R120 000 at the end of the first year and R125 000 at the end of the second year. 5.2 REQUIRED Study the information given below to determine whether the company should accept the investment opportunity or not. Motivate your answer by calculating the Accounting Rate of Return on average investment (expressed to two decimal places). (5 marks) INFORMATION Universal Limited is a manufacturing company and its management is appraising the production and sale of a new product. This would involve the purchase of a new machine with a cost price of R1 200 000 and an expected scrap/salvage value of R200 000. The net cash flows from the machine are estimated to be R300 000 per year for eight years. Depreciation is expected to be R125 000 per year. The company’s cost of capital is 18%. 5.3 REQUIRED Use the information given below to answer the following questions: 5.3.1 Calculate the Internal Rate of Return (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive cost of capital rates) and interpolation. (6 marks) 5.3.2 Based on the IRR should the company consider purchasing the machine? Why? (1 mark) INFORMATION Venus Limited is investigating an opportunity to purchase a machine for R640 000. The machine is expected generate net cash flows of R180 000 per annum for five years. The company’s cost of capital is 16%. END OF PAPER  APPENDIX 1: Present value of R1 Number of 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 25% Periods 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8696 0.8621 0.8547 0.8475 0.8403 0.8333 0.8000 2 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7561 0.7432 0.7305 0.7182 0.7062 0.6944 0.6400 3 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.7118 0.6931 0.6750 0.6575 0.6407 0.6244 0.6086 0.5934 0.5787 0.5120 4 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 0.5523 0.5337 0.5158 0.4987 0.4823 0.4096 5 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4972 0.4761 0.4561 0.4371 0.4190 0.4019 0.3277 6 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5346 0.5066 0.4803 0.4556 0.4323 0.4104 0.3898 0.3704 0.3521 0.3349 0.2621 7 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.4523 0.4251 0.3996 0.3759 0.3538 0.3332 0.3139 0.2959 0.2791 0.2097 8 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 0.4039 0.3762 0.3506 0.3269 0.3050 0.2848 0.2660 0.2487 0.2326 0.1678 9 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2843 0.2630 0.2434 0.2255 0.2090 0.1938 0.1342 10 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2472 0.2267 0.2080 0.1911 0.1756 0.1615 0.1074 11 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 0.2875 0.2607 0.2366 0.2149 0.1954 0.1778 0.1619 0.1476 0.1346 0.0859 12 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 0.2567 0.2307 0.2076 0.1869 0.1685 0.1520 0.1372 0.1240 0.1122 0.0687 13 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1625 0.1452 0.1299 0.1163 0.1042 0.0935 0.0550 14 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 0.2046 0.1807 0.1597 0.1413 0.1252 0.1110 0.0985 0.0876 0.0779 0.0440 15 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1229 0.1079 0.0949 0.0835 0.0736 0.0649 0.0352 16 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1883 0.1631 0.1415 0.1229 0.1069 0.0930 0.0811 0.0708 0.0618 0.0541 0.0281 17 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1696 0.1456 0.1252 0.1078 0.0929 0.0802 0.0693 0.0600 0.0520 0.0451 0.0225 18 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1528 0.1300 0.1108 0.0946 0.0808 0.0691 0.0592 0.0508 0.0437 0.0376 0.0180 19 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1377 0.1161 0.0981 0.0829 0.0703 0.0596 0.0506 0.0431 0.0367 0.0313 0.0144 20 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1240 0.1037 0.0868 0.0728 0.0611 0.0514 0.0433 0.0365 0.0308 0.0261 0.0115 25 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0736 0.0588 0.0471 0.0378 0.0304 0.0245 0.0197 0.0160 0.0129 0.0105 0.0038 30 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 0.1314 0.0994 0.0754 0.0573 0.0437 0.0334 0.0256 0.0196 0.0151 0.0116 0.0090 0.0070 0.0054 0.0042 0.0012 40 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0154 0.0107 0.0075 0.0053 0.0037 0.0026 0.0019 0.0013 0.0010 0.0007 0.0001 50 0.6080 0.3715 0.2281 0.1407 0.0872 0.0543 0.0339 0.0213 0.0134 0.0085 0.0054 0.0035 0.0022 0.0014 0.0009 0.0006 0.0004 0.0003 0.0002 0.0001 * 60 0.5504 0.3048 0.1697 0.0951 0.0535 0.0303 0.0173 0.0099 0.0057 0.0033 0.0019 0.0011 0.0007 0.0004 0.0002 0.0001 0.0001 * * * *  APPENDIX 2: Present value of a regular annuity of R1 per period for n periods Number of 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% Periods 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8696 0.8621 0.8547 0.8475 0.8403 0.8333 2 1.9704 1.9416 1.9135 1.8861 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901 1.6681 1.6467 1.6257 1.6052 1.5852 1.5656 1.5465 1.5278 3 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4437 2.4018 2.3612 2.3216 2.2832 2.2459 2.2096 2.1743 2.1399 2.1065 4 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.1024 3.0373 2.9745 2.9137 2.8550 2.7982 2.7432 2.6901 2.6386 2.5887 5 4.8534 4.7135 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6959 3.6048 3.5172 3.4331 3.3522 3.2743 3.1993 3.1272 3.0576 2.9906 6 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.2305 4.1114 3.9975 3.8887 3.7845 3.6847 3.5892 3.4976 3.4098 3.3255 7 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.7122 4.5638 4.4226 4.2883 4.1604 4.0386 3.9224 3.8115 3.7057 3.6046 8 7.6517 7.3255 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 5.1461 4.9676 4.7988 4.6389 4.4873 4.3436 4.2072 4.0776 3.9544 3.8372 9 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.5370 5.3282 5.1317 4.9464 4.7716 4.6065 4.4506 4.3038 4.1633 4.0310 10 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.8892 5.6502 5.4262 5.2161 5.0188 4.8332 4.6586 4.4941 4.3389 4.1925 11 10.3676 9.7868 9.2526 8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 6.4951 6.2065 5.9377 5.6869 5.4527 5.2337 5.0286 4.8364 4.6560 4.4865 4.3271 12 11.2551 10.5753 9.9540 9.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.4924 6.1944 5.9176 5.6603 5.4206 5.1971 4.9884 4.7932 4.6105 4.4392 13 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.7499 6.4235 6.1218 5.8424 5.5831 5.3423 5.1183 4.9095 4.7147 4.5327 14 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.9819 6.6282 6.3025 6.0021 5.7245 5.4675 5.2293 5.0081 4.8023 4.6106 15 13.8651 12.8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 7.1909 6.8109 6.4624 6.1422 5.8474 5.5755 5.3242 5.0916 4.8759 4.6755 16 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 7.3792 6.9740 6.6039 6.2651 5.9542 5.6685 5.4053 5.1624 4.9377 4.7296 17 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.5488 7.1196 6.7291 6.3729 6.0472 5.7487 5.4746 5.2223 4.9897 4.7746 18 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.7016 7.2497 6.8399 6.4674 6.1280 5.8178 5.5339 5.2732 5.0333 4.8122 19 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.8393 7.3658 6.9380 6.5504 6.1982 5.8775 5.5845 5.3162 5.0700 4.8435 20 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 7.4694 7.0248 6.6231 6.2593 5.9288 5.6278 5.3527 5.1009 4.8696 25 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 8.4217 7.8431 7.3300 6.8729 6.4641 6.0971 5.7662 5.4669 5.1951 4.9476 30 25.8077 22.3965 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.6938 8.0552 7.4957 7.0027 6.5660 6.1772 5.8294 5.5168 5.2347 4.9789 40 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.9511 8.2438 7.6344 7.1050 6.6418 6.2335 5.8713 5.5482 5.2582 4.9966 50 39.1961 31.4236 25.7298 21.4822 18.2559 15.7619 13.8007 12.2335 10.9617 9.9148 9.0417 8.3045 7.6752 7.1327 6.6605 6.2463 5.8801 5.5541 5.2623 4.9995 60 44.9550 34.7609 27.6756 22.6235 18.9293 16.1614 14.0392 12.3766 11.0480 9.9672 9.0736 8.3240 7.6873 7.1401 6.6651 6.2402 5.8819 5.5553 5.2630 4.9999