MAC2601 Oct/Nov 2015 exam paper — questions

Every question, by topic

1. Question 1.1 · Direct and absorption costing · 14 marks

   Part A concerns Steinhopp Time Pieces (Pty) Ltd, which manufactures and supplies time pieces (including a model called Lerox) and values inventory using the FIFO method. Part B concerns Steinhopp Golf Carts (Pty) Ltd, a subsidiary of Steinhopp Time Pieces, which manufactures and supplies golf carts and has been awarded a contract by Menlyn Country Club to supply golf carts for the whole of the 2015 financial year. For Steinhopp Time Pieces (Pty) Ltd's Lerox product, the actual results for the year ended 30 September 2015 were: 3 800 units sold and 3 300 units produced; a selling price of R240 per unit; direct materials of R110 per unit; direct labour of R25 per unit; variable manufacturing overheads of R15 per unit; fixed manufacturing overheads absorbed of R20 per unit; total variable selling costs of R68 400; total non-manufacturing costs of R178 400; and no over- or under-applied overheads. The budgeted figures for the year ending 30 September 2016 are: a selling price of R250 per unit; direct materials of R120 per unit; direct labour of R30 per unit; variable manufacturing overheads of R16 per unit; and total fixed manufacturing overheads of R75 000. Additional information: (1) the budgeted quantity schedule for the year ending 30 September 2016 shows budgeted sales of 4 100 units, opening inventory of 500 units and closing inventory of 400 units; (2) variable selling costs for the 2016 budgeted year are expected to increase by R2 per unit compared with the 2015 actual figures; and (3) the R178 400 of non-manufacturing costs incurred in the year ended 30 September 2015 comprised both fixed administration costs and variable selling costs, and the fixed administration cost component is expected to increase by 10% in the 2016 budgeted year. Required: prepare the budgeted statement of comprehensive income of Steinhopp Time Pieces (Pty) Ltd for Lerox for the year ending 30 September 2016, using the absorption costing method.Show the full questionShow less

2. Question 1.2.1 · Direct and absorption costing · 5.5 marks

   Part A concerns Steinhopp Time Pieces (Pty) Ltd, which manufactures and supplies time pieces (including a model called Lerox) and values inventory using the FIFO method. Part B concerns Steinhopp Golf Carts (Pty) Ltd, a subsidiary of Steinhopp Time Pieces, which manufactures and supplies golf carts and has been awarded a contract by Menlyn Country Club to supply golf carts for the whole of the 2015 financial year. Steinhopp Golf Carts (Pty) Ltd, a subsidiary of Steinhopp Time Pieces, manufactures and supplies golf carts and has been awarded a contract by Menlyn Country Club to supply golf carts for the whole of the 2015 financial year. For its Fabulous Golf Cart Range, the company's total production cost in the 2014 financial year was R26 000 000 when 4 000 units were produced, and R36 000 000 when 6 000 units were produced. In 2015 the company manufactured and sold 500 golf carts at a selling price of R15 000 per cart. The production cost structure (i.e. the variable production cost per unit and the total fixed production cost) in 2015 is identical to that of 2014, and this cost structure remains unchanged for any production quantity between 1 and 10 000 units. Non-manufacturing costs must be ignored. Required: calculate the breakeven point, in units (golf carts), for the Fabulous Range for 2015.Show the full questionShow less

3. Question 1.2.2 · Direct and absorption costing · 2.5 marks

   Part A concerns Steinhopp Time Pieces (Pty) Ltd, which manufactures and supplies time pieces (including a model called Lerox) and values inventory using the FIFO method. Part B concerns Steinhopp Golf Carts (Pty) Ltd, a subsidiary of Steinhopp Time Pieces, which manufactures and supplies golf carts and has been awarded a contract by Menlyn Country Club to supply golf carts for the whole of the 2015 financial year. Using the same Steinhopp Golf Carts (Pty) Ltd Fabulous Range information (2014 total production cost of R26 000 000 at 4 000 units and R36 000 000 at 6 000 units; a 2015 selling price of R15 000 per cart; the same variable-cost-per-unit and total fixed cost structure applying to any output between 1 and 10 000 units; and non-manufacturing costs ignored), calculate the profit or loss for 2015 based on actual sales of 500 golf carts, and state clearly whether the result is a profit or a loss.Show the full questionShow less

4. Question 1.2.3 · Direct and absorption costing · 3 marks

   Part A concerns Steinhopp Time Pieces (Pty) Ltd, which manufactures and supplies time pieces (including a model called Lerox) and values inventory using the FIFO method. Part B concerns Steinhopp Golf Carts (Pty) Ltd, a subsidiary of Steinhopp Time Pieces, which manufactures and supplies golf carts and has been awarded a contract by Menlyn Country Club to supply golf carts for the whole of the 2015 financial year. Again using the Steinhopp Golf Carts (Pty) Ltd Fabulous Range information (2014 total production cost of R26 000 000 at 4 000 units and R36 000 000 at 6 000 units; a 2015 selling price per golf cart of R15 000; the same cost structure applying for any production quantity between 1 and 10 000 units; and non-manufacturing costs ignored), calculate the number of golf carts the company should sell in 2015 in order to earn a profit of R10 000 000.Show the full questionShow less

5. Question 2.1(a)(i) · Process and joint product costing · 4 marks

   All three parts (A, B and C) must be answered, and the information given for each part relates both to that part and to the question as a whole. Thabang Traders (Pty) Ltd, which uses job costing to manufacture customised products for its clients, recorded the following for September 2015: the direct material control account had an opening balance of R11 000, and direct materials purchased during the month amounted to R14 000. The direct materials required by the individual jobs during the month were R2 800 for Job A, R3 000 for Job B and R4 200 for Job C. Prepare the general ledger material control account of Thabang Traders (Pty) Ltd for the month of September 2015, and balance the account.Show the full questionShow less