000 Victory (Pty) Ltd ("Victory") manufactures several products in separate divisions: Division A, B, C and D. Victory uses the absorption costing system, and has a 30 September financial year-end. Division Function A Manufactures two sizes of bottles, 200 ml and 500 ml. B Prints branded labels to be used on product containers. Manufactures wax for customers. Wax is further processed by customers in manufacturing of candles, polishing products, and other products. D Management and administration. Division A: The division previously used the traditional costing system, however during the month of August a study was performed to identify activities and suitable cost drivers for the identified activities. Activity-Based-Costing (ABC) is being implemented effective from the current month of September 2021. Fixed manufacturing overheads under the traditional costing system were based on budgeted production of 200 000 units per year, of which 120 000 units are 200 ml bottles and 80 000 units are 500 ml bottles. The study revealed the following activity-based analysis of September 2021 budgeted fixed manufacturing overheads which are set out below: Expected monthly fixed manufacturing overheads and activities involved: Activity Cost drivers R Batch Number of batches 28 000 Packing (packed in boxes) Packing hours 30 000 Unidentified ? 40 000 Total 98 000 The analysis also revealed the following budgeted information: 200 ml bottles 500 ml bottles Packing time 15 000 minutes 33 000 minutes Batch size 200 units per batch 100 units per batch Machine time 1 000 machine hours 1 500 machine hours Division B: The division B prints specialised labels for each of two companies, namely ASD (Pty) Ltd (Blue Labels) and BNM (Pty) Ltd (Green Labels), with their own specifications for the bottle labels ordered. The division uses job costing. The branded labels have the same size irrespective for which bottle size they are used. Each completed label is referred to as a unit The following information relates to the month of September 2021: Actual Materials: (R) Purchased Direct material 50 000 Requested material: Blue labels for ASD (Pty) Ltd job 20 000 Green labels for BNM (Pty) Ltd job 15 000 Actual Wages: Wages paid: Direct labour in terms of the ASD (Pty) Ltd job (400 hours) Direct labour in terms of the BNM (Pty) Ltd job (250 hours) 6 000 4 500 Actual overheads: Expenses paid: Overheads 12 000 The budgeted average manufacturing overheads amount to R15 000 per month, and the estimated average budgeted production is 500 direct labour hours per month. Overheads are allocated based on direct labour hours. Units: Completed Sold Work-in- progress (WIP) 0 2 500 1 500 Number of units: ASD (Pty) Ltd job (selling price R25 per unit) BNM (Pty) Ltd job (selling price R20 per unit) 300 0 0 Division C: Division C manufactures wax (a single product) which is sold to companies that further process it for their products. Division C uses a process costing system. The Division recorded the following information for the month of September 2021: Units Opening work in progress ("opening WIP") (01 September): 50% 9 000 complete: Closing work in progress ("closing WIP") (30 September): 90% 12 000 complete New units put into production in September 2021 90 000 Completed in September 2021 70 000 Additional information: Normal losses are estimated at 4% of the units that reach/pass the wastage point. Normal losses occur when the process is 65% complete. Raw materials are added at the beginning of the process and conversion takes place evenly throughout the process. Division C uses the weighted average method of inventory valuation. The cost information was as follows: R Opening WIP Raw materials 250 000 Conversion 170 000 Added during September 2021 Raw materials 520 000 Conversion 310 000 Marks (7) (7) REQUIRED (a) Calculate Division A's activity rates for all the activities for September 2021 in terms of ABC. (b) Calculate the total cost of the completed units of the ASD (Pty) Ltd job and of the incomplete units of the BNM (Pty) Ltd job in Division B for September 2021. (c) Calculate Division B's total profit on only the sold units of the ASD (Pty) Ltd job for September 2021. (d) Prepare Division C's quantity statement for September 2021. (e) Prepare Division C's production cost statement for September 2021. TOTAL (3) (7) (3) 27 000 Victory (Pty) Ltd ("Victory") manufactures several products in separate divisions: Division A, B, C and D. Victory uses the absorption costing system, and has a 30 September financial year-end. Division Function A Manufactures two sizes of bottles, 200 ml and 500 ml. B Prints branded labels to be used on product containers. Manufactures wax for customers. Wax is further processed by customers in manufacturing of candles, polishing products, and other products. D Management and administration. Division A: The division previously used the traditional costing system, however during the month of August a study was performed to identify activities and suitable cost drivers for the identified activities. Activity-Based-Costing (ABC) is being implemented effective from the current month of September 2021. Fixed manufacturing overheads under the traditional costing system were based on budgeted production of 200 000 units per year, of which 120 000 units are 200 ml bottles and 80 000 units are 500 ml bottles. The study revealed the following activity-based analysis of September 2021 budgeted fixed manufacturing overheads which are set out below: Expected monthly fixed manufacturing overheads and activities involved: Activity Cost drivers R Batch Number of batches 28 000 Packing (packed in boxes) Packing hours 30 000 Unidentified ? 40 000 Total 98 000 The analysis also revealed the following budgeted information: 200 ml bottles 500 ml bottles Packing time 15 000 minutes 33 000 minutes Batch size 200 units per batch 100 units per batch Machine time 1 000 machine hours 1 500 machine hours Division B: The division B prints specialised labels for each of two companies, namely ASD (Pty) Ltd (Blue Labels) and BNM (Pty) Ltd (Green Labels), with their own specifications for the bottle labels ordered. The division uses job costing. The branded labels have the same size irrespective for which bottle size they are used. Each completed label is referred to as a unit The following information relates to the month of September 2021: Actual Materials: (R) Purchased Direct material 50 000 Requested material: Blue labels for ASD (Pty) Ltd job 20 000 Green labels for BNM (Pty) Ltd job 15 000 Actual Wages: Wages paid: Direct labour in terms of the ASD (Pty) Ltd job (400 hours) Direct labour in terms of the BNM (Pty) Ltd job (250 hours) 6 000 4 500 Actual overheads: Expenses paid: Overheads 12 000 The budgeted average manufacturing overheads amount to R15 000 per month, and the estimated average budgeted production is 500 direct labour hours per month. Overheads are allocated based on direct labour hours. Units: Completed Sold Work-in- progress (WIP) 0 2 500 1 500 Number of units: ASD (Pty) Ltd job (selling price R25 per unit) BNM (Pty) Ltd job (selling price R20 per unit) 300 0 0 Division C: Division C manufactures wax (a single product) which is sold to companies that further process it for their products. Division C uses a process costing system. The Division recorded the following information for the month of September 2021: Units Opening work in progress ("opening WIP") (01 September): 50% 9 000 complete: Closing work in progress ("closing WIP") (30 September): 90% 12 000 complete New units put into production in September 2021 90 000 Completed in September 2021 70 000 Additional information: Normal losses are estimated at 4% of the units that reach/pass the wastage point. Normal losses occur when the process is 65% complete. Raw materials are added at the beginning of the process and conversion takes place evenly throughout the process. Division C uses the weighted average method of inventory valuation. The cost information was as follows: R Opening WIP Raw materials 250 000 Conversion 170 000 Added during September 2021 Raw materials 520 000 Conversion 310 000 Marks (7) (7) REQUIRED (a) Calculate Division A's activity rates for all the activities for September 2021 in terms of ABC. (b) Calculate the total cost of the completed units of the ASD (Pty) Ltd job and of the incomplete units of the BNM (Pty) Ltd job in Division B for September 2021. (c) Calculate Division B's total profit on only the sold units of the ASD (Pty) Ltd job for September 2021. (d) Prepare Division C's quantity statement for September 2021. (e) Prepare Division C's production cost statement for September 2021. TOTAL (3) (7) (3) 27