1. Which costing system is applicable to a manufacturing company that is producing a single product type of which all units are homogeneous?

(a) Process costing.

(b) Job costing.

(c) Activity-Based-Costing (ABC).

(d) Joint costing.

2. What are some of the reasons why it is important to know the unit cost of a product?

(a) In order to be able to value inventory, prepare a bank reconciliation, and set selling prices.

(b) In order to determine the amount of variable costs incurred, prepare a bank reconciliation, and set selling prices.

(c) In order to be able to value inventory, prepare a budget, and set selling prices or quotes.

(d) In order to be able to value inventory, prepare the financial statements analysis and set standard costs.

3. Success (Pty) Ltd uses process costing. The opening work-in-progress (WIP) is 45% complete, new units were put into production in the current period and closing WIP is 35% complete. Normal loss is 5% and normal loss takes place when the process is 55% complete. The company uses the First-in-first-out (FIFO) method. Which units will be subject to the normal loss in the current period?

(a) New units put into production and closing WIP.

(b) Opening WIP and closing WIP.

(c) Opening WIP, new units put into production and closing WIP.

(d) Opening WIP and new units put into production.

4. Consider the following statements regarding abnormal losses in process costing:

i) They are also known as controllable losses.

ii) One of the examples is wastage due to evaporation in a chemical process.

iii) They indicate that part/parts of the process is/are ineffective. MAC2601 October/November 2021 CONFIDENTIAL 3 of 11 [TURN OVER]

iv) They are also known as unavoidable losses.

Which option is correct for abnormal losses in a process costing system?

(a) Statements i, and iii

(b) Statements ii, and iv

(c) Statements i, ii, and iii (d)

Statements i, iii, and iv

Use the information provided below to answer questions 5 to 7:

Sunshine (Pty) Ltd plans to manufacture and sell 30 000 units of its product in the 2022 financial year. The following information is available for the 2022 financial year:

R

Variable product cost per unit 35

Sales commission per unit 4

Total fixed cost 420 000

5. If Sunshine (Pty) Ltd requires a profit of R230 100 for the 2022 financial year, what is the required selling price to achieve this target profit?

(a) R45,33

(b) R46,67

(c) R56,67

(d) R60,67

6. Assuming a selling price of R100 per unit applies and that Sunshine (Pty) Ltd did extensive marketing, what will the margin of safety ratio be should Sunshine sales increase to 32 000 units?

(a) 77,04%

(b) 78,48%

(c) 80,23%

(d) 99,62%

7. Group three Ltd is compiling tender documents to bid for one of the Government departments construction tender. Should the company win the tender, salary cost for its permanent employees assigned to the project will be considered as?

(a) Incremental cost

(b) An opportunity cost

(c) Sunk cost

(d) Committed cost MAC2601 October/November 2021 CONFIDENTIAL 4 of 11 [TURN OVER]

Use the information provided below to answer questions 8 to 10: Morotse (Pty) Ltd uses a perpetual inventory system and applies the first-in-first-out (FIFO) method for the valuation of inventory. The following information relates to the month ended 31 July 2021:

Date Transaction

03/07/2021 Issue of 200 units

08/07/2021 Purchase of 200 units at a total cost of R20 000

15/07/2021 Issue of 90 units

16/07/2021 Returns from factory to store: 30 excess units from goods issued on 15 July. Returned units are in good condition 21/07/2021 Purchase of 150 units at a total cost of R14 700

25/07/2021 Issue of 110 units T

The opening balance of inventory on 1 July 2021 was 300 units at the total value of R33 000.

8. The value of inventory after the units purchased on 8 July 2021 is?

(a) R20 000

(b) R11 000

(c) R31 000

(d) R22 000

9. The value of inventory after units returns on 16 July 2021 is?

(a) R24 400

(b) R20 000

(c) R4 400

(d) R3 300

10.The value of closing inventory as at 31 July 2021 amounts to:

(a) R13 000

(b) R11 400

(c) R14 700

(d) R27 700