8
that they shoud QUESTION 2 MANUFACTURING cheaper And to rent extra floor space for the factory . Manager i foreman Gerry General Information Total fixed costs (factory overhead & administration costs Net profit ACE BLAZERS ACE TRACKSUITS Ayanda 2016 2015 2016 2015 R1 484 000 R 400 000 R1 900 000 R1 400 000 R490 000 R1 138 ood R528 500 R103 600 (25 marks: 35 minutes) You are provided with information relating to Ace Clothing for the year ended 31 October 2016 The owner of the business is Andy Ace. The business consists of two factories operating independently in different parts of the town, sach with their own factory foramar manager One of the factores produces Ace Blazers and the other produces Ace Tracksuits Andy has compared the promit he has eamed over the past two years (2016 and 2015) and has found that it investad a lot of his personal capital in the business nas ncreased by more than R400 000. However, he is still not satisfied with the results us he has REQUIRED 21 Provide two reasons, each with calculations to explain the increase in the direct Tabour cost of producing blazars. Provide two points of advice to Andy (6) 22 Andy does not know how to the break-even point is intact correct Give the workings to prove that the 2016 break-even point of 10 095 units for blazers 23 Comment on the changes in units of blazers and tracksuits produced in comparison to the break-aven points for the past two years. Quote figures to support your answer (4) Refer to information A (v) for the decision taken in respect of blazers Calculate the increase in the vulling price of blazers Explain whether or not this has benefited the line 25 Consider the information A (VL) for the decision taken in respect of Ace Tracksuits as well as all costs associated with the tracksuits Explain how this decision led to changes in the variable and overhead costs relating to Ace Tracksuits Quote / calculate figures for the changes and provide possible reasons for the changes (16) Explain whether the selling price of the tracksuit is appropriate or not Quote Figures R110.00 R93 00 Variable costs par unit. Direct material costs per unit Direct labour costs per unit Selling & distribution costs per unit Total vanable costs per un R91.00 R88,00 R24,00 R95,00 R168.00 R74.00 RBO 00 R 15.00 R12.00 R185.00 R260 00 R12.00 R215.00 R203.00 R38.00 Additional information calculations: Selling price per un charged by R350.00 Ace Clothing Selling price of competitors R300 00 Number of units made and sold 10 500 Break-even point 10 095 R290,00 R358,00 R290.00 R205 00 18 000 31 000 13 333 19 388 R220.00 14 500 10 526 | 25 25 TOTAL MARKS: 50 INFORMATION Background information: The inflation rate has been 6 for the past two years Andy currently pays a fixed annual salary of R101 500 to cach factory forarnar/manager This represents a 6% increase on the 2015 figure The factory premises are rented at a fixed monthly rental. This also increased in line with ination from the beginning of the financial year Andy allows his factory foremen/managers to make decisions relating to their taciones, but their decisions have to be approved by hum Gerry, the factory foreman/manager of Ace Blazers was pleased that bazaru soia belio 2015 A decision was made to adjust the price of blazers granty in 2016 VI Ayanda beruman/ mangger of Ace Tracksuits produce byter ut tracksuits as other firms in town were producing only trecht decision was made to improve the design and free of the The accountantheside the following information that they shoud QUESTION 2 MANUFACTURING cheaper And to rent extra floor space for the factory . Manager i foreman Gerry General Information Total fixed costs (factory overhead & administration costs Net profit ACE BLAZERS ACE TRACKSUITS Ayanda 2016 2015 2016 2015 R1 484 000 R 400 000 R1 900 000 R1 400 000 R490 000 R1 138 ood R528 500 R103 600 (25 marks: 35 minutes) You are provided with information relating to Ace Clothing for the year ended 31 October 2016 The owner of the business is Andy Ace. The business consists of two factories operating independently in different parts of the town, sach with their own factory foramar manager One of the factores produces Ace Blazers and the other produces Ace Tracksuits Andy has compared the promit he has eamed over the past two years (2016 and 2015) and has found that it investad a lot of his personal capital in the business nas ncreased by more than R400 000. However, he is still not satisfied with the results us he has REQUIRED 21 Provide two reasons, each with calculations to explain the increase in the direct Tabour cost of producing blazars. Provide two points of advice to Andy (6) 22 Andy does not know how to the break-even point is intact correct Give the workings to prove that the 2016 break-even point of 10 095 units for blazers 23 Comment on the changes in units of blazers and tracksuits produced in comparison to the break-aven points for the past two years. Quote figures to support your answer (4) Refer to information A (v) for the decision taken in respect of blazers Calculate the increase in the vulling price of blazers Explain whether or not this has benefited the line 25 Consider the information A (VL) for the decision taken in respect of Ace Tracksuits as well as all costs associated with the tracksuits Explain how this decision led to changes in the variable and overhead costs relating to Ace Tracksuits Quote / calculate figures for the changes and provide possible reasons for the changes (16) Explain whether the selling price of the tracksuit is appropriate or not Quote Figures R110.00 R93 00 Variable costs par unit. Direct material costs per unit Direct labour costs per unit Selling & distribution costs per unit Total vanable costs per un R91.00 R88,00 R24,00 R95,00 R168.00 R74.00 RBO 00 R 15.00 R12.00 R185.00 R260 00 R12.00 R215.00 R203.00 R38.00 Additional information calculations: Selling price per un charged by R350.00 Ace Clothing Selling price of competitors R300 00 Number of units made and sold 10 500 Break-even point 10 095 R290,00 R358,00 R290.00 R205 00 18 000 31 000 13 333 19 388 R220.00 14 500 10 526 | 25 25 TOTAL MARKS: 50 INFORMATION Background information: The inflation rate has been 6 for the past two years Andy currently pays a fixed annual salary of R101 500 to cach factory forarnar/manager This represents a 6% increase on the 2015 figure The factory premises are rented at a fixed monthly rental. This also increased in line with ination from the beginning of the financial year Andy allows his factory foremen/managers to make decisions relating to their taciones, but their decisions have to be approved by hum Gerry, the factory foreman/manager of Ace Blazers was pleased that bazaru soia belio 2015 A decision was made to adjust the price of blazers granty in 2016 VI Ayanda beruman/ mangger of Ace Tracksuits produce byter ut tracksuits as other firms in town were producing only trecht decision was made to improve the design and free of the The accountantheside the following information
