Answer ALL questions in this paper. [100 MARKS] QUESTION 1 (20 Marks) 1.1 REQUIRED Calculate Annes remuneration for 15 April 2022. (4 marks) INFORMATION The normal wage of Anne is R200 per hour and her normal working day comprises 9 hours. The standard production time for each employee is 10 minutes per unit. On 15 April 2022, Annes production was 60 units. Using the Halsey bonus system, a bonus of 50% of the time saved is given to employees. 1.2 REQUIRED Calculate the total labour cost of Judith to Saffron Limited for 2021. (4 marks) INFORMATION The following details relate to Judith, an employee of Saffron Limited, for 2021: R Monthly salary after deductions 24 000 Employees monthly deductions 16 000 Annual bonus 36 000 Employers contribution to pension and medical aid funds per month 3 600 Employees contribution to pension and medical aid funds per month 3 000 1.3 REQUIRED Use the information provided below to calculate the following variances. In each case state whether the variance is favourable or unfavourable. 1.3.1 Material quantity variance (4 marks) 1.3.2 Labour efficiency variance (4 marks) 1.3.3 Variable manufacturing overheads expenditure variance (4 marks) INFORMATION Regal Ltd uses the standard costing system. The standards and actual information for May 2022 for the only product that it manufactures are as follows: Standards: Direct materials 4kg @ R7 per kg Direct labour 5 hours @ R60 per hour Variable manufacturing overheads R12 per labour hour Normal production 12 000 units per month Actual information for May 2022: Direct materials used 43 000kg @ R7.50 per kg Direct labour 56 000 hours @ R58 per hour Variable manufacturing overheads R649 600 Production 11 000 units manufactured QUESTION 2 (20 Marks) REQUIRED Use the information provided below to answer the following questions: 2.1 Prepare the Income Statement of Clermont Manufacturers for August 2022 using the marginal costing method. (9 marks) 2.2 Prepare the Income Statement of Clermont Manufacturers for August 2022 using the absorption costing method. (8 marks) 2.3 Reconcile the profit calculated according to absorption costing (in question 2.2) with the profit calculated according to marginal costing (in question 2.1). (3 marks) INFORMATION The following information relates to the only product produced by Clermont Manufacturers during August 2022: Opening inventory Nil Number of units manufactured 5 000 Number of units sold 4 500 Selling price per unit R300 Direct materials cost per unit R60 Direct labour cost per unit R40 Fixed manufacturing overheads cost R90 000 Variable manufacturing overheads per unit R30 Fixed selling cost R50 000 Fixed administrative cost R60 000 Sales commission R30 per unit QUESTION 3 (20 Marks) REQUIRED Use the information provided below to answer the following questions independently: 3.1 Calculate the margin of safety (expressed in units). (4 marks) 3.2 Use the marginal income ratio to determine the break-even value if the direct manufacturing costs are R10 per unit more than expected. (4 marks) 3.3 Calculate the total Marginal Income and Net Profit/Loss if the sales volume for 2023 is 20% below the budgeted quantity. (4 marks) 3.4 Calculate the number of units that must be sold to earn a net profit of R150 per unit. (4 marks) 3.5 Calculate the break-even quantity if the selling price is reduced by R50 per unit and the fixed manufacturing costs decrease by R22 000. (4 marks) INFORMATION The Salmon Ltd manufactures and sells fishing rods for R600 each. The budgeted sales for 2023 are 22 000 rods and the costs are expected to be as follows: R Direct manufacturing costs per unit R200 Variable manufacturing overheads cost per unit R50 Variable administration costs per unit R40 Sales commission 10% of sales Fixed manufacturing costs R1 800 000 Fixed administration and selling costs R600 000 QUESTION 4 (20 Marks) REQUIRED Use the information provided below to prepare the following for Protea Limited for January, February and March 2023: 4.1 Debtors Collection Schedule (6 marks) 4.2 Cash Budget (14 marks) INFORMATION Protea Limited is in the process of formulating plans for the first quarter of 2023. 1. The following sales figures show the growth expected: Year Month Sales 2022 December R460 000 2023 January R560 000 2023 February R640 000 2023 March R720 000 2. Forty percent (40%) of the sales is expected to be for cash and the balance is on credit. 3. Twenty percent (20%) of the credit sales is expected to be collected in the month of the sale and 75% in the month after the sale. The remaining 5% is usually written off as bad debts. Debtors who settle their accounts in the month of the sale are entitled to a 5% discount. 4. The purchase of inventory is the companys largest expenditure and the cost of these items equals 60% of the current months sales (excluding any discounts). Sixty percent (60%) of the purchases is for cash, to take advantage of a 10% discount. The balance is on credit and is paid in the month after the purchase. 5. Wages and fringe benefits equal 20% of the current months sales (excluding any discounts). Labour costs are paid for in the month in which they are incurred. 6. Property taxes are estimated at R48 000 for 2023 and will be paid in four equal instalments in the last month of each quarter. 7. General and administrative expenses are projected to be R420 000 for 2023 including depreciation of R48 000. These expenses are incurred evenly throughout the year and are payable monthly. 8. Selling and distribution expenses amount to R24 000 for January 2023 and are expected to increase by 10% per month thereafter. 9. A provisional company tax payment will be made during January 2023 and it is calculated at a rate of 28% on half the estimated taxable income of R880 000 for the financial year. 10. The expected cash balance on 31 December 2022 is R100 000. QUESTION 5 (20 Marks) REQUIRED Use the information provided below to calculate the following. Where applicable, use the present value tables that appear after QUESTION 5. 5.1 Payback period of both machines (expressed in years, months and days.) (6 marks) 5.2 Accounting Rate of Return (on average investment) of Machine A (expressed to two decimal places). (3 marks) 5.3 Net Present Value of both machines. (6 marks) 5.4 Internal Rate of Return of Machine B (expressed to two decimal places) using interpolation if the net cash flows are R290 000 per year for four years. (5 marks) INFORMATION Trump Limited intends purchasing a new machine and has the option of purchasing Machine A or Machine B. The following details apply: Machine A Machine B Purchase price R800 000 R800 000 Expected useful life 4 years 4 years Scrap value 0 0 Depreciation per year R200 000 R200 000 Minimum required rate of return 12% 12% Expected net profit: End of: Year 1 R20 000 R80 000 Year 2 R60 000 R80 000 Year 3 R140 000 R80 000 Year 4 R120 000 R80 000 END OF PAPER