EXURE F FORMATIVE ASSESSMENT 1 QUESTION 2 (41 marks) Food Jar Limited ("Food Jar") processes and cans various foods. One of their products is canned sweet corn. Canned sweet corn is manufactured in two departments, namely "Processing", where the raw corn is processed, filled into cans and sealed, and "Packaging" where the cans are labelled, cleaned and packed into boxes. Food Jar purchases their cans from Tin-Tin Ltd ("Tin-Tin") and the cost of placing an order with Tin-Tin is R25 per order. Tin-Tin takes 4 days to deliver the cans from the time the order is made. Food Jar then stores the cans in a storeroom until they are needed by the "Processing" department. It costs the business R15 per can per annum to store and hold the cans. The annual demand for cans by the Processing" department is 1 400 000 units. Food Jar uses a perpetual inventory system and the weighted average costing method, as the cost of canned foods per food type is the same. Fluctuations in material purchase prices occur as the cost of cans manufactured by Tin-Tin depends on metal prices (e.g. aluminium and tin prices) which fluctuates. The following movements took place in inventory for bottles for the week 15 - 19 February 2021: Monday 15 February Tuesday 16 February Wednesday 17 February Thursday 18 February Friday 19 February Opening stock of 250 cans at a cost of R0.40 each Received 900 purchased cans at R0.35 each Received 750 purchased cans at R0.28 each Issued 1 600 cans to the "Processing" department Received 500 purchased cans at R0.55 each Issued 480 cans to the "Processing" department Following this week, the financial accountant and management accountant held a meeting, as the financial accountant was concerned by the inconsistent purchases of cans. There were also concerns about the fluctuating cost of cans, and the impact that this has on the gross profit margins of the entity. While discussing the gross profit margins of the entity, both accountants looked at the following information regarding labour for 15 - 19 February 2021: HMAC230-1-Jan-Jun2021-FA1 --V2-ES-05112020 ASSESSMENT 1 . The workers in the "Processing department receive an hourly wage of R65 They are also incentivised using the Rowan premium scheme. The workers in the Packaging department package cans into boxes of 30 cans per box. They are paid R45 on a piece-work scheme, based on the number of boxes filled. The following budgeted and actual time was recorded for orders that week: Processing Packaging department department Budgeted time allocated for orders 35 hours 36 hours Actual time taken to complete orders 32 hours 33 hours The "Processing department managed to process and seal 1 600 cans during that week, while the "Packaging" department packed 52 boxes that week. quired: Determine the value of the closing inventory for Food Jar at the end of the week 19 February 2021. (11 marks) Differentiate between the financial accountant and management accountant in terms of focus and emphasis. Support your answer by providing your own fabricated example of tasks that the two accountants may complete at Food Jar. (3 x 2 = 6 marks) Suppose that the financial and management accountants decide to adopt the economic order quantity (EOQ) method of inventory management to ensure consistency in orders. Calculate the EOQ of cans for Food Jar. Calculate the reorder point of cans, assuming no safety stock and the company operates for 360 days in a year. Calculate the total annual ordering cost for cans. (3 x 4 = 12 marks) ANNEXURE E FORMATIVE ASSESSMENT 1 2.4. Assume that instead of the EOQ method, the accountants decide to adopt a Just-in-time strategy for inventory management for cans. Discuss what considerations regarding Tin-Tin as a supplier should be considered before implementing this system. (4 marks) 2.5 Calculate the gross wages for an employee in each department for the week ending 19 February 2021. (8 marks) Round to two decimal places where applicable. EXURE F FORMATIVE ASSESSMENT 1 QUESTION 2 (41 marks) Food Jar Limited ("Food Jar") processes and cans various foods. One of their products is canned sweet corn. Canned sweet corn is manufactured in two departments, namely "Processing", where the raw corn is processed, filled into cans and sealed, and "Packaging" where the cans are labelled, cleaned and packed into boxes. Food Jar purchases their cans from Tin-Tin Ltd ("Tin-Tin") and the cost of placing an order with Tin-Tin is R25 per order. Tin-Tin takes 4 days to deliver the cans from the time the order is made. Food Jar then stores the cans in a storeroom until they are needed by the "Processing" department. It costs the business R15 per can per annum to store and hold the cans. The annual demand for cans by the Processing" department is 1 400 000 units. Food Jar uses a perpetual inventory system and the weighted average costing method, as the cost of canned foods per food type is the same. Fluctuations in material purchase prices occur as the cost of cans manufactured by Tin-Tin depends on metal prices (e.g. aluminium and tin prices) which fluctuates. The following movements took place in inventory for bottles for the week 15 - 19 February 2021: Monday 15 February Tuesday 16 February Wednesday 17 February Thursday 18 February Friday 19 February Opening stock of 250 cans at a cost of R0.40 each Received 900 purchased cans at R0.35 each Received 750 purchased cans at R0.28 each Issued 1 600 cans to the "Processing" department Received 500 purchased cans at R0.55 each Issued 480 cans to the "Processing" department Following this week, the financial accountant and management accountant held a meeting, as the financial accountant was concerned by the inconsistent purchases of cans. There were also concerns about the fluctuating cost of cans, and the impact that this has on the gross profit margins of the entity. While discussing the gross profit margins of the entity, both accountants looked at the following information regarding labour for 15 - 19 February 2021: HMAC230-1-Jan-Jun2021-FA1 --V2-ES-05112020 ASSESSMENT 1 . The workers in the "Processing department receive an hourly wage of R65 They are also incentivised using the Rowan premium scheme. The workers in the Packaging department package cans into boxes of 30 cans per box. They are paid R45 on a piece-work scheme, based on the number of boxes filled. The following budgeted and actual time was recorded for orders that week: Processing Packaging department department Budgeted time allocated for orders 35 hours 36 hours Actual time taken to complete orders 32 hours 33 hours The "Processing department managed to process and seal 1 600 cans during that week, while the "Packaging" department packed 52 boxes that week. quired: Determine the value of the closing inventory for Food Jar at the end of the week 19 February 2021. (11 marks) Differentiate between the financial accountant and management accountant in terms of focus and emphasis. Support your answer by providing your own fabricated example of tasks that the two accountants may complete at Food Jar. (3 x 2 = 6 marks) Suppose that the financial and management accountants decide to adopt the economic order quantity (EOQ) method of inventory management to ensure consistency in orders. Calculate the EOQ of cans for Food Jar. Calculate the reorder point of cans, assuming no safety stock and the company operates for 360 days in a year. Calculate the total annual ordering cost for cans. (3 x 4 = 12 marks) ANNEXURE E FORMATIVE ASSESSMENT 1 2.4. Assume that instead of the EOQ method, the accountants decide to adopt a Just-in-time strategy for inventory management for cans. Discuss what considerations regarding Tin-Tin as a supplier should be considered before implementing this system. (4 marks) 2.5 Calculate the gross wages for an employee in each department for the week ending 19 February 2021. (8 marks) Round to two decimal places where applicable