FACULTY OF COMMERCE, MANAGEMENT AND LAW Assignment Questions AAM3691/2022 ASSIGNMENT QUESTIONS ASSIGNMENT 1 55 000 QUESTION 1 (30 MARKS) ABC Company ("ABC") is a company that manufactures bill boards which is based in Ondangwa. The owner of ABC has little accounting background but due to budget constraints they are not able to hire a fully qualified a management accountant. The owner of ABC has hired you as a management accounting intern and has provided you with the following information: N$'000 Salaries Factory workers (1) 61 000 Factory management (2) Accounting 10 000 Directors 40 000 Depreciation (3) Factory equipment 10 000 Office equipment 2 200 Buildings 3 500 Purchases from creditors Raw material 95 000 Water and electricity (4) Factory 22 000 Storeroom 3 000 Office 4 000 Other Cleaners (office) (fixed rate as per contract) 1 800 Entertainment (amount is spent every year) 600 External audit fees as per contract 1 500 Additional Information: 1. Factory workers are paid based on the hours worked. 2. Factory management is employed as permanent employees who are paid a fixed salary irrespective of the hours worked. 3. All the assets are depreciated on the straight line method over the useful life of the asset, except delivery vehicles whose depreciation is based on the number of kilometres travelled. The number of kilometres travelled is roughly proportionate to the production volume. There are three buildings on the premises - the factory building, the storeroom where the raw materials are store and the administration building. 4. The water and electricity of the storeroom and the office is the same from one month to the next irrespective of any change in the number of units sold or produced. N$3 000 of the water and electricity of the factory is not influenced by the number of units produced. MARKS REQUIRED: 1.1 For each cost above, indicate whether it is a direct, indirect or period cost as well as whether it is fixed or variable. 30 Page 10 of 15 FACULTY OF COMMERCE, MANAGEMENT AND LAW [(Please present your answers in a table format and mark the appropriate column by way of a (X)] for example: Cost Direct Indirect Period Variable Fixed Salaries X TOTAL MARKS FOR QUESTION 1 30 QUESTION 2 (20 MARKS) Motor Spares ("MS") is a company located in Tsumeb that sells various types of motor vehicle spares. One of its flagship product is a gasket that is mostly used by pickup trucks (bakkies). The gaskets are purchased from a local manufacturer situated in Walvis Bay. The following information has been made available by the procurement and sales departments: Quarter Units purchased Cost per unit Total purchases Units sold 2020 (N$) 300 30 9 000 300 2 400 35 14 000 300 3 400 36 14 400 300 300 37 11 100 300 1 400 48 500 1 200 Inventory at the beginning of 1st quarter was 500 units at N$29 per unit and Inventory at end of 4th quarter was 700 units. Based on inventory reports for the last 5 years, the delivery period for gaskets has been between 1 to 2 weeks and on average MS sales were between 200 to 300 gaskets per quarter. REQUIRED: MARKS 5 5 N 2.1 Using the FIFO method, calculate the cost of goods sold 2.2 Using the LIFO method, calculate the cost of goods sold What is the gross profit for the year based on FIFO cost of sales figure given a 2.3 margin of 20%? 2.4 Re-order level 2.5 Minimum inventory level. 2.6 Name any three documents involved in inventory control. TOTAL MARKS 2 N | 3 3 20 Page 11 of 15 FACULTY OF COMMERCE, MANAGEMENT AND LAW QUESTION 3 (20 MARKS) Part A Namibia Body Works (NBW) is a renowned panel beating company based in Windhoek. The business uses sophisticated machinery in the panel beating operations and as a result, the company employ various grade of labour. Panel beater S. Slinger is employed as a panel beater at NBW. Due to the nature of his work, he is remunerated on a time based system. The normal working week at NBW is 45 hours. On the first week of May 2021, S. Slinger worked for 50 hours. The company pay an hourly rate of N$30 per hour. Overtime when worked is remunerated at a time and half. The following are his deductions for the week: Social security -0.9% of normal wages Pension fund -8% of normal wages Income tax - N$315 It is NBW's policy to contribute the same amount as the employees towards the social security fund and pension fund. Spray painter Jaco Manetti is employed as a spray painter at NBW on a contract. Since Jaco is on contract he opted to be paid his wages on a daily basis. As such he is remunerated on a differential piecework system based on the number of panels he sprays on a day. His supervisor is responsible for the allocation of panels to be worked on a particular. The supervisor ensures that the panels allocated would ensure a fair remuneration for Jaco. The following information has been extracted for Jaco for one day in May 2021. Standard time allowed: Standard work day: Normal wage rate: Premium: 20 minutes per panel 9 hours N$36 per hour 90% of piecework rate if below standard 120% of piecework rate if standard or above standard 32 units Jaco's production for the day Workshop supervisor F. Frans is the workshop supervisor of NBW. She is paid a fixed salary monthly of N$10 000. To keep her motivated, she is entitled to an annual bonus of N$9 000. NBW contributes N$9 000 to her pension fund annually. She works 9 hours per day from Monday to Friday every week. She is also entitled to 28 days paid vacation leave. There are 12 public holidays in the year for which 9 fall on weekends. Assume a 365 days year Required Marks Sub- Total total 7 7 4 11 Using only information relating to the panel beater, prepare a pay slip for S. 3.1 Slinger in as much detail as possible. Using only information relating to the spray painter, calculate the 3.2 remuneration for Jaco for the day using the differential piecework system. Using only the information relating to the workshop manager, compute 3.3 Frans's hourly recovery tariff per hour. Total 9 20 20 QUESTION 4 (16 MARKS) As a result of Corona virus outbreak in the world, an increased demand had caused shortage in hand sanitisers. Cardmium laboratory ("CL") has responded to this product shortage by mixing and selling own sanitisers to the public at a very affordable price. Since this is a new product, CL had to quickly assembly a team of five members from final year science students from UNAM working as interns to mix and fill the containers manually. These interns although under Page 12 of 15 FACULTY OF COMMERCE, MANAGEMENT AND LAW strict supervision, had to start from scratch with the mixing and filling of the sanitisers in batches of 50 containers of 500 ml in order to meet the unexpected spike in demand. Each intern will be remunerated at a rate of N$7.50 per hour of production The supervisor has highlighted in the production report that it takes 12 hours to manufacture the first batch and a total cumulative time of 27 hours to manufacture the 4th batch. MARKS 3 7 REQUIRED: 4.1. Using the learning curve techniques, determine the rate of learning for the given scenario. 4.2. Determine the time it takes the team to complete the 8th batch. 4.3. Upon hearing that UNAM manufactures own sanitisers, the Ministry of Health and Social Services has placed a special order of 150 containers. What would be the incremental direct labour cost for the special order assuming normal production are 8 batches? TOTAL MARKS FOR QUESTION 4 6 16 Total assignment 1: 86 marks Page 13 of 15 CamScanner FACULTY OF COMMERCE, MANAGEMENT AND LAW Assignment Questions AAM3691/2022 ASSIGNMENT QUESTIONS ASSIGNMENT 1 55 000 QUESTION 1 (30 MARKS) ABC Company ("ABC") is a company that manufactures bill boards which is based in Ondangwa. The owner of ABC has little accounting background but due to budget constraints they are not able to hire a fully qualified a management accountant. The owner of ABC has hired you as a management accounting intern and has provided you with the following information: N$'000 Salaries Factory workers (1) 61 000 Factory management (2) Accounting 10 000 Directors 40 000 Depreciation (3) Factory equipment 10 000 Office equipment 2 200 Buildings 3 500 Purchases from creditors Raw material 95 000 Water and electricity (4) Factory 22 000 Storeroom 3 000 Office 4 000 Other Cleaners (office) (fixed rate as per contract) 1 800 Entertainment (amount is spent every year) 600 External audit fees as per contract 1 500 Additional Information: 1. Factory workers are paid based on the hours worked. 2. Factory management is employed as permanent employees who are paid a fixed salary irrespective of the hours worked. 3. All the assets are depreciated on the straight line method over the useful life of the asset, except delivery vehicles whose depreciation is based on the number of kilometres travelled. The number of kilometres travelled is roughly proportionate to the production volume. There are three buildings on the premises - the factory building, the storeroom where the raw materials are store and the administration building. 4. The water and electricity of the storeroom and the office is the same from one month to the next irrespective of any change in the number of units sold or produced. N$3 000 of the water and electricity of the factory is not influenced by the number of units produced. MARKS REQUIRED: 1.1 For each cost above, indicate whether it is a direct, indirect or period cost as well as whether it is fixed or variable. 30 Page 10 of 15 FACULTY OF COMMERCE, MANAGEMENT AND LAW [(Please present your answers in a table format and mark the appropriate column by way of a (X)] for example: Cost Direct Indirect Period Variable Fixed Salaries X TOTAL MARKS FOR QUESTION 1 30 QUESTION 2 (20 MARKS) Motor Spares ("MS") is a company located in Tsumeb that sells various types of motor vehicle spares. One of its flagship product is a gasket that is mostly used by pickup trucks (bakkies). The gaskets are purchased from a local manufacturer situated in Walvis Bay. The following information has been made available by the procurement and sales departments: Quarter Units purchased Cost per unit Total purchases Units sold 2020 (N$) 300 30 9 000 300 2 400 35 14 000 300 3 400 36 14 400 300 300 37 11 100 300 1 400 48 500 1 200 Inventory at the beginning of 1st quarter was 500 units at N$29 per unit and Inventory at end of 4th quarter was 700 units. Based on inventory reports for the last 5 years, the delivery period for gaskets has been between 1 to 2 weeks and on average MS sales were between 200 to 300 gaskets per quarter. REQUIRED: MARKS 5 5 N 2.1 Using the FIFO method, calculate the cost of goods sold 2.2 Using the LIFO method, calculate the cost of goods sold What is the gross profit for the year based on FIFO cost of sales figure given a 2.3 margin of 20%? 2.4 Re-order level 2.5 Minimum inventory level. 2.6 Name any three documents involved in inventory control. TOTAL MARKS 2 N | 3 3 20 Page 11 of 15 FACULTY OF COMMERCE, MANAGEMENT AND LAW QUESTION 3 (20 MARKS) Part A Namibia Body Works (NBW) is a renowned panel beating company based in Windhoek. The business uses sophisticated machinery in the panel beating operations and as a result, the company employ various grade of labour. Panel beater S. Slinger is employed as a panel beater at NBW. Due to the nature of his work, he is remunerated on a time based system. The normal working week at NBW is 45 hours. On the first week of May 2021, S. Slinger worked for 50 hours. The company pay an hourly rate of N$30 per hour. Overtime when worked is remunerated at a time and half. The following are his deductions for the week: Social security -0.9% of normal wages Pension fund -8% of normal wages Income tax - N$315 It is NBW's policy to contribute the same amount as the employees towards the social security fund and pension fund. Spray painter Jaco Manetti is employed as a spray painter at NBW on a contract. Since Jaco is on contract he opted to be paid his wages on a daily basis. As such he is remunerated on a differential piecework system based on the number of panels he sprays on a day. His supervisor is responsible for the allocation of panels to be worked on a particular. The supervisor ensures that the panels allocated would ensure a fair remuneration for Jaco. The following information has been extracted for Jaco for one day in May 2021. Standard time allowed: Standard work day: Normal wage rate: Premium: 20 minutes per panel 9 hours N$36 per hour 90% of piecework rate if below standard 120% of piecework rate if standard or above standard 32 units Jaco's production for the day Workshop supervisor F. Frans is the workshop supervisor of NBW. She is paid a fixed salary monthly of N$10 000. To keep her motivated, she is entitled to an annual bonus of N$9 000. NBW contributes N$9 000 to her pension fund annually. She works 9 hours per day from Monday to Friday every week. She is also entitled to 28 days paid vacation leave. There are 12 public holidays in the year for which 9 fall on weekends. Assume a 365 days year Required Marks Sub- Total total 7 7 4 11 Using only information relating to the panel beater, prepare a pay slip for S. 3.1 Slinger in as much detail as possible. Using only information relating to the spray painter, calculate the 3.2 remuneration for Jaco for the day using the differential piecework system. Using only the information relating to the workshop manager, compute 3.3 Frans's hourly recovery tariff per hour. Total 9 20 20 QUESTION 4 (16 MARKS) As a result of Corona virus outbreak in the world, an increased demand had caused shortage in hand sanitisers. Cardmium laboratory ("CL") has responded to this product shortage by mixing and selling own sanitisers to the public at a very affordable price. Since this is a new product, CL had to quickly assembly a team of five members from final year science students from UNAM working as interns to mix and fill the containers manually. These interns although under Page 12 of 15 FACULTY OF COMMERCE, MANAGEMENT AND LAW strict supervision, had to start from scratch with the mixing and filling of the sanitisers in batches of 50 containers of 500 ml in order to meet the unexpected spike in demand. Each intern will be remunerated at a rate of N$7.50 per hour of production The supervisor has highlighted in the production report that it takes 12 hours to manufacture the first batch and a total cumulative time of 27 hours to manufacture the 4th batch. MARKS 3 7 REQUIRED: 4.1. Using the learning curve techniques, determine the rate of learning for the given scenario. 4.2. Determine the time it takes the team to complete the 8th batch. 4.3. Upon hearing that UNAM manufactures own sanitisers, the Ministry of Health and Social Services has placed a special order of 150 containers. What would be the incremental direct labour cost for the special order assuming normal production are 8 batches? TOTAL MARKS FOR QUESTION 4 6 16 Total assignment 1: 86 marks Page 13 of 15 CamScanner