MANAGEMENT ACCOUNTING

Question 1

Mojela, a movie producer, and director at Mzansi Studios is considering investing R12 000 in an AI project to improve the creative and writing skills of his team. The Department of trade and Industry has agreed to finance the project if Mojela pays upfront R5 000 into the project. The project will generate the following cash flows:

TOTAL Unit R R Sales (20 000 units) 300 000 15.00 Variable costs (180 000) (9.00) Contribution margin 120 000 6.00 Fixed expenses (70 000) Net operating income 50 000YEAR REVENUES EXPENSES R 20 000 18 000 2 22 000 19 000 3 22 000 20 000 4 22 000 17 000 25 000 17 000TABLE1: Present value of R1due at the end of n periods Periods 4% 6% 8% 10% 12% 14% 0.962 0.943 0.926 0.909 0.893 0.877 2 0.925 0.890 0.857 0.826 0.797 0.769 3 0.889 0.840 0.794 0.751 0.712 0.675 4 0.855 0.792 0.735 0.683 0.636 0.592 5 0.822 0.747 0.681 0.621 0.567 0.519 6 0.790 0.705 0.630 0.564 0.507 0.456 7 0.760 0.665 0.583 0.513 0.452 0.400 8 0.731 0.627 0.540 0.467 0.404 0.351 9 0.703 0.592 0.500 0.424 0.361 0.308 10 0.676 0.558 0.463 0.386 0.322 0.270TABLE 2: Present value of an Annuity of Riper period Periods 49% 10% 12%% 146 1 0.962 0.943 0.926 0.909 0.893 0.877 2 1.886 1.833 1.783 1.736 1.690 1.647 3 2.775 2.673 2.577 2487 2.402 2.322 4 3.630 3.465 3.312 3.170 3.037 2.914 5 4.462 4.212 3.990 3.993 3.605 3.433 5.242 4.917 4.623 4.365 4.111 3.869 7 6.002 6.502 5.206 4.868 4.684 4.288 B 8.733 6.210 5.747 5.335 4.980 4.839 7.435 6.802 6.247 6.759 5.328 4.948 10 8.111 7.360 6.710 6.145 5.650 5.216