MANCOSA: BACHELOR OF BUSINESS ADMINISTRATION HONOURS GO QUESTION 3 The information given below was extracted from the accounting records of Casper Limited, a partnership business with Bruce and Lee as partners. (20) INFORMATION Extract from the ledger of Casper Limited on 30 June 2020: CR DR Capital: Bruce R Capital: Lee 400 000 Current a/c: Bruce (01 July 2019) 300 000 Current a/c: Lee (01 July 2019) 45 000 Drawings: Bruce 42000 95 000 Drawings: Lee 110 000 The following must be taken into account 1. On 30 June 2020 the Profit and Loss account reflected a net profit of R940 000. 2. Partners are entitled to interest at 14% p.a. on their capital balances. Note: Bruce decreased his capital contribution by R90 000 on 01 July 2019. This capital decrease has been recorded. 3. Partners are entitled to the following monthly salaries: Bruce R13 000 for the first ten months of the financial year and R15 000 for the next two months. Lee R10 000 per month throughout the year. 4. Partner Lee is entitled to a bonus equal to 10% of the net profit before any of the above appropriations have been taken into account. 5. The remaining profit/shortfall must be shared equally between Bruce and Lee. REQUIRED Prepare the Statement of Changes in Equity for the year ended 30 June 2020. (20) QUESTION 4 The following budgeted details for 2020 relate to a product manufactured by Kito Limited: Sales R50 000 R7.50 Variable cost per unit sold Total fixed cost R12 500 Sales volume 2 500 units Consider the following situations independently: 4.1 Calculate the operating profit. (3) 4.2 Suppose sales increase by R10 000 without changes to any costs. By what amount will contribution margin and operating profit increase? (2) 4.3 Suppose fixed costs increase by R3 000. By how much must sales increase if operating profit was to remain unchanged? (2) 4.4 Would you recommend an advertising programme costing R5 000 that would generate an additional R10 000 of sales? Why? (2) (3) 4.5 Calculate the volume of sales required to achieve an operating profit of R20 000. 60 PROGRAMME HANDBOOK: JANUARY 2020 INTAKE