Move-Quicker (Pty) Ltd (Move-Quicker) was established in 2018 by Ms Mogale after the taxi she was travelling in, broke down resulting in her missing an important job interview. Move-Quicker is based in Mamelodi, east of Pretoria. The company manufactures and sells quick moving vehicles called Sporter cars. The company has a 30 June year-end and uses the first-in first-out method of inventory valuation. Fixed manufacturing overheads (FMO) are allocated to production based on direct labour weeks worked. Budgeted data for the year ended 30 June 2021 is as follows: Total budgeted fixed overhead costs are R1 025 000. (These total budgeted fixed overheads are split between the manufacturing and administration departments in the ratio 8:2.) The company budgeted for 40 direct labour weeks to be worked in the 2021 financial year. Actual information for the year ended 30 June 2021 relating to Sporter cars: 1. The selling price per vehicle was R250 000. 2. Direct material costs: Each vehicle required all of the following direct material: Ten metres of steel at R930 per metre; Fifty kilograms of aluminium (at a cost price of R250 per kilogram); and Other direct materials (copper, glass, rubber, fibers, etc) of which the total cost amounted to R23 200 per vehicle. 3. Labour costs: The company employed highly skilled labour at the rate of R36 000 per week. 41 direct labour weeks were used to manufacture all the vehicles. 4. Total actual fixed overheads amounted to R993 750. (These total actual fixed overheads are split between the manufacturing and administration departments in the ratio 8:2.) 5. Vehicle production and inventory: Details Vehicles Production 20 Opening inventory 01 July 2020 6 Closing inventory 30 June 2021 4 6. The costs to manufacture each vehicle were R146 000 for the year ended 30 June 2020. These costs included absorbed fixed manufacturing overheads. MAC2601 October/November 2021 CONFIDENTIAL 6 of 11 [TURN OVER] 7. It is company policy to pay commission to sales personnel of R25 000 for each vehicle sold. 8. No inventory of direct materials or work-in-progress is held. 9. All completed cars are parked in the showroom and counted into inventories. QUESTION 3 (33 marks) (40 minutes) INDEPENDENT PART A Energy (Pty) Ltd (Energy) is a manufacturer of batteries that are used for home consumption. Its only products are Energy Max batteries (Max) and Energy Rechargeable batteries (Rechargeable). The manufacturing process is labour-intensive and the materials used are; Metal Case, Chemical and Powder. No inventories of any type are kept. The management accountant has received communication from the supplier of materials indicating that, due to lockdown restrictions emanating from the COVID-19 pandemic, they will only be able to supply Energy with 30 000 litres of Chemical and 11 000 kilograms (kg) of Powder in the 2022 financial year. However, there is no limitation on the number of Metal Cases that the supplier will be able to provide. The following information relates to the budgeted financial year 2022: Max Rechargeable R per unit R per unit Selling price 350 400 Direct Labour 60 80 Raw materials Metal Case 32 48 Chemical (40c per millilitre) 50 65 Powder (30c per gram) 35 45 Variable manufacturing overheads 10 17 Fixed manufacturing overheads 20 20 Gross profit 143 125 Units Units Budgeted annual sales demand 50 000 45 000 REQUIRED Marks (a) Calculate Move-Quickers total fixed manufacturing overhead over/under recovery amount for the financial year ended 30 June 2021 and prepare the related journal entry to be recorded in Move-Quickers financial records. (5) (b) Prepare the actual income statement for Move-Quicker (Pty) Ltd for the year ended 30 June 2021 using the absorption costing system. (15) TOTAL (20)