Ouestion 1

Namib Grapes CC is registered is a company that buys Grapes from Aussinkher farm, this farm is situated in the south of Namibia. Namib Grapes and Aussinkher Farm agreed on a normal delivery time of two weeks and in difficult circumstances a maximum delivery time of four weeks is allowed. This agreement was reached after taking into account that Grapes can only be transported across by a mini truck that does not exceed the speed of 60 km per hour. After careful analysis of the operations of Namib Grapes, the following information became available: Normal usage 5 000 units per week

Purchase price per unit $20,00

Average storage cost per unit per annum $ 3,50

Cost of placing an order $75,00

Prime interest rate 10%

Production weeks per annum 48

The purchase of grapes is financed using an overdraft facility. REQUIRED

1. Calculate the re-order level.

2. Calculate the safety stock.

3. Calculate the economic order quantity.

4. Calculate the average stock level.

5. Calculate the numbers of orders per year

6. Calculate the ordering cost per year

Question 2

Kavango Investment CC provided you with the following information for the week ending 31 January 2016:

Name	Position	Normal rate per hour	hours worked during the week
muremi A	Receptionist	72.50	59
Ruben N	quality surveyor	95	57.5
Tabby T	Engineer	115	50.5

Important Information

The Normal working hours are 45 hours per week.

Overtime is remunerated at time and a half of normal rate.

Employees get birthday bonuses on their month of birth. The bonus is 35% of the basic wage.

The following deductions must be considered:

o Income Tax (PAYE) is 15%

o Social Security Contribution is 2% of the basic wage.

o Pension fund 5% employee; 8,70% employer, all based on basic salary

o Medical Aid N$35 per person; 2% of the basic pay by employer

The company only has one Quantity Surveyor who was born on the 27th January 1984

REQUIRED

1. Prepare a Payroll with all the detailed information for the week ending 31 January 2016

2. Compile the Journal Entries of the payroll accounts for the week ending 31 January 2016.

Question 3

NSP Limited produces tents for entertainment and for the outdoors. Production takes place in three departments, namely Cutting, Sewing and Finishing. Shown below is an extract from the budget for the manufacture of 8 800 tents for the year ended 31 May 2016:

	Manufacturing cost centre			Service Cost center
	Cutting	Sewing	Finishing	Personnel	Inspection
Budgeted overheads	$411 525	$72 850	$82900	$118 500	$92 200
Allocations of Overheads
Personnel	18%	38%	29%	-	15%
Inspection	45%	13%	32%	10%	-

REquired

1. Calculate the allocation of overheads to the production cost centres using the repeated distribution method. (Start with the Personnel cost centre).

2. Confirm your answer in 4.1 by using the method of simultaneous equations.

Question 4

Mr. James Chapman has recently qualified as an auditor, he and his class mate are thinking of opening up a small firm in their home town of Rehoboth. After a review of active firms in other small towns and interviews on how jobs use those firms resources, they felt they had enough information to go ahead with the start-up. Chapman & Associates would operate using two direct cost categories (partner labour and audit manager labour) there would also be two indirect cost categories, namely clerical labour and general administration support. These would yield more accurate job costs. Budgeted information for operations in 2016 is as follows

	partner labour	Audit Manager labour
Number of employees	2	10
Hours of billable time per employee	600	600
total compensation (per employee) $	84 000	30 000

Budgeted information for the two direct cost categories is as follow

	Clearical labour	General admin support
Total cost $	810 000	180 000
Cost allocation base	partner labour	Audit Manager labour

Required:

4.1 Compute the 2016 budgeted rates for

(a) Partners

(b) Audit Managers

4.2 Compute the 2016 budgeted indirect cost rates for

(a) clerical hours

(b) general admin support

Calculate the budgeted costs for Chapman & Associates given the following:

	Purco LTD	Max LTD
Partners	24	16
Audit Manager	36	64

4.3

Calculate the cost of the two jobs for

(a) Purco Ltd

(b) Max Ltd