PART A (42 marks) LightsON (Pty) Ltd makes LED Lightbulbs. The entity has a dual accounting reporting system, whereby it uses variable costing for internal management reporting purposes and absorption costing (based on a fully integrated system) for external reporting requirements. In the latter case, overheads are absorbed on the basis of budgeted production for each of the respective quarterly periods. The financial yearend is 31 December 2023. Budget data: At the beginning of the current financial year (2023), the management accountant, Mr. Smart, prepared a forecast budget for quarters 1 and 2 based on the following: 1st Quarter 2nd Quarter Selling price per unit R200 R220 Sales (units) 210 000 240 000 Production (units) 210 000 240 000 Prime cost per unit R75 R75 Variable selling and administration cost per unit R5 R5 Fixed selling and administration overhead R6 750 000 R7 250 000 Fixed production overhead Note A R10 000 000 Variable production overhead per unit Note A R20 Note A Mr. Smart derived the budgeted semi-variable overheads according to the following cost-volume relationship: 1st Quarter 2nd Quarter Units produced 150 000 210 000 Production overheads* R12 000 000 R13 200 000 * Production overheads are incurred on the basis of units produced. Additional information: 1. There was no opening inventory of raw materials, work-in-progress or finished goods as at 1 January 2023. All materials purchased during the financial year were fully utilised and there was no work-in-progress at the end of the financial year. 2. LightsON (Pty) Ltd achieved its sales and production targets in the 1st quarter as per the budget. 3. It was anticipated that sales would improve in the 2nd quarter of the entitys financial year however, 230 000 units were produced and only 210 000 units were sold. 4. The actual selling price, all variable costs and fixed selling and administration costs were exactly as budgeted. However, the actual fixed production overhead expenditure was R9 500 000 for the 1st quarter and R8 800 000 in the second quarter.

REQUIRED: 1.1 Calculate the following for the 1st quarter and 2nd quarter respectively: 1.1.1 Budgeted break-even units (10 marks) 1.1.2. Percentage margin of safety (4 marks) 1.1.3 Contribution ratio (4 marks) 1.2 Analyse the performance of LightsON (Pty) Ltd for both the 1st and 2nd quarters based on your calculations performed in questions 1.1.1 to 1.1.3. (2 marks) 1.3 Prepare LightsON (Pty) Ltds actual financial results for both the 1st and 2nd quarters that will be used for internal reporting purposes. (12 marks) 1.4 Prepare LightsON (Pty) Ltds actual financial results on a quarterly basis for external purposes and reconcile the profits to those achieved in question 1.3. (10 marks)