Question 1

ABC Company ("ABC") is a company that maufactures bill boards which is based in Ondangwa. The owner of ABC has little accounting background but due to budget constraints they are not able to hire a fully qualified management accountant. The owner of ABC has hired you as a management accounting inter and has provided you with the following information:

	N$000
Salaries
Factory workers(1)	61 000
Factory management	55 000
Accounting	10 000
Directors	40 000
Depreciation (3)
Factory equipment	10 000
Office equipment	2 200
Buildings	3 500
Purchases from creditors
Raw material	95 000
Water and electricity (4)
Factory	22 000
Storeroom	3 000
Office	4 000
Other
Cleaners (office) (fixed rate as per contract)	1 800
Entertainment (amount is spent every year)	600
External audit fees as per contract	1 500

Additional Information:

1. Factory workers are paid based on the hours worked.

2. Factory management is employed as permanent employees who are paid a fixed salary irrespective of the hours worked.

3. All the assets are depreciated on the straight line method over the useful life of the asset, except delivery vehicles whose depreciation is based on the number of kilometres travelled. The number of kilometres travelled is roughly proportionate to the production volume. There are three buildings on the premises the factory building, the storeroom where the raw materials are store and the administration building.

4. The water and electricity of the storeroom and the office is the same from one month to the next irrespective of any change in the number of units sold or produced. N$3 000 of the water and electricity of the factory is not influenced by the number of units produced.

REQUIRED:

1.1 For each cost above, indicate whether it is a direct, indirect or period cost as well as whether it is fixed or variable.

Question 2

Motor Spares (MS) is a company located in Tsumeb that sells various types of motor vehicle spares. One of its flagship product is a gasket that is mostly used by pickup trucks (bakkies). The gaskets are purchased from a local manufacturer situated in Walvis Bay. The following information has been made available by the procurement and sales departments:

Quarter 2020	Units purchased	Cost per unit	Total purchases (N$)	Units sold
1	300	30	9 000	300
2	400	35	14 000	300
3	400	36	14 400	300
4	300	37	11 100	300
	1 400		48 500	1 200

Inventory at the beginning of 1st quarter was 500 units at N$29 per unit and Inventory at end of 4th quarter was 700 units. Based on inventory reports for the last 5 years, the delivery period for gaskets has been between 1 to 2 weeks and on average MS sales were between 200 to 300 gaskets per quarter.

REQUIRED:

2.1 Using the FIFO method, calculate the cost of goods sold

2.2 Using the LIFO method, calculate the cost of goods sold

2.3 What is the gross profit for the year based on FIFO cost of sales figure given a margin of 20%?

2.4 Re-order level

2.5 Minimum inventory level.

2.6 Name any three documents involved in inventory control.

Question 3

Part A Namibia Body Works (NBW) is a renowned panel beating company based in Windhoek. The business uses sophisticated machinery in the panel beating operations and as a result, the company employ various grade of labour. Panel beater S. Slinger is employed as a panel beater at NBW. Due to the nature of his work, he is remunerated on a time based system. The normal working week at NBW is 45 hours. On the first week of May 2021, S. Slinger worked for 50 hours. The company pay an hourly rate of N$30 per hour. Overtime when worked is remunerated at a time and half.

The following are his deductions for the week:

Social security 0.9% of normal wages

Pension fund 8% of normal wages

Income tax N$315

It is NBWs policy to contribute the same amount as the employees towards the social security fund and pension fund.

Spray painter

Jaco Manetti is employed as a spray painter at NBW on a contract. Since Jaco is on contract he opted to be paid his wages on a daily basis. As such he is remunerated on a differential piecework system based on the number of panels he sprays on a day. His supervisor is responsible for the allocation of panels to be worked on a particular. The supervisor ensures that the panels allocated would ensure a fair remuneration for Jaco. The following information has been extracted for Jaco for one day in May 2021.

Standard time allowed:	20 minutes per panel
Standard work day:	9 hours
Normal wage rate:	N$36 per hour
Premium:	90% of piecework rate if below standard 120% of piecework rate if standard or above standard
Jacos production for the day	32 units

Workshop supervisor F. Frans is the workshop supervisor of NBW. She is paid a fixed salary monthly of N$10 000. To keep her motivated, she is entitled to an annual bonus of N$9 000. NBW contributes N$9 000 to her pension fund annually. She works 9 hours per day from Monday to Friday every week. She is also entitled to 28 days paid vacation leave. There are 12 public holidays in the year for which 9 fall on weekends. Assume a 365 days year.

Required

3.1 Using only information relating to the panel beater, prepare a pay slip for S. Slinger in as much detail as possible.

3.2 Using only information relating to the spray painter, calculate the remuneration for Jaco for the day using the differential piecework system.

3.3 Using only the information relating to the workshop manager, compute Franss hourly recovery tariff per hour.

Question 4

As a result of Corona virus outbreak in the world, an increased demand had caused shortage in hand sanitisers. Cardmium laboratory (CL) has responded to this product shortage by mixing and selling own sanitisers to the public at a very affordable price. Since this is a new product, CL had to quickly assembly a team of five members from final year science students from UNAM working as interns to mix and fill the containers manually. These interns although under strict supervision, had to start from scratch with the mixing and filling of the sanitisers in batches of 50 containers of 500 ml in order to meet the unexpected spike in demand. Each intern will be remunerated at a rate of N$7.50 per hour of production. The supervisor has highlighted in the production report that it takes 12 hours to manufacture the first batch and a total cumulative time of 27 hours to manufacture the 4th batch.

Required

4.1. Using the learning curve techniques, determine the rate of learning for the given scenario.

4.2. Determine the time it takes the team to complete the 8th batch.

4.3. Upon hearing that UNAM manufactures own sanitisers, the Ministry of Health and Social Services has placed a special order of 150 containers. What would be the incremental direct labour cost for the special order assuming normal production are 8 batches?