QUESTION 6 The transport department of NUST operates a fleet of assorted vehicles. these vehicles are used as the need arises by the various schools. Each month a statement is prepared for the transport department comparing actual results with budget. One of the items in the transport department's monthly statement is the cost of vehicle maintenance. This maintenance is carried out by the employees of the department. To facilitate his control the transport manager has asked the future statements should show vehicle maintenance costs analysed into fixed and variable costs. Data from the previous six months July to December inclusive are given below: REQUIRED: 6.1 Use the high-low method to determine the total fixed cost and the variable cost per hour. 6.2 What vehicle maintenance costs would you expect to be incurred at the level of 11000 running hours? 6.3 Determine the fixed cost per hour to be incurred at the level of 10000 running hours? QUESTION7 Volt sun itd manufactures batteries used in electricity panels, It has supplied the following information for the vear ended 10 June 2010 : Required 1. Classify the above costs in variable, semi-variable and fixed by indicating the variable cost per unit and fixed cost component where applicable. 2. Calculate the flexible budget at the level of production of 2500 units using the cost classification you have found in (a). 1.1 State the three main elements of manufacturing costs. (3) 1.2 Conversion cost representing 60% of manufacturing cost amounts to N$876000. Direct labour amounts to 37.5% of conversion cost. Required: Calculate the following amounts: 1.2.11.2.21.2.31.2.41.2.51.3Statetwodifferencesbetweenfinancialaccountingandmanagementaccounting(2)DirectmaterialDirectlabourManufacturingoverheadsManufacturingcostPrimecost(3)(3)(3)(3)(3) QUESTION 2 (9 marks) A business has bought and sold identical items of inventory during 2016 as follows: 1/7/163/7/165/7/16BalanceBoughtSold1000units1000units1200units@N$10each@N$16each@N$20each Required: 1. Determine the average price of closing inventory on the 3 July 2016 using the Weighted Average Cost (WACO) method of inventory valuation. 2. Determine the value of closing inventory 5 July 2016 using the (WACO) method of inventory valuation. (3) 3. Determine the value of closing inventory 5 July 2016 using the First in, First out (FIFO) cost method. (3) Awaseb is a factory worker who earns N$30 per hour. His normal work week is 8 hours per day from Monday to Friday. He is paid time-and-a-half for normal overtime and double the normal rate for work on Sundays and Public Holidays. During the past week the following hours were recorded on his clock card; and there was no public day during the week. Required: Calculate the gross wage earned by Awaseb during the week. (10 marks) QUESTION 4 (19 marks) Tura-Babe, a friend of yours, has recently set up a small business making curtains. She has supplied you with the following figures, and has asked your advice on a number of issues: The above total production costs are based on producing 1200 pairs of curtains per month, while, selling and administration costs are based on units sold. The number of curtains to be sold will be 80% of the units produced and a selling price is N$15.00 Tura-Babe wants to know: 1. How much profit she will make at the proposed level and selling price. (10) 2. If sales are slower than expected, what should be the selling price whereby there is neither any profit nor any loss? (9) QUESTION 5 (20 marks) Play-with-fire Ltd manufactures plastic model kits for the toy market. It operates two production cost centres (Moulding and Assembly) and a service department (Canteen). The following overheads budget for 2015-2016 has been submitted. The canteen department costs are to be reapportioned using the number of production employees. Required: (1) Allocate, where applicable and to the nearest N\$, each of the overheads using an appropriate allocation base between the production departments and canteen department. (2) Re-apportion the canteen department's overheads to the production departments using the number of production employees, to the nearest N\$. (4) (3) Calculate the overhead absorption rates (OAR)/predetermined overhead rate for the Moulding and Assembly Departments (two decimal places). The overheads absorption rates (OAR) are allocated to the Moulding department on the basis of machine hours and in the Assembly department on the basis of direct labour hours. (4) The storekeeper of a tyre manufacturing company has to plan the firm's inventory requirements for the valves used in the tyres. The monthly usage is 500 valves. The storekeeper has reported that the cost to keep one valve in the storeroom for one year is N\$5. The valves are supplied by a firm in Angola which normally delivers the valves between one month and 2 months after the order was placed. The cost to place an order is N$150. The storekeeper has asked you to assist him in calculating some of the inventory levels. Required: Calculate the following inventory levels: 6.1Economicorderquantity6.2Re-orderlevel(Re-orderpoint)6.3Minimuminventorylevel(Safetystock)(3)6.4Averageinventorylevel6.5Maximuminventorylevel(4) 6.6 Annual ordering cost (3) 6.7 Annual carrying cost (3)