QUESTION ONE (20 Marks) INFORMATION Busta Limited plans to manufacture bar fridges and the following information is applicable:

Estimated sales for the year	5 000 units at R3 400 each
Estimated costs for the year:
Variable costs
Direct Material	R520 per unit
Direct Labour	R350 per unit
Variable Manufacturing Cost	R110 per unit
Selling expenses	6% of selling price per unit sold
Factory overheads (all fixed)	R625 000
Administrative expenses (all fixed)	R462 000

REQUIRED:

1.1 Calculate the total net profit for the estimated figures. 1.2 Calculate the break-even quantity 1.3 Calculate the break-even value 1.4 Calculate the break-even value using the marginal income ratio. 1.5 Calculate the target sales volume to achieve a profit of R920 500.. 1.6 Calculate the new break-even quantity and value if the selling price is increased by 12% 1.7 Calculate the margin of safety in units at the original budgeted volume and price

(3 marks) (3 marks) (2 marks) (3 marks) (3 marks) (4 marks) (2 marks)

QUESTION TWO (20 Marks)

REQUIRED
Study the information provided below and answer the following questions:
2.1	Calculate the Payback Period of both projects (answers expressed in years, months and days.) Which project would you choose on the basis of payback period? Why?	(6 marks)
2.2	Calculate the Accounting Rate of Return for both projects (answer expressed to two decimal places).	(6 marks)
2.3	Calculate the Net Present Value for both projects. (Round off amounts to the nearest Rand.)	(6 marks)
2.4	Based on your calculations from 2.1 2.3, which project should Rothmans Limited choose? Why? .	(2 marks)

INFORMATION
The following information relates to two projects under consideration by Rothmans Limited:
Project A	Project B
Initial cost	R1 555 000	R1 550 000
Expected life	7 years	7 years
Expected scrap value	0	0
Expected net cash flows:	R	R
End of year	1	450 000	420 000
2	420 000	420 000
3	400 000	420 000
4	200 000	420 000
5	180 000	420 000
6	350 000	420 000
7	450 000	420 000
The company estimates that its cost of capital is 13%.

QUESTION THREE (20 Marks) The following projections have been made by Orange Traders for the period ending 31 March 2022: 1. Total sales:

January	February	March
R1 450 000	R1 875 000	R1 400 000

2. Cash sales are 42% of total sales and these customers are allowed a cash discount of 4% and the balance is on credit. 3. Credit sales are collected as follows: 15% in the month of the sale 55% in the month after the sale 28% two months after the sale and the balance is written off as irrecoverable. 4. Total purchases:

January	February	March
Cash purchases	62 500	150 000	200 000
Credit purchases	250 000	300 000	325 000

A discount of 4% is received on cash purchases. Creditors are paid in full one month after the month of purchases. 5. Operating expenses amount to R51 500 for January and are paid in cash. They are expected to increase by 1.5% per month thereafter. 6. Monthly salaries amount to R80 000 per month. They are expected to increase by 8.5% with effect from 1 March 2022. 7. Rent income is R17 800 per month. The rent will increase to R19 000 on 1 March 2022. 8. An investment of R320 000 will be made at My Bank on 28 February 2022. The interest rate will be 9% per annum and paid every month starting on 31 March 2022. 9. Orange Traders expects to have an unfavorable bank balance of R124 500 on 1 January 2022. Required: Use the information supplied to prepare the following for Silver City Traders for the three months ending 31 March 2022. 3.1 Debtors collection schedule. (6 Marks) 3.2 Cash budget statement. (14 Marks) QUESTION FOUR (20 Marks)

4.1	REQUIRED
Complete the table below for the transactions provided using the following methods of inventory valuation:
4.1.1	Weighted average cost	(7 marks)
4.1.2	FIFO	(6 marks)
Purchases	Issues/Returns to supplier	Balance
Date	Quantity	Price	Amount	Quantity	Price	Amount	Quantity	Price	Amount

INFORMATION
The following information was extracted from the records of Planet Limited, a manufacturing company, for an inventory item called Fitness Plus used in Project A for March 2021:
March	Transaction details
01 07 09 10 16 22 30	Opening inventory: 6 000 units @ R40 each. Invoice received for 144 000 units @ R44 each. Transferred 105 000 units to the production department. Returned 15 000 damaged units (purchased 07 March) to the supplier. Invoice received for 30 000 units at R48 each. Transferred 45 000 units to production. Invoice received for 15 000 units @ R52 each.

4.2

Popi Limited uses the standard costing system. The standards for Product A are as follows:
Material Labour Variable overheads Fixed overheads Normal production	8 kilograms at R5.30 per kilogram 8 hours at R100 per hour R40 per labour hour R50 000 29 000 units per month
Actual information for the month May 2021 is:
Material Labour Variable overheads Fixed overheads Production	182 000 kilograms at R6.20 per kilogram 198 000 hours at R73 per hour R35 per labour hour R31 200 25 000 units

Required
4.2.1	Calculate the material quantity variance. (2 marks)
4.2.2	Calculate the variable manufacturing overhead efficiency variance. (2 marks)
4.2.3	Fixed manufacturing overhead volume variance. (3 marks)

QUESTION FIVE (20 Marks) INFORMATION The following information relates to the only product made by Fabby Limited for the year ended 31 December 2021: Opening Inventory 0

Number of units manufactured	99 000
Number of units sold (at R5 940 per unit)	98 000
Direct Materials costs per unit	R990
Direct Labour costs per unit R1980
Variable manufacturing overheads cost per unit	R980
Variable selling expenses per unit Fixed Manufacturing overhead cost	R220 R4 950 000

Fixed selling and administrative expenses R1 980 000 REQUIRED: Draft the income statement for the year ended 31 December 2021 using the: 5.1 Marginal Costing method (10 marks) 5.2 Absorption Costing method (10 marks)