QUESTION ONE (20 Marks)

INFORMATION:

The following information was extracted from the accounting records of Leeds Limited for the month ended 30 April 2021:

INFORMATION

There is no inventory on hand at the beginning of the month of April for Leeds Limited. The total expected production and sales are 75 000 units and 70 000 units respectively. The selling price per unit is R12. The companys expenses can be broken down as follows:

• Fixed manufacturing cost is R34 500,
• Variable manufacturing cost per unit is R3.30,
• Fixed sales and administration costs are R32 000, and
• Variable sales and administration costs are R1.45.

Leeds limited uses the First-In-First out method of inventory evaluation.

REQUIRED:

Using the information provided above, prepare the Income statement of Leeds Limited for the month ended 30 April 2021 using:

1.1 The Absorption costing method (10 marks)

1.2 The Marginal costing method (10 marks)

QUESTION TWO (10 Marks)

Calculate the daily remuneration of W. Rooney using Taylors differential piecework system from

the information provided. (5 marks)

INFORMATION

The following information relates to W. Rooney, an employee of Manchester Enterprises:

2.1

• W. Rooneys standard workday is 9 hours. His standard production time is 55 units per hour.
• His normal wage rate is R73 per hour. He is remunerated in terms of Taylors differential piecework system whereby the following premium applies:
• 80% of piecework rate if below standard
• 120% of piecework rate if standard or above standard
• W. Rooneys production is 300 units per day.

2.2 Use the information provided below to calculate the following: (5 marks)

INFORMATION

Monthly sales of West Ham Limited is 4 400 units at R150 a unit. The purchase price is R90 per unit. The carrying cost amounts to 10% of the purchase price and the ordering cost is R62 per order.

2.2.1 Calculate the Economic order quantity (EOQ) (3 marks)

2.2.2 Calculate the Number of orders that need to be placed for the year (2 marks)