QUESTION ONE [30] 1. The following figures are available for Insure (Pty) Ltd: Actual (2020) Budget (2020) January February March April May Sales 96 000 120 000 60 000 160 000 200 000 Purchases 100 000 50 000 160 000 84 000 60 000 Sales commission 400 600 1 200 800 400 Wages 800 800 800 ? ? 2. 40% of all sales are for cash. 3. 35% of all purchases are for cash. 4. Collection from debtors are as follows: 20% is collected in the month of the sale and 2% discount is granted on these collections. 60% is collected in the month following the month of sale. 15% is collected in the second month following the month of sale. The remaining 5% is written off as a bad debt. 5. Insure (Pty) Ltd will make an investment of R50 000 in fixed deposit on 01 April 2020. 6. Interest of R500 per month on the fixed deposit is expected to be received from 30 April 2020. 7. Creditors are paid 2 months after date of invoice. 8. Rent expense amounts to R8 000 per month and is payable on the first day of each month. 9. Wages will be increased by 10% in April and will increase by a further 5% in May 2020. 10. A new machine is expected to be purchased for R10 000 cash in May 2020. 11. Commission is paid to sales personnel in the month following the month in which it was earned. 12. On 31 March 2020, Insure (Pty) Ltd had a bank overdraft of R28 000. Required: 1.1. Prepare the debtors collection schedule for April and May 2020. (10) 1.2. Prepare the cash budget for April and May 2020. (20) 2 QUESTION TWO [30] 2.1 A standard quantity of 2 kilograms of material Z at a standard price of R4 per kilogram is allowed for the production of one unit of product Zeplin. The cost figures for the first quarter of 20.6 showed that 4 400 kg of material Z was purchased at R4,20 per kg. 2 000 units of product Zeplin were produced using 4 200 kg of material Z. Required: In respect of material, calculate the following variances: 2.1.1 Purchase price variance (5) 2.1.2 Issue price variance (5) 2.1.3 Quantity variance (5) 2.1.4 Total material variance for the 4 200 kg of material issued. (5) 2.2 To produce one unit of product Zeplin a standard quantity of 4 direct labour hours at a standard rate of R6 per hour is allowed. The wage records show that it took 2 100 hours at R5,90 per hour to produce 500 units of product Zeplin. Required: Calculate the following labour variances: 2.2.1 Labour rate variance (4) 2.2.2 Labour efficiency variance (4) 2.2.3 Total labour variance (2) QUESTION THREE [20] Power Ltd manufactures and sells a single product. The budgeted monthly information for the next year is as follows: Sales per month 70 000 units Selling price per unit R5 Variable costs per unit R2 Fixed costs per month (annual / 12 ) R150 000 Initial investment R2 000 000 Required: 3.1 Calculate the budgeted profit for the year by using cost-volume-profit principles. You do not need to compile the statement of comprehensive income. (5) 3.2 How many units must be sold per year if the company wishes to earn 10% net profit 3 per unit on the initial investment? (5) 3.3 What is the breakeven point in units and in value? (5) 3.4 Using the figures for the year, assume that there is an increase of 10% in fixed costs and an increase to R2.50 per unit in variable costs. Calculate the breakeven point in value and in units. (5) QUESTION FOUR [20] The following information was extracted from the Financial Statements of RR Trading. Extracts from the Statement of Financial Position as at 28 February 2022 2022 2021 R R Inventory 300 000 340 000 Trade and other receivables 113 500 95 000 Trade and other payables 159 000 102 000 SARS Income tax 18 000 (DR) 50 000 (CR) Extracts from the Statement of Financial Performance for the year 28 February 2022 2022 2021 R R Net profit before tax 1 050 500 1 350 000 Income Tax 440 000 520 000 Interest on loans 53 000 44 000 Dividend Paid 380 000 Depreciation 55 000 45 000 Required: 4.1 Prepare the Reconciliation between Profit before Taxation and Cash Generated from Operations Note. (10) 4.2 Prepare an extract of the Cash Flow Statement showing Cash Flows from Operating Activities.