SECTION A

[100 MARKS]

Answer ALL the questions in this section.

Question 1

Use the information provided to answer the questions.

1.1 Calculate the annual economic order quantity from the information provided below. (4 marks)

INFORMATION

GM Electronics expects to sell 800 alarm systems each month of 2022 at R4 000 each. The cost price of each alarm system is R2 000. The inventory holding cost of an alarm system is 1% of the unit cost price. The cost of placing an order for the alarm systems is estimated at R60.

1.2 Study the information provided below and calculate the hourly recovery tariff per hour (expressed in rands and cents) of Martha.

INFORMATION

The basic annual salary of Martha is R576 000. She is entitled to an annual bonus of 90% of her basic monthly salary. Her employer contributes 8% of her basic salary to her pension fund. She works for 45 hours per week (from Monday to Friday). She is entitled to 21 days paid vacation leave. There are 12 public holidays in the year (365 days), 8 of which fall on weekdays.

1.3 Use the information provided below to calculate Samantha's remuneration for 17 March 2022. (4 marks)

INFORMATION

Samantha's normal wage is R300 per hour and her normal working day is 8 hours. The standard production time for each employee is 4 units for every 30 minutes. On 17 March 2022, Samantha's production was 76 units. Using the Halsey bonus system, a bonus of 50% of the time saved is given to employees.

1.4 Calculate the earnings of G. Henry using the straight piecework incentive scheme from the information provided below.

INFORMATION

G. Henry is employed by Royal Manufacturers and is paid R250 per hour. His normal working day is 9 hours. The standard time to produce a product is 5 minutes. If G. Henry produces more than his quota, he receives 1 times the hourly rate on the additional output. G. Henry produced 132 units for the day

1.5 From the information provided below complete the table using the FIFO method of inventory valuation:

Purchased

Issues

and returns

Balance

Date

Quantity

Price

Amount

Quantity Price Amount

Quantity

Price Amount

The following transactions of Franco Manufacturers took place during March 2022

DATE	TRANSACTION	UNITS	PRICE PER UNITS
01	Opening Inventory	1600	R3.50
05	Purchased from a suppler	600	R4.00
12	Purchased from a supplier	1300	R4.50
24	Purchased from a supplier	1600	R5.00
16	Issued to production	1800	?
28	Issued to production	1300	?

Question 2

2.1 Answer the questions from the information provided.

Use the information given below to prepare the Income Statement for March 2022 according to the absorption costing method.

INFORMATION

The following information was extracted from the accounting records of Alpha Enterprises for the month ended 31 March 2022:

Sales 3 200 units

Selling price per unit R100

Finished products on 01 March 2022 400 units

Products manufactured during the month 3 600 units

Variable manufacturing costs per unit R26

Variable selling and administrative costs per unit sold R12

Fixed manufacturing costs R25 200

Fixed selling and administrative costs R12 400

Additional information

The variable manufacturing cost per unit and total manufacturing cost per unit of the finished goods on 01 March 2022 was R21.60 and R26.20 respectively.

2.2 Use the information provided below to calculate the following manufacturing variances for March 2022. Note: Each answer must state whether the variance is favourable or unfavourable.

2.1 Labour rate variance (2 marks)

2.2 Labour efficiency variance (2 marks

2.2.3 Variable overheads efficiency variance (2 marks)

2.2.4 Variable overheads expenditure variance (2 marks)

INFORMATION

Nevada Limited set a standard labour rate of R32 per hour and a standard variable overhead rate of R3.80 per labour hour.

Actual hours worked for March 2022 were 4 910 at a cost of R149 264. The actual variable overhead cost incurred was R19 640. The standard allowance of labour hours for the output achieved was 5 000 hours.

Question 3

Study the information given below and answer each of the following questions independently:

3.1 Calculate the total Marginal Income and Net Profit/Loss if all the tables are sold. (4 marks)

3.2 Use the marginal income ratio to calculate the break-even value. (4 marks)

3.3 Calculate the new total Marginal Income and Net Profit/Loss, if an increase in advertising expense by R100 000 is expected to increase sales by 400 units.(4 marks)

3.4 How many units must be sold if the company wishes to earn a net profit of R298 920. (4 marks)

3.5 Based on the expected sales volume of 2 400 units, determine the sales price per unit (expressed in rands and cents) that will enable the company to break even.

INFORMATION

Samcor Limited manufactures tables. The following information was extracted from the budget for the year ended 30 June 2022:

1. Total production and sales 2 400 units

2. Selling price per table R1 200

3. Variable manufacturing costs per table:

Direct material R288

Direct labour R192

Overheads R96

4. Fixed manufacturing overheads R216 960

5. Other costs:

Fixed marketing and administrative costs R144 000 Sales commission 5%

Question 4

Use the information provided below to prepare the following for January and February 2023:

4.1 Debtors Collection Schedule (4 marks)

4.2 Cash Budget

INFORMATION

The following information was provided by Intel Enterprises:

1. The bank balance on 31 December 2022 is expected to be R40 000 (unfavourable).

2. Credit sales are expected to be as follows:

December 2022 R576 000

January 2023 R540 000

February 2023 R648 000

3. Credit sales usually make up 40% of the total sales. Cash sales make up the balance. Cash customers receive a 10% discount.

4. Credit sales are normally collected as follows:

* 30% in the month in which the transaction takes place, and these customers are entitled to a 5% discount.

* 65% in the following month

The rest is usually written off as bad debts.

5. Budgeted purchases of inventory are as follows:

December 2022 R1 000 000

January 2023 R800 000

February R920 000

6. Fifty percent (50%) of the purchases are for cash. The remainder is paid in the month after the purchase.

7. The monthly salaries amount to R150 000. Salaries are expected to increase by 9% with effect from 01 February 2023 for those employees who presently make up 80% of the salary bill. The salaries of the remaining 20% are expected to increase by 6%.

8. Interest at 18% per annum on the loan balance is paid at the end of each month. The loan balance on 31 December 2022 was R400 000 and a capital repayment of R100 000 will be made on 01 February 2023.

9. Part of the building is sublet to a tenant and rent is collected monthly. The lease agreement for the year ended 31 January 2023 reflected the rental as R180 000 per annum. The rental will increase by 10% with effect from 01 February 2023.

10. Other operating expenses are budgeted at R40 000 per month. This amount includes R5 000 for depreciation. Operating expenses are paid for in the month in which they are incurred.