This question consists of two unrelated parts, PART A and PART B. PART A (42 marks) LightsON (Pty) Ltd makes LED Lightbulbs. The entity has a dual accounting reporting system, whereby it uses variable costing for internal management reporting purposes and absorption costing (based on a fully integrated system) for external reporting requirements. In the latter case, overheads are absorbed on the basis of budgeted production for each of the respective quarterly periods. The financial yearend is 31 December 2023. Budget data: At the beginning of the current financial year (2023), the management accountant, Mr. Smart, prepared a forecast budget for quarters 1 and 2 based on the following: Note A Mr. Smart derived the budgeted semi-variable overheads according to the following cost-volume relationship: * Production overheads are incurred on the basis of units produced. Additional information: 1. There was no opening inventory of raw materials, work-in-progress or finished goods as at 1 January 2023. All materials purchased during the financial year were fully utilised and there was no work-in-progress at the end of the financial year. 2. LightsON (Pty) Ltd achieved its sales and production targets in the 1st quarter as per the budget. 3. It was anticipated that sales would improve in the 2 nd quarter of the entity's financial year however, 230000 units were produced and only 210000 units were sold. 4. The actual selling price, all variable costs and fixed selling and administration costs were exactly as budgeted. However, the actual fixed production overhead expenditure was R9 500000 for the 1st quarter and R8 800000 in the second quarter. 1.1 Calculate the following for the 1 st quarter and 2 nd quarter respectively: 1.1.1 Budgeted break-even units 1.1.2. Percentage margin of safety 1.1.3 Contribution ratio (10 marks) (4 marks) (4 marks) 1.2 Analyse the performance of LightsON (Pty) Ltd for both the 1st and 2nd quarters based on your calculations performed in questions 1.1.1 to 1.1.3. (2 marks) 1.3 Prepare LightsON (Pty) Ltd's actual financial results for both the 1st and 2nd quarters that will be used for internal reporting purposes. (12 marks) 1.4 Prepare LightsON (Pty) Ltd's actual financial results on a quarterly basis for external purposes and reconcile the profits to those achieved in question 1.3. (10 marks) Round to two decimals where applicable. LightsON (Pty) Ltd is bidding for a contract to supply LED lightbulbs to a manufacturing entity called No Lights Ltd. The management accountant wants to determine the total raw materials cost (broken down per inventory item) to manufacture the LED lightbulbs. A year ago, LightsON (Pty) Ltd purchased 500 grams of Material A for an order that was cancelled and for which, prior to this contract's possibility, LightsOn (Pty) Ltd had found no alternative use. The best offer the entity had so far is from a scrap metal dealer offering to acquire the entire 500 grams of Material A at a guaranteed price of R50 per gram. LightsON (Pty) Ltd however declined the offer from the scrap metal dealer as that would have resulted in a a loss, as the entity originally paid R100 per gram for Material A. Lights ON (Pty) Ltd is keen to use it for No Lights Ltd's order. Materials B and D are in regular use. Material C, which costs R40 per unit, is not in regular use but could be used as a substitute for an inventory item in another job that is unrelated to the LED lightbulbs. Raw material requirements: Additional information: The management accountant derived the following total raw materials cost using the information above: REQUIRED: Using the relevant costing principles, critically discuss the calculation of the raw material costs per inventory item that was done by the management accountant. Support your answer with calculations where necessary. (8 marks) Round to two decimals where applicable. This question consists of two unrelated parts, PART A and PART B. PART A (42 marks) LightsON (Pty) Ltd makes LED Lightbulbs. The entity has a dual accounting reporting system, whereby it uses variable costing for internal management reporting purposes and absorption costing (based on a fully integrated system) for external reporting requirements. In the latter case, overheads are absorbed on the basis of budgeted production for each of the respective quarterly periods. The financial yearend is 31 December 2023. Budget data: At the beginning of the current financial year (2023), the management accountant, Mr. Smart, prepared a forecast budget for quarters 1 and 2 based on the following: Note A Mr. Smart derived the budgeted semi-variable overheads according to the following cost-volume relationship: * Production overheads are incurred on the basis of units produced. Additional information: 1. There was no opening inventory of raw materials, work-in-progress or finished goods as at 1 January 2023. All materials purchased during the financial year were fully utilised and there was no work-in-progress at the end of the financial year. 2. LightsON (Pty) Ltd achieved its sales and production targets in the 1st quarter as per the budget. 3. It was anticipated that sales would improve in the 2 nd quarter of the entity's financial year however, 230000 units were produced and only 210000 units were sold. 4. The actual selling price, all variable costs and fixed selling and administration costs were exactly as budgeted. However, the actual fixed production overhead expenditure was R9 500000 for the 1st quarter and R8 800000 in the second quarter. 1.1 Calculate the following for the 1 st quarter and 2 nd quarter respectively: 1.1.1 Budgeted break-even units 1.1.2. Percentage margin of safety 1.1.3 Contribution ratio (10 marks) (4 marks) (4 marks) 1.2 Analyse the performance of LightsON (Pty) Ltd for both the 1st and 2nd quarters based on your calculations performed in questions 1.1.1 to 1.1.3. (2 marks) 1.3 Prepare LightsON (Pty) Ltd's actual financial results for both the 1st and 2nd quarters that will be used for internal reporting purposes. (12 marks) 1.4 Prepare LightsON (Pty) Ltd's actual financial results on a quarterly basis for external purposes and reconcile the profits to those achieved in question 1.3. (10 marks) Round to two decimals where applicable. LightsON (Pty) Ltd is bidding for a contract to supply LED lightbulbs to a manufacturing entity called No Lights Ltd. The management accountant wants to determine the total raw materials cost (broken down per inventory item) to manufacture the LED lightbulbs. A year ago, LightsON (Pty) Ltd purchased 500 grams of Material A for an order that was cancelled and for which, prior to this contract's possibility, LightsOn (Pty) Ltd had found no alternative use. The best offer the entity had so far is from a scrap metal dealer offering to acquire the entire 500 grams of Material A at a guaranteed price of R50 per gram. LightsON (Pty) Ltd however declined the offer from the scrap metal dealer as that would have resulted in a a loss, as the entity originally paid R100 per gram for Material A. Lights ON (Pty) Ltd is keen to use it for No Lights Ltd's order. Materials B and D are in regular use. Material C, which costs R40 per unit, is not in regular use but could be used as a substitute for an inventory item in another job that is unrelated to the LED lightbulbs. Raw material requirements: Additional information: The management accountant derived the following total raw materials cost using the information above: REQUIRED: Using the relevant costing principles, critically discuss the calculation of the raw material costs per inventory item that was done by the management accountant. Support your answer with calculations where necessary. (8 marks) Round to two decimals where applicable