UNIVERSITY EXAMINATIONS\ \ October/November 2023\ MAC3701\ \ Application of Management Accounting Techniques\ \ 100 Marks\ Duration 3 Hours\ \ This paper consists of 8 pages (including this page and the Invigilator App instructions).\ Instructions:\ 1. All questions must be answered, and all calculations must be shown.\ 2. This is a closed-book examination; hence, you may not refer to any of your study material,\ notes, the Internet, etc. during the examination.\ 3. Ignore taxation and the time value of money.\ 4. Please ensure you have carefully read and follow the instructions provided in:\ Tutorial letter 104\ The Invigilator App documents\ Examination instructions document provided with your timetable on myUnisa\ October/November 2023 examination rules\ 5. You are reminded that you should make use of the Invigilator App, about which you will\ find more information on the next page.\ PROPOSED TIMETABLE\ \ Marks Minutes\ \ Question 1: Topics\ Direct and absorption costing; Standard costing; Optimal manufacturing\ mix; Business factors, qualitative factors and other related matters;\ Performance management; Relevant costing.\ \ 100 180\ \ Converting your answers to a PDF file and successfully uploading your\ one PDF file. (You must successfully submit your PDF file before\ 11:30, South African time, 15 November 2023.)\ \ 30\ 100 210\ \ Page 2 of 8\ \ MAC3701\ October/November 2023\ \ CONFIDENTIAL [TURN OVER]\ \ Page 3 of 8\ \ MAC3701\ October/November 2023\ \ CONFIDENTIAL [TURN OVER]\ QUESTION 1 (100 Marks; 180 Minutes)\ YeboToys (Pty) Ltd, based in Polokwane, Limpopo, is a South African toy manufacturing company\ specialising in the manufacturing of sensory balls, which are balls designed to enhance sensory\ experiences for therapeutic or recreational purposes and feature varied textures or sound elements.\ Yebo has two product ranges namely Textured sensory balls (Texture), which have raised surface\ textures, and Sound sensory balls (Sound) containing internal bells that create sounds during\ movement. Yebos products are trademarked because trademarks ensure that Yebo has a strong\ market presence. Yebo prides itself on being a proudly South African company that only uses locally\ manufactured materials in its products. Yebo has a 31 December financial year-end; uses an\ absorption costing system; and values all its inventory items using the first-in-first-out (FIFO) method.\ The manufacturing process is highly automated. Texture is manufactured by mixing Thermoplastic\ elastomer (TPE) with colour pigment. The mixture is then injected into a mould cavity in the shape of\ the textured sensory ball. The textured ball is removed once it has cooled and solidified. Sound balls\ are made similarly to textured balls with the difference that after the sound ball has solidified a small\ opening is made into the ball and direct labourers then insert the bells and heat-seal the opening.\ More TPE and colour pigment are also used in Sound balls because the sound ball needs a thicker\ wall to protect the bells. Yebo is known for its high-quality products hence both ball types undergo\ stringent quality control tests to ensure that they meet Yebos high standards.\ 1 BUDGETED MANAGEMENT INFORMATION FOR THE 2023 FINANCIAL YEAR\ 1.1 Yebo budgeted to manufacture and sell 6 400 Texture balls and 1 600 Sound balls per\ month. One ball is equal to one unit.\ 1.2 There was no budgeted and opening and closing inventory of any type for the 2023 financial\ year.\ 1.3 No losses occur in the manufacturing process.\ 1.4 The budgeted selling price per unit for Texture and Sound was R165 and R320 respectively.\ 1.5 The TPE budgeted purchase price was R53 000 per tonne and Texture uses 100 grams (g)\ per ball and Sound 250 g per ball.\ 1.6 The colour pigment budgeted purchase price was R400 per kilogram (kg). Texture uses 5 g\ per ball and Sound 12,5 g per ball.\ 1.7 Each Sound contains five bells at R1,30 per bell.\ 1.8 The standard idle time allowance for direct labour is 10% and the direct labour clock hour rate\ was R200 per hour. It takes 4,2 and 9,6 direct labour clock minutes to manufacture one\ Texture and Sound respectively.\ 1.9 Variable manufacturing overhead (VMO) costs are allocated based on machine time used in\ the manufacturing of each product. The VMO recovery rate per machine hour is R270 per\ hour and it takes 7,5 and 12 machine minutes to manufacture one Texture and one Sound\ ball respectively.\ 1.10 The fixed manufacturing overheads (FMO) are applied to products based on the number of\ units manufactured. The total budgeted FMO for the year is R1 327 680.\ 1.11 The budgeted other fixed administrative costs are R2 280 000 for the year; occur evenly over\ the months; and are divided equally between the two products.\ \ Page 4 of 8\ \ MAC3701\ October/November 2023\ \ CONFIDENTIAL [TURN OVER]\ \ QUESTION 1 (continued)\ 1.12 The variable selling and distribution costs per unit are the same for both p