Users/daisy/AppData/local/Microsoft/Windows/ NetCache/IE/TKTIYMUUADIEM Advanced%20Managerial%20Acco. * ES | A Read aloud y Draw yhlight y Erase QUESTION ONE [30] 1.1. The managing director of Parser Ltd, a small business, is considering undertaking a once-off contract and has asked her inexperienced accountant to advise on what costs are likely to be incurred so that she can price at a profit. The following schedule has been prepared Costs for special order Notes R Direct wages 1 2 3 Supervisor costs General overheads Machine depreciation Machine overheads Materials 4 28 500 11 500 4 000 2 300 18 000 34 000 98 300 5 6 Notes 1. Direct wages comprise the wages of two employees, particularly skilled in the labour process for this job, who could be transferred from another department to undertake work on the special order. They are fully occupied in their usual department and sub-contracting staff would have to be brought in to undertake the work left behind. Subcontracting costs would be R32 000 for the period of the work. Different subcontractors who are skilled in the special order techniques are available to work on the special order and their costs would amount to R31 300 ORI e WINX ile | C/Users/daisy/AppData/local/Microsoft/Windows/INetCache/IC/IKIIVMUI/ADIEM Advanced%20Marwerkte E A Bad Woud V Drawy Hugh 8 Notes 1. Direct wages comprise the wages of two employees, particularly skilled in the labour rooms for this job, who could be transferred from another department to undertake work on the special order They are fully occupied in their usual department and sub-contracting staff would have to be brought in to undertake the work left behind. Subcontracting costs would be R32 000 for the period of the work. Different subcontractors who are skilled in the special order techniques are available to work on the special order and their costs would amount to R31 300, 2. A supervisor would have to work on the special order. The cost of R15 500 is comprised of R8 000 normal payments plus R3 500 additional bonus for working on the special order. Normal payments refer to the fixed salary of the supervisor. In addition, the supervisor would lose incentive payments in his normal work to R2 500. It is not anticipated that any replacement costs relating to the supervisor's work on other jobs would arise. 3. General overheads comprise an apportionment of R3 000 plus an estimate of R1 000 Incremental overheads 4 Machine depreciation represents the normal period cont based on the duration of the contract. It's anticipated that R500 will be incurred in additional machine maintenance costs 5. Machine overheads (for running costs such as electricity) are charged at R3 per hour. It is estimated that 6 000 hours will be needed for the special order. The machine has 4 000 hours ING e ch y/AppData/local/Microsoft Windows/NetCache/E/TKTIMUL/ADIM Advanced%20Managerial420ACKOR B A Read aloud y Dw Highlight 2 available capacity. The further 2 000 hours required will mean an existing job is taken off the machine resulting in a lost contribution of R2 per hour. 6. Materials represent the purchase costs of 7 5000 kg bought some time ago. The materials are no longer uted and are unlikely to be wanted in the future except on the special order. The completa stock of materiais (amounting to 10 000 kg), or part thereof, could be sold for R420 per kg. The replacement cost material used would be R33 375 7. Costs will be incurred evenly over the project duration of three months. The prospective client is willing to make an upfront payment of R40 000. The outstanding balance will be paid one month after completion Because the business does not have adequate funds to finance the special order, a bank overdraft shortfall will be required. The overdraft will be repaid on the settlement of the outstanding debt. The company uses a cost of capital of 15% to appraise projects. The bank's overdraft rate is 12% for Parser Ltd. The managing director has heard that for special orders such as this relevant costing should be used that also incorporates opportunity costs. She has approached you to create a revised conting schedule based on relevant casting principles Determine the minimum price to be quoted by Parser on the once-off contract. Explain why you included or excluded amounts from your calculation (20) to search ORE e AGEN 2012 hp GP O File C:/Users/daisy/AppData/local/Microsoft Windows/1NetCache/IE/IKTIMUL/ADIM Advanced ManagerialX20Acce Determine the minimum price to be quoted by Parner on the once of contract Explain why you included or excluded amounts from your calculation. (20) 12. Hawthorne Car Hire is a vahide hiring company in KwaZulu-Natal. The previous CEO was over optimistic in hin expectations for the company and had purchased too many vehicles They are considering selling five of the vehicles but have been approached by a dired marketing company that require vehicles for a special contract. The company had purchased Ford Figo's at R140 000 each. Their current book value is R120 000 and could be sold for R105000 The marketing company requires the five vehicles for 180 days at an al indlusive rental of R100 per day. Hawthorne would be responsible for all the running costs including tul for the rental period. They have estimated that the fuel cost will be R5 000 per vehide, The insurance R3 000 and the repairs and maintenance R2 500 per vehicle for the rent period Additionally the rental agent's salary of RS 000 per month would be located to the project 2 and a 5 commission is payable on the real value The rentgent would . O st 10 e here to search AIM Advanced Manual AX File C/Users/daisy/AppData/local/Microsoft Windows/Metache/1E/TIKIMADM Advance20Maria Add y renta pened. They were insurance R3 000 and the repairs and maintenance R2500 perwide for the rulerod Additionally the rental agent's salary of RS 000 per month would be located to the project 2 fre and a 5% commission is payable on the rental value. The rental agent would howww with the company the special contract was not accepted. Additionat administrative cost of R10 000 would be incurred for the contract It is believed that the vehicles resale value would be R6 000 at the end of the 100 days. The vehicles are being depreciated over 5 years Determine whether the marketing company's contract should be accepted or if the vehicle should be sold. You may ignore the time value of money. 190 1401 QUESTION TWO Zek Lid assembles heavy industrial switchboxes Hitherto Zak Ltd has set only one but recently a decin was made to end the product The ORE 35 Type here to search Users/daisy/AppData/local/Microsoft/Windows/ NetCache/IE/TKTIYMUUADIEM Advanced%20Managerial%20Acco. * ES | A Read aloud y Draw yhlight y Erase QUESTION ONE [30] 1.1. The managing director of Parser Ltd, a small business, is considering undertaking a once-off contract and has asked her inexperienced accountant to advise on what costs are likely to be incurred so that she can price at a profit. The following schedule has been prepared Costs for special order Notes R Direct wages 1 2 3 Supervisor costs General overheads Machine depreciation Machine overheads Materials 4 28 500 11 500 4 000 2 300 18 000 34 000 98 300 5 6 Notes 1. Direct wages comprise the wages of two employees, particularly skilled in the labour process for this job, who could be transferred from another department to undertake work on the special order. They are fully occupied in their usual department and sub-contracting staff would have to be brought in to undertake the work left behind. Subcontracting costs would be R32 000 for the period of the work. Different subcontractors who are skilled in the special order techniques are available to work on the special order and their costs would amount to R31 300 ORI e WINX ile | C/Users/daisy/AppData/local/Microsoft/Windows/INetCache/IC/IKIIVMUI/ADIEM Advanced%20Marwerkte E A Bad Woud V Drawy Hugh 8 Notes 1. Direct wages comprise the wages of two employees, particularly skilled in the labour rooms for this job, who could be transferred from another department to undertake work on the special order They are fully occupied in their usual department and sub-contracting staff would have to be brought in to undertake the work left behind. Subcontracting costs would be R32 000 for the period of the work. Different subcontractors who are skilled in the special order techniques are available to work on the special order and their costs would amount to R31 300, 2. A supervisor would have to work on the special order. The cost of R15 500 is comprised of R8 000 normal payments plus R3 500 additional bonus for working on the special order. Normal payments refer to the fixed salary of the supervisor. In addition, the supervisor would lose incentive payments in his normal work to R2 500. It is not anticipated that any replacement costs relating to the supervisor's work on other jobs would arise. 3. General overheads comprise an apportionment of R3 000 plus an estimate of R1 000 Incremental overheads 4 Machine depreciation represents the normal period cont based on the duration of the contract. It's anticipated that R500 will be incurred in additional machine maintenance costs 5. Machine overheads (for running costs such as electricity) are charged at R3 per hour. It is estimated that 6 000 hours will be needed for the special order. The machine has 4 000 hours ING e ch y/AppData/local/Microsoft Windows/NetCache/E/TKTIMUL/ADIM Advanced%20Managerial420ACKOR B A Read aloud y Dw Highlight 2 available capacity. The further 2 000 hours required will mean an existing job is taken off the machine resulting in a lost contribution of R2 per hour. 6. Materials represent the purchase costs of 7 5000 kg bought some time ago. The materials are no longer uted and are unlikely to be wanted in the future except on the special order. The completa stock of materiais (amounting to 10 000 kg), or part thereof, could be sold for R420 per kg. The replacement cost material used would be R33 375 7. Costs will be incurred evenly over the project duration of three months. The prospective client is willing to make an upfront payment of R40 000. The outstanding balance will be paid one month after completion Because the business does not have adequate funds to finance the special order, a bank overdraft shortfall will be required. The overdraft will be repaid on the settlement of the outstanding debt. The company uses a cost of capital of 15% to appraise projects. The bank's overdraft rate is 12% for Parser Ltd. The managing director has heard that for special orders such as this relevant costing should be used that also incorporates opportunity costs. She has approached you to create a revised conting schedule based on relevant casting principles Determine the minimum price to be quoted by Parser on the once-off contract. Explain why you included or excluded amounts from your calculation (20) to search ORE e AGEN 2012 hp GP O File C:/Users/daisy/AppData/local/Microsoft Windows/1NetCache/IE/IKTIMUL/ADIM Advanced ManagerialX20Acce Determine the minimum price to be quoted by Parner on the once of contract Explain why you included or excluded amounts from your calculation. (20) 12. Hawthorne Car Hire is a vahide hiring company in KwaZulu-Natal. The previous CEO was over optimistic in hin expectations for the company and had purchased too many vehicles They are considering selling five of the vehicles but have been approached by a dired marketing company that require vehicles for a special contract. The company had purchased Ford Figo's at R140 000 each. Their current book value is R120 000 and could be sold for R105000 The marketing company requires the five vehicles for 180 days at an al indlusive rental of R100 per day. Hawthorne would be responsible for all the running costs including tul for the rental period. They have estimated that the fuel cost will be R5 000 per vehide, The insurance R3 000 and the repairs and maintenance R2 500 per vehicle for the rent period Additionally the rental agent's salary of RS 000 per month would be located to the project 2 and a 5 commission is payable on the real value The rentgent would . O st 10 e here to search AIM Advanced Manual AX File C/Users/daisy/AppData/local/Microsoft Windows/Metache/1E/TIKIMADM Advance20Maria Add y renta pened. They were insurance R3 000 and the repairs and maintenance R2500 perwide for the rulerod Additionally the rental agent's salary of RS 000 per month would be located to the project 2 fre and a 5% commission is payable on the rental value. The rental agent would howww with the company the special contract was not accepted. Additionat administrative cost of R10 000 would be incurred for the contract It is believed that the vehicles resale value would be R6 000 at the end of the 100 days. The vehicles are being depreciated over 5 years Determine whether the marketing company's contract should be accepted or if the vehicle should be sold. You may ignore the time value of money. 190 1401 QUESTION TWO Zek Lid assembles heavy industrial switchboxes Hitherto Zak Ltd has set only one but recently a decin was made to end the product The ORE 35 Type here to search