Advanced (40 minutes)

SOURCE: ADAPTED FROM ACCA LEVEL 2 MANAGEMENT ACCOUNTING (DECEMBER 1985)

Mahler Products has two manufacturing departments, each producing a single standardised product. The data for unit cost and selling price of these products are as follows:

The factory cost gures are used in the department accounts for the valuation of nished goods inventory and are used in both years.
The department prot and loss accounts have been prepared for the year to 30 June 2XX5. These are given separately below for the two halves of the year:

Department A Department B Direct materials cost R 4 R 6 Direct labour cost 2 4 Variable manufacturing overheads 2 4 Fixed manufacturing overheads 12 16 Factory cost 20 30 Profit mark-up 50% 10 25% 7,50 Selling price 30 37,50