ASSIGNMENT: BBA/BCOM - MANAGEMENT ACCOUNTING (MAIN) QUESTION 1 1.1 1.2 INTAKE (20 Marks) REQUIRED Calculate the hourly recovery tariff for K. Ntuli from the information provided below. INFORMATION (4 marks) The annual basic salary of K. Ntuli is R324 000. She is entitled to an annual bonus of R27 540. Her employer contributes 7.5% of her basic salary to her pension fund. Her normal working week comprises 45 hours (9 hours per day from Monday to Friday). She is entitled to 28 consecutive days paid vacation leave. There are 13 public holidays in the year (365 days), 8 of which fall on weekdays. REQUIRED Use the information provided below to calculate the total remuneration of each of the three employees (on the first day of June 2017) using Taylor's differential piecework system. INFORMATION (4 marks) Rambo Ltd uses Taylor's differential piecework system to remunerate employees. The following information was extracted from its records on the first day of June 2017: Standard production Standard hours per day Normal wage rate Premium Production of employees: 180 units per hour 9 hours R90 per hour 90% of piecework rate if below standard; 110% of piecework rate if standard or above standard 1 500 units Mary Jill Ann 1 620 units 1980 units 1.3 Use the table and information below to determine the the value of issues between 01 and 15 June 2017 and the value of inventory on 15 June 2017 using the: 1.3.1 First-in-first-out method. 1.3.2 Weighted average cost method. (4 marks) (4 marks) Purchases Issues and returns Balance Date Quantity Price Amount Quantity Price Amount Quantity Price Amount 1.4 INFORMATION Hero Manufacturers made the following material purchases, returns to supplier and issue to production during the first half of June 2017: June Units Price Inventory 01 1 400 R3.00 Purchases 07 600 R4.00 Purchases 11 3 000 R5.00 Return (see 11th) 12 1 000 ? Issue 15 3 500 ? REQUIRED Use the information provided below to calculate the number of orders that should be placed, based on the annual economic order quantity. INFORMATION (4 marks) Maxwell Limited manufactures a product which has a steady monthly demand of 12 000 units. The product requires a component that is purchased from a supplier at R30 per unit. The ordering cost is R1.80 per order. The holding cost is 10% of the unit purchase price. QUESTION 2 2.1 REQUIRED Prepare the Income Statement of Rhea Limited for the month ended 31 May 2017 using the marginal costing method. INFORMATION (20 Marks) (11 marks) The following information was extracted from the accounting records of Rhea Limited for the month ended 31 May 2017: Inventory on 01 May 2017 Production Sales Units Nil 30 000 25.000 Fixed manufacturing costs R240 000 Variable manufacturing costs per unit R40 Selling price per unit R100 Marketing costs: Fixed costs Advertising Sales commission Administration costs: Salaries Other office costs R18 000 per month R22 000 per month R6 per unit sold R50 000 per month R4 per unit sold 2.2 REQUIRED Use the information provided below to calculate the following variances of Chrysanth Limited for January 2017: 2.2.1 Total material variance 2.2.2 Total labour variance 2.2.3 Total variable overheads variance Note: Indicate whether each variance is favourable or unfavourable. INFORMATION Chrysanth Limited uses the standard costing system. The standards for the product that it manufactures are as follows: Material G Labour Variable overheads Fixed overheads Normal production 4 kg @ R9 per kg 10 hours @ R90 per hour R20 per labour hour R40 000 16 000 per month Actual information for January 2017: Material G used Labour Variable overheads Fixed overheads 59 000 kg @ R10 per kg 160 000 hours @ R92 per hour R22 per labour hour R42 000 Production 15 000 (3 marks) (3 marks) (3 marks) QUESTION 3 (20 Marks) 3.1 REQUIRED Study the information given below and answer each of the following questions independently: Calculate the total Marginal Income and Net Profit/Loss if all the tables are sold. 3.2 Calculate the break-even value using the marginal income ratio. (4 marks) (4 marks) 3.3 Calculate the number of units that must be manufactured and sold if the company wishes to earn a net profit of R390 000. (4 marks) 3.4 Based on the expected sales volume of 2 500 units, determine the sales price per unit that will enable the company to earn a net profit of R650 000. (4 marks) 3.5 Calculate the new total Marginal Income if a decrease in the selling price by R100 per unit is expected to increase sales by 400 units. (4 marks) INFORMATION Nysa Limited manufactures tables. The following information was extracted from the budget for the year ending 30 June 2018: 1. Total production and sales 2 500 units 2. Inventory on 01 July 2017 Nil 2. Selling price per table R2 000 3. Variable production cost per table: Direct materials R250 Direct labour Overheads 4. Fixed production overhead costs 5. Other costs: R150 R100 R240 000 Fixed marketing and administration Sales commission 6. Inventory on 30 June 2018 R280 000 10% of selling price Nil QUESTION 4 REQUIRED Use the following information provided by Milan Enterprises to prepare the: (20 Marks) 4.1 Debtors Collection Schedule for January and February 2018. (4 marks) 4.2 Cash Budget for January and February 2018. (16 marks) Note: Where applicable, round off amounts to the nearest Rand. INFORMATION 1. The bank balance of Milan Enterprises was R37 000 (unfavourable) on 31 December 2017. 2. Credit sales were forecasted as follows: December 2017 R288 000 January 2018 R270 000 February 2018 R324 000 3. 4. 5. * Credit sales usually make up 80% of the total sales. Cash sales make up the balance. Credit sales are normally collected as follows: 20% in the month in which the transaction takes place and these customers are entitled to a 5% discount. * 75% in the following month. The rest is usually written off as bad debts. Budgeted purchases of inventory are as follows: Total purchases December 2017 R250 000 January 2018 R200 000 February 2018 R230 000 6. 7. 8. Sixty percent (60%) of the purchases are for cash in order to take advantage of a 10% cash discount. The remaining purchases are on credit and are paid for one month after the purchase. The monthly salaries amount to R72 000. Salaries are expected to increase by 10% with effect from 01 February 2018 for those employees who presently make up 70% of the salary bill. The salaries of the remaining 30% are expected to increase by 7.5%. Interest at 15% per annum on the loan balance is paid monthly. The loan balance on 31 December 2017 was R360 000 and a repayment of R100 000 will be made on 01 February 2018. Part of the building is sublet to a tenant and rent is collected monthly. The lease agreement for the year ended 31 January 2018 reflected the rental as R86 400 per annum. The rental will increase by 12% with effect from 01 February 2018. Other operating expenses amount to R18 000 per month. This amount excludes R3 000 for depreciation. Operating expenses are paid for in the month in which they are incurred. 5.1 QUESTION 5 REQUIRED Calculate the Payback Period of Project G (expressed in years, months and days). (20 Marks) (3 marks) 5.2 Calculate the Accounting Rate of Return (on average investment) of Project F (expressed to two decimal places). (5 marks) 5.3 Calculate the Net Present Value of Project F (with amounts rounded off to the nearest Rand). (4 marks) 5.4 Calculate the Internal Rate of Return (IRR) of Project G (expressed to two decimal places). (6 marks) 5.5 Comment on the IRR calculated above. (2 marks) INFORMATION 1. Nascar Limited has the option to invest in machinery in Projects F and G but finance is only available to invest in one of them. The following projected data is available: Project F Project G R R Initial cost 250 000 250 000 Depreciation per year 50 000 50 000 Net cash inflows: Year 1 70 000 82 000 Year 2 75.000 82 000 Year 3 82 000 82 000 Year 4 85 000 82.000 Year 5 90 000 82 000 Additional information Project F is expected to have a scrap value of R20 000 (not included in the figures above). No scrap value is expected for Project G. 2. The cost of capital is 15%. TOTAL: 100