SECTION B $$ MANAGEMENT ACCOUNTING $[50$ MARKS$]$

QUESTION $1(25$ Marks$)$

Jurupa Ltd$,$ a construction company based in Kondinin, Madron has been awarded a contract

by the Cricket World Cup Federation Committee to build the concrete stadium seats for the new

stadium located in Fred Point, Durban. The company director, Bruce Gianni, has appointed

Sujik Bratiko as the production manager with a salary of R$100000$ per month.

MBA$4807$

OCT$/$NOV $2023$ SUPPLEMENTARY EXAMINATION

$6$

The concrete to manufacture each seat cost R$55\mathrm{.}00$ per seat. Sujik has estimated that it would

take $12$ hours to make one seat in the production process at a wage rate of R$296\mathrm{.}00$ per hour

worked with a workforce of one hundred workers in the process. With all the labour hours being

worked, the concrete mixers are estimated to lose R$63525$ in value every year.

The company had to spend an additional R$362565$ for costs incurred to put sign boards at the

different corners of the stadium informing the public that the company is manufacturing the

seats for the new stadium, this is an excellent marketing tool for the company. The construction

site requires a site office to be set up$.$ ManStrong Container Rentals agreed to set up a container

for the company in order to operate the office at a rate of R$36000$ per month. The site will also

employ, Thanda McNeil to do the administration work for the site office at a salary of R$29500$

per month.

As a result of expensive materials and equipment being kept at the site, the managers agreed

that a security company must be contracted to guard all materials and equipment used in

production. After a tender process, Shape Security had been awarded the contract which stated

they would provide $2\backslash$times $24-$hour armed guards per shift for a rate of R$65963$ per month.

Required:

Identify all the costs involved from the information provided above, then classify the cost

you have selected in terms of Cost Behaviour $($Variable$,$ Fixed or Mixed Cost$)$ and then

further classify the cost as either Product Cost $($Manufacturing Cost$)$ or Period Cost

$($Non$-$Manufacturing Cost$).$