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BAC621C-BUSINESS ACCOUNTING- 1ST OPP JUNE 2024 |
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HP-GSB~
HAROLDPUPKEWITZ
GraduateSchoolof Business
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
HAROLDPUPKEWITZGRADUATESCHOOLOF BUSINESS
QUALIFICATION:DIPLOMA IN BUSINESSPROCESSMANAGEMENT
QUALIFICATIONCODE:06DBPM LEVEL:6
COURSECODE: BAC621C
COURSENAME: BUSINESSACCOUNTING2B
SESSION:JUNE 2024
PAPER:PAPER1
DURATION: 3 HOURS
MARKS: 100
EXAMINER
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
Gerhardt Sheehama
MODERATOR Lameck Odada
INSTRUCTIONS
1. This question paper is made up of four (4) questions.
2. Answer ALLthe questions in blue or black ink only. NO pencil
3. Start each question on a new page in your answer booklet and show all workings.
4. Round off only final answers to two (2) decimal places unless otherwise stated.
5. Questions relating to this examination may be raised in the initial 30 minutes after the
start of the paper. Thereafter, candidates must use their initiative to deal with any
perceived error or ambiguities & any assumption made by the candidate should be
clearly stated.
PERMISSIBLEMATERIALS
Silent, non-programmable calculators
THIS QUESTION PAPERCONSISTSOF 8 PAGES(including this front page)
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QUESTION 1
[20 MARKS]
Each of the following questions has only ONE correct answer. In your answer script, only write down the
numbers of the questions and next to each number the letter which, in your opinion, represents the correct
answer.
The following details refer to Questions 1.1 and 1.3:
NONA Company recorded the following direct material costs during last month:
Standard quantity material allowed
Actual quantity materials used
Materials quantity variance
Total actual direct materials cost
12 000 kg
15 000 kg
N$78 000
N$375 000
1.1 NONA's actual materials price was:
A.
N$31.25
B.
N$26.00
C.
N$32.15
D. N$25.00
1.2 NONA's standard materials price was:
A.
N$31.25
B.
N$26.00
C.
N$32.15
D. N$25.00
1.3 NONA's materials price variance was:
A.
N$15 000 adverse
B.
N$13 500 adv~rse
C.
N$15 000 favourable
D. N$13 500 favourable
1.4 The difference between the actual and standard labour rate multiplied by the
actual direct labour hours worked in production is called:
A.
Direct labour flexible budget variance
B.
Direct labour quantity variance
C.
Direct labour efficiency variance
D.
Direct labour rate variance
1.5 The following statement is NOT true with regard to standard costing:
A. The standard quantity of material represents the amount of material that
shouid have been used for the actual output.
B.
Material usage variance= (SQ-AQ) x AP
C.
If a lower quality raw material is purchased, it may result in an adverse material
usage variance.
D. Labour efficiency variance= (SH-AH) x SR
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1.6 The operating leverage factor is calculated as follows:
A.
Contribution+ Fixed costs
B.
Contribution+ Variable cost
C.
Variable costs+ Fixed costs
D.
Contribution+ Net profit
1.7 The following is NOT an assumption of CVPanalysis:
A.
The variable cost per unit varies over the relevant range of activity.
B.
Selling price remains constant per unit irrespective ofthe sales volume.
C.
The total fixed cost per unit varies over the relevant range of activity.
D.
The total variable cost changes in direct proportion to changes in the level of
activity over the relevant range of activity.
1.8 An organisation manufactures and sells a single product which has a variable cost N$24 per unit and
total variable costs to sales ratio of 60%. Total monthly fixed costs are
N$720 000.
What is the monthly break-even point (in units)?
A.
18 000
B.
20 000
C. 30 000
D.
45 000
The following details refer to Questions 1.9 and 1.10:
A company manufactures a single product which it sells for N$15 per unit. The production has
total variable costs to sales ratio of 60%.
The company's weekly break-even point in sales is N$18 000.
1.9 What is the amount of fixed costs?
A.
N$7 200
B.
N$1800
C.
N$2 700
D.
N$ 4 500
1.10 What would be the profit in a week if 1500 units are sold?
A.
N$7 200
B.
N$1800
C.
N$2 700
D.
N$ 4 500
(2 marks each, 2 x 10 = 20 marks)
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QUESTION 2
[28 MARKS]
A company manufactures and sells a finished product called Delta. You were recently appointed as the cost
accountant of this company and one of your duties is to assist in the preparation of the annual budget. The
following estimated figures have been gathered for 2023:
Projected sales:
Product
Units
Price per unit
Delta
6 000
N$70
Estimated inventories (units):
Product
Delta
1 January
2 000
31 December
2 500
Production schedule to manufacture one unit of Delta:
Raw material:
Mixture
4 kilograms @ N$8 per kilogram
The following is anticipated with respect to raw materials inventories:
1 January
31 December
3 200 kg
3 600 kg
Direct labour is estimated as follows:
Delta-maker
Hours per unit
2
Rate per hour
N$30
Overheads are absorbed at a rate of N$20 per direct labour hour.
REQUIRED:
Prepare the following budgets for 2017:
2.1 Sales budget (in N$)
(3)
2.2 Production budget (in units)
(4)
2.3 Raw material purchases budget for each raw material (in units and N$)
(7)
2.4 Direct labour budget (in hours and N$)
(3)
2.5 Variable overheads (in N$)
(3)
2.6 Discuss any four major benefits to be gained from budgeting
(8)
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QUESTION3
[20 MARKS]
Angie Silva has recently opened The Sandal Shop in Rundu, a store that specializes in fashionable sandals. Angie
has just received a degree at NUSTand she is anxious to apply the principles she has learned. In time, she hopes
to open a chain of sandal shops. As a first step, she has prepared the following analysis for her new store:
Sales price per pair of sandals
Variable expenses per pair of sandals
Contribution margin per pair of sandals
Pairs of sandals sold
Total fixed expenses
400
160
240
300
60000
REQUIRED:
3.1
Calculate how many pairs of sandals must be sold each year to break even.
Also state what this represents in total dollar sales.
(6)
3.2
Angie has decided that she must earn at least N$31 200 the first year to justify her time
and effort.
Calculate how many pairs of sandals must be sold to reach this target profit.
(3)
3.3 Angie now has two salespersons working in the store - one full time and one part time.
It will cost her an additional fixed cost of N$75 000 per year to convert the part-time
position to a full-time position. Angie believes that the change will bring in an
additional N$120 000 in sales each year. Make a recommendation whether she should
convert the position.
(6)
3.4 Refer to the original data. During the first year, the store sold only 300 pairs of sandals and reported the
following operating results:
N$
Sales (300 pairs)
120 000
Less:variable expenses
(48 000)
Contribution margin
72 000
Less:Total fixed expenses
(60 000)
Net income
12 000
3.4.1 Calculate the store's degree of operating leverage.
(3)
3.4.2 Angie is confident that with a more intense sales effort and with a more creative
advertising program she can increase sales by 25% next year. Calculate the expected
percentage increase in net income by using the degree of operating leverage to
compute your answer.
(2)
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QUESTION 4
(20 MARKS)
Namtura Ltd (pty) manufactures printing paper in its Windhoek plant. The managing director has become aware
of the disadvantages of fixed budgets and asks you to prepare a flexible budget for the next accounting period.
The following for 2024 is available:
Activity level (machine hours)
Repairs and maintenance
Supplies
Water and electricity
Telephone
Rates
Energy
Salary
Total costs
Budget
N$
N$
16 000
20 000
80000
100 000
64000
80 000
152 000
160 000
48000
60000
90000
110000
60 000
70000
20 000
20 000
514 000
600 000
Actual
N$
18 000
96000
70 000
152 000
56 000
104 000
75 000
25 000
578 000
REQUIRED
Actual production required 18 machine hours during 2024. Prepare a performance report for 2024, clearly
indicate flexible budget and variances.
Note: Round off variable cost per unit to two decimal places, total costs and variances to the nearest N$.
QUESTION 5
[12 MARKS]
Haupindi CC is considering a project that would have a ten-year life and would require a N$1 000 000 investment
in equipment. It is estimated that the project will terminate at the end of ten years and that it will generate net
cashflow of N$300 000, annually. The company's required rate of return is 12%. It is further estimated that the
project will provide the following net income each year:
REQUIRED: Compute the project's net present value.
END OF EXAMINATION PAPER
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APPENDIXTABLE1
Present Value Tables
Number
Interest Rate per Year
of Years 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15%
1 .990 .980 .971 .962 .952 .943 .935 .926 .917 .909 .901 .893 .885 .877 .870
2 .980 .961 .943 .925 .907 .890 .873 .857 .842 .826 .812 .797 .783 .769 .756
3 .971 .942 .915 .889 .864 .840 .816 .794 .772 .751 .731 .712 .693 .675 .658
4 .961 .924 .888 .855 .823 .792 .763 .735 .708 .683 .659 .636 .613 .592 .572
5 .951 .906 .863 .822 .784 .747 .713 .681 .650 .621 .593 .567 .543 .519 .497
6 .942 .888 .837 .790 .746 .705 .666 .630 .596 .564 .535 .507 .480 .456 .432
7 .933 .871 .813 .760 .711 .665 .623 .583 .547 .513 .482 .452 .425 .400 .376
8 .923 .853 .789 .731 .677 .627 .582 .540 .502 .467 .434 .404 .376 .351 .327
9 .914 .837 .766 .703 .645 .592 .544 .500 .460 .424 .391 .361 .333 .308 .284
10 .905 .820 .744 .676 .614 .558 .508 .463 .422 .386 .352 .322 .295 .270 .247
11 .896 .804 .722 .650 .585 .527 .475 .429 .388 .350 .317 .287 .261 .237 .215
12 .887 .788 .701 .625 .557 .497 .444 .397 .356 .319 .286 .257 .231 .208 .187
13 .879 .773 .681 .601 .530 .469 .415 .368 .326 .290 .258 .229 .204 .182 .163
14 .870 .758 .661 .577 .505 .442 .388 .340 .299 .263 .232 .205 .181 .160 .141
15 .861 .743 .642 .555 .481 .417 .362 .315 .275 .239 .209 .183 .160 .140 .123
16 .853 .728 .623 .534 .458 .394 .339 .292 .252 .218 .188 .163 .141 .123 .107
17 .844 .714 .605 .513 .436 .371 .317 .270 .231 .198 .170 .146 .125 .108 .093
18 .836 .700 .587 .494 .416 .350 .296 .250 · .212 .180 .153 .130 .111 .095 .081
19 .828 .686 .570 .475 .396 .331 .277 .232 .194 .164 .138 .116 .098 .083 .070
20 .820 .673 .554 .456 .377 .312 .258 .215 .178 .149 .124 .104 .087 .073 .061
Discountfactors:Presentvalueof $1 to be receivedaftert years= 1/(1 + r)1.
Number
Interest Rate per Year
of Years 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 26% 27% 28% 29% 30%
1 .862 .855 .847 .840 .833 .826 .820 .813 .806 .800 .794 .787 .781 .775 .769
2 .743 .731 .718 .706 .694 .683 .672 .661 .650 .640 .630 .620 .610 .601 .592
3 .641 .624 .609 .593 .579 .564 .551 .537 .524 .512 .500 .488 .477 .466 .455
4 .552 .534 .516 .499 .482 .467 .451 .437 .423 .410 .397 .384 .373 .361 .350
5 .476 .456 .437 .419 .402 .386 .370 .355 .341 .328 .315 .303 .291 .280 .269
6 .410 .390 .370 .352 .335 .319 .303 .289 .275 .262 .250 .238 .227 .217 .207
7 .354 .333 .314 .296 .279 .263 .249 .235 .222 .210 .198 .188 .178 .168 .159
8 .305 .285 .266 .249 .233 .218 .204 .191 .179 .168 .157 .148 .139 .130 .123
9 .263 .243 .225 .209 .194 .180 .167 .155 .144 .134 .125 .116 .108 .101 .094
10 .227 .208 .191 .176 .162 .149 .137 .126 .116 .107 .099 .092 .085 .078 .073
11 .195 .178 .162 .148 .135 .123 .112 .103 .094 .086 .079 .072 .066 .061 .056
12 .168 .152 .137 .124 .112 .102 .092 .083 .076 .069 .062 .057 .052 .047 .043
13 .145 .130 .116 .104 .093 .084 .075 .068 .061 .055 .050 .045 .040 .037 .033
14 .125 .111 .099 .088 .078 .069 .062 .055 .049 .044 .039 .035 .032 .028 .025
15 .108 .095 .084 .074 .065 .057 .051 .045 .040 .035 .031 .028 .025 .022 .020
16 .093 .081 .071 .062 .054 .047 .042 .036 .032 .028 .025 .022 .019 .017 .015
17 .080 .069 .060 .052 .045 .039 .034 .030 .026 .023 .020 .017 .015 .013 .012
18 .069 .059 .051 .044 .038 .032 .028 .024 .021 .018 .016 .014 .012 .010 .009
19 .060 .051 .043 .037 .031 .027 .023 .020 .017 .014 .012 .011 .009 .008 .007
20 .051 .043 .037 .031 .026 .022 .019 .016 .014 .012 .010 .008 .007 .006 .005
Note:Forexampleif, theinterestrateis 10%peryear,thepresenvtalueof $1receivedatyear5 is $.621.
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