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FAM701Y-FINANCIAL MANAGEMENT 300-2ND OPP-DEC 2025 |
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FINANCIAL MANAGEMENT FAM701Y {FAM300) NOVEMBER 2025 2nd OPPORTUNITY ASSESSMENT
nAm I BI A u n IVE RS ITV
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES & EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING & FINANCE
QUALIFICATION : BACHELOR OF ACCOUNTING (CHARTERED ACCOUNTANCY)
COURSE CODE: FAM701Y
COURSE NAME: FINANCIAL MANAGEMENT 300
DATE: NOVEMBER 2025
DURATION: 3 HOURS
PAPER: PRACTICAL AND THEORY
MARKS: 100
NOVEMBER 2025 SECOND OPPORTUNITY ASSESSMENT QUESTION PAPER
EXAMINER:
MODERATOR:
Mr. S. Nghiwilepo
Mr. T. Lunga
INSTRUCTIONS:
• This paper consists of 10 pages including the cover page.
• Answer ALL questions in blue or black ink only. No PENCIL.
• Start each question on a new page.
• Silent, non-programmable calculators may be used, unless otherwise instructed.
• Show all your workings clearly. Unless otherwise instructed, round all calculations to two
decimal places.
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FINANCIAL MANAGEMENT FAM701V (FAM300) NOVEMBER 2025 2nd OPPORTUNITY ASSESSMENT
Question 1
[60 Marks]
Bokomo Namibia (Pty) Ltd "The Company or Bokomo", established in 1998, is a leading food
manufacturer in Namibia. The company has two major shareholders with equal share holding.
Bokomo produces and distributes essential staple products including Champion maize meal,
Bokomo flour, Marathon sugar, nice rice, and Pasta Grande.
The company recently expanded into pasta production, driven by increased urban demand for
affordable carbohydrate alternatives. Bokomo's strategic focus is to:
1. Strengthen its presence in staple foods (maize meal, flour, rice, sugar).
2. Diversify into higher-margin convenience products su_ch as pasta, ready-to-cook meals
and health related products.
3. Invest in modern production technology to improve efficiency and reduce unit costs.
Namibia's manufacturing sector remains in its infancy stage, with the economy heavily reliant on
imports of processed goods, particularly from South Africa. At present, much of Namibia's natural
resources-including fish, livestock, and marine products- are exported in raw form, with limited
value addition locally. This has restricted industrial growth, job creation, and innovation in the
manufacturing sector.
Bokomo wants to bridge this gap by producing products in Namibia, by Namibians. In a recent
interview with the Namibian Broadcasting Corporation (NBC), the Managing director of Bokomo,
Mr. Tangeni Kornelius indicated that "Namibia is blessed with abundant resources. However, it is
sad to note that 35 years after independence, majority of the population is still in poverty with
graduates unable to find jobs. He further stated that, the solution is to invest in the manufacturing
sector as it has the potential to absorb most if not all of these graduates".
Mr. Tangeni further indicated that Bokomo embraces organic growth arguing that this makes the
company more stable and less risky compared to rapid acquisition - led expansion. He also stated
that this type of strategy enables the company to grow at its own pace without being overly
dependent on outside investors. Unlike mergers which often face clashes in values or systems,
organic growth maintains the company's existing culture and identity.
The company has a 31 October financial year end.
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FINANCIAL MANAGEMENT FAM701Y (FAM300) NOVEMBER 2025 2nd OPPORTUNITY ASSESSMENT
PART A
In preparation for the 2026 financial year, you have been provided with the following information
pertaining to one of Bokomo's product, Champion Super Maize Meal (10kg bag). Bokomo sells
its maize meal mainly to Namibian supermarket chains and some to wholesalers. Supermarkets
can buy on credit, while wholesalers pay cash on delivery.
Actual Results FY2025
Estimated Results FY2026
Total
Revenue
August
N$
Sales 1,920,000
September
N$
2,400,000
October
N$
1,200,000
November
N$
3,200,000
December
N$
4,000,000
January
N$
1,800,000
Total Purchases
Sales Commission
520,000
?
880,000
?
380,000
?
965,000 1,500,000
?
?
400,000
?
Additional information
• 40% of total sales are cash with the balance being credit sales.
• 65% of total purchases are credit with the balance being cash purchases.
Collections for credit sales are as follows:
• 20% is collected in the month of the sale and a 2% discount is granted on these collections.
• 60% is collected in the month following the month of sale.
• 15% is collected in the second month following the month of sale.
• 5% is written off as unrecoverable debts.
• At the end of September 2025, Bokomo invested N$1,700,000 in fixed deposits with
Windhoek Bank. Interest will be received monthly at 10% per annum starting end of
October 2025. The interest earned is paid out immediately. Half of these fixed deposits
will mature on 31 December 2025. The rest matures in March 2026.
• Creditors are paid 2 months after the date of invoice.
• Rent expense amounts to N$22,000 per month and is payable on the first day of each
month.
• Salaries amount to N$800,000 per month. One employee, who earns N$25,000 per month
resigned at the end of October 2025. The salaries of the remaining employees will be
increased by 10% with effect from 1 January 2026.
• A new packaging machine is expected to be purchased for N$300,000 cash on 1 January
2026. As per the company policy, depreciation is calculated using the straight-line method
over the asset's useful life which is 5 years.
• Commission is paid to sales personnel in the month following the month in which it was
earned at a rate of 10% of total sales.
• A vehicle with a carrying value of N$80,000 will be traded in at book value on 1 December
2025 for a new vehicle costing N$300,000. A deposit of 10% on the Net balance will be
paid on 1 December 2025 and the balance of the outstanding amount will be paid in six
equal instalments commencing 1 January 2026.
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FINANCIAL MANAGEMENT FAM701Y (FAM300) NOVEMBER 2025 2nd OPPORTUNITY ASSESSMENT
• Other operating expenses are estimated to amount to N$550,000 in November 2025.
Other operating expenses are expected to increase by 10% in January 2026.
• On 31 October 2025 Bokomo had a favourable bank balance of N$500,000. The company
wishes to maintain a cash balance of N$500,000 at the end of each month and will borrow
funds from Windhoek Bank to facilitate this. The funds will be borrowed at the beginning
of the month, and interest of 10,50% per month will be paid at the beginning of the next
month on the balance outstanding. The full borrowed amount is repaid at beginning of
the following month if the company has generated sufficient cash flows that results in
maintaining the required cash balance.
Cash budget prepared by the Creditors Clerk
Details
Opening Cash balance
Sales
Interest received on Fixed Deposit
Total Cash Available
Cash Budget
November December
500,000 500,000
1,280,000 1,600,000
14,167
14,167
1,794,167 2,114,166
January
500,000
720,000
14,167
1,234,166
Total Expenditure
Purchases
Rent Expense
Salaries
Sales Commission
Depreciation Packaging machine
Vehicle Trade in
Other Operating expenses
Bad debts
Loan received/ (repaid) Windhoek Bank
Interest on loan
Closing Cash Balance
- 1,294,167 -1,614, 167 - 734,166
- 627,250 - 975,000 - 260,000
- 35,000 - 35,000 - 35,000
- 800,000 - 800,000 - 880,000
- 128,000 - 160,000 -
-
--
72,000
60,000
- - 22,000 - 33,000
- 550,000 - 550,000 - 605,000
- 96,000 - 120,000 - 54,000
942,083 1,146,752 1,385,243
- - 98,919 - 120,409
500,000 500,000
500,000
Debtors Collection Schedule prepared by the creditors Clerk
Total
Month
Credit Sales
Debtors Collection Schedule
November December
January
Sep-25
Oct-25
Nov-25
Dec-25
Jan-26
1,440,000
720,000
1,920,000
2,400,000
1,080,000
I
216,000
432,000
376,320
-
-
1,024,320 I
-
108,000
1,152,000
470,400
-
1,130,400 I
-
-
288,000
1,440,000
211,680
1,939,680
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FINANCIAL MANAGEMENT FAM701Y {FAM300) NOVEMBER 2025 2nd OPPORTUNITY ASSESSMENT
PARTB
To support its strategic focus and regional growth, Bokomo Namibia is exploring product
diversification in Henties Bay. The coastal town is well known for its seal population, and after
feasibility studies were conducted, the company is now considering renting a seal processing
factory within which it will produce a product to be called "NamSeal Oil" from Cape fur seals
along Namibia's coastline.
NamSeal Oil will be refined into two lines: culinary-grade seal oil rich in Omega-3 fatty acids will
be used for cooking and dietary supplements, and cosmetic-grade seal oil for use in skin and hair
care products. The seals will be harvested under government-approved sustainable quotas. Both
products will be marketed locally and exported to health-conscious markets abroad.
Production process
STEP 1: Bulk Extraction
• The company will use one oil extraction machine (to be acquired)
• The initial production run of the machine will extract bulk crude seal oil from raw seal
tissue. This initial filtration removes solids.
•STEP 2: Product Split
• Culinary-Grade seal oil:
o This oil will be called 11Namib Omega"
o Further filtration and refining will be done to meet food-grade standards.
o Antioxidants are added to extend shelf-life.
o This product will be packaged and sold in 1-litre amber glass bottles
• Cosmetic-Grade seal oil:
o This oil will be called 11Namib Glow"
o Cosmetic-grade refinement (may include mild filtration).
o Optional addition of vitamins or essential oils for skin/hair benefits.
o This oil will be bottled into 100ml opaque glass bottles with pump dispenser.
o This product will be packaged and sold in 100ml opaque glass bottles with pump
dispenser
NB: Both products originate from the same extraction machine, but production runs are separate
to ensure quality, regulatory compliance, and correct formulation.
Cost Estimation - Namib Omega
Raw material (seal oil, antioxidants, bottle, cap, label)
Labour (production and packaging staff)
Variable manufacturing overheads
Selling price per bottle
Cost per bottle (N$)
300
so
40
800
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FINANCIAL MANAGEMENT FAM701Y (FAM300) NOVEMBER 2025 2nd OPPORTUNITY ASSESSMENT
Cost Estimation - Namib Glow
Raw material (seal oil, additives, bottle, pump dispenser, label)
Labour (production and packaging staff)
Variable manufacturing overheads
Selling price per bottle
Cost per bottle (N$)
50
15
10
180
Projected Sales Units
Year 1
Year 2
Year 3
Year 4
Year 5
Namib Omega
4,000
4,000
4,600
5,300
6,000
Namib Glow
4,000
6,000
9,000
10,000
12,000
Other relevant information
• To commence production, the company needs to acquire a Seal Oil Extraction machine.
A supplier in Cape Town, South Africa, Southern Star Processing Equipment's (Pty) Ltd has
indicated that the cost of the machine is N$3,500,000 including transport. The machine
has a useful life of five years.
• Installation costs amount to 5% of the machine purchase price.
• The factory rent in year 1 and 2 will be N$22,000 per month. The monthly rental will
increase by inflation at the end of year 3 and then remain stable until year 5.
• Salaries of production supervisor is anticipated to be N$960,000 per annum throughout
the five-year period
• Insurance of the new production machinery is N$9,600 per month throughout the five
years .
• Maintenance of machine will amount to N$25,000 per month throughout the five years.
• The company's before tax cost of debt is 10% while the weighted average cost of capital
is 12%
• The Namibian Consumer Price Index is estimated to be 6%
• The company's policy is to depreciate production machinery over their useful lives.
• The Namibian Revenue Agency (NamRA) allows tax deduction on production machinery
in the ratio 40:20:20:20
• The company tax rate in Namibia is 30%
• Bokomo expects to sell the machine for its salvage value of N$675,000 at the end of five
years
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FINANCIAL MANAGEMENT FAM701Y (FAM300) NOVEMBER 2025 2nd OPPORTUNITY ASSESSMENT
Incremental Working capital requirements are as follows
Year
0
1
2
3
4
N$
N$
N$
N$
N$
Incremental 400,000 200,000 150,000 80,000 40,000
REQUIRED 1- 30 MARKS
Using the information in PART A only
Review the cash budget prepared by the creditors clerk and identify any errors or omissions.
You must not prepare a cash budget, just review the prepared cash budget. Assume that the
debtor's collection schedule prepared by the creditor's clerk is correct. Prepare your review
using a table format as indicated below:
Error or omission identified
Why it is an error
Recommendation to correct
error or omission
REQUIRED 2 - 30 MARKS
Using the information in PART B only
MARKS
a) Using the Net Present Value technique, evaluate and advice whether the
company should start operating the seal processing factory. Show all your 20
workings.
b) Based on the proposed sales, evaluate whether the Henties Bay factory will
10
break even in year 1. Show all your workings.
TOTAL MARKS QUESTION 1
60
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FINANCIAL MANAGEMENT FAM701V (FAM300) NOVEMBER 2025 2nd OPPORTUNITY ASSESSMENT
Question 2
[15 Marks]
DesertShield Manufacturing (Pty) Ltd "DSM", a manufacturing company, has been invited to
provide a quotation for the manufacture of equipment required by the Namibian Defence Force
(NDF) at their local army base. This is a once-off order in excess of normal budgeted production.
The Management Accountant has already prepared the following cost estimates:
Direct materials
Direct labour
Overhead
Estimating time
Note
Steel
Fittings
100m2 @ N$5.00 / m2
1
2
Skilled
25hrs @ N$80 / hr
3
Semi-skilled l0hrs @ N$35 / hr
4
.5
4hrs @ N$150 / hr
6
Administration overhead @ 20% of production cost
7
Profit
@ 25% of total cost
8
Selling price
N$ 500.00
N$ 120.00
N$ 2,000.00
N$ 350.00
N$ 500.00
N$ 600.00
N$ 4,070.00
N$ 814.00
N$ 4,884.00
N$ 1,221.00
N$ 6,105.00
Notes:
1. The steel is regularly used and has a current stock value of N$5.00 per square metre. There
are currently 1,000 square metres in stock. The steel is readily available at a price of N$5.50
per square metre.
2. The fittings would have to be bought specifically for this job. A supplier has quoted the price
of N$120 for the fittings required.
3. The skilled labour is currently employed by your company and paid at a rate of N$80.00 per
hour. If this job were to be undertaken, it would be necessary to work 25 hours overtime,
which would be paid at time-and-a-half. The other alternative is to finish the work in normal
time, which means that the production of another product that earns a contribution of
N$45.00 per hour will have to be scaled down. (The cost of labour has already been taken
into account in determining this contribution)
4. The semi-skilled labour currently has sufficient paid idle time to be able to complete this
work. These labourers will still be employed by the company and receive full pay, even if the
quotation does not get accepted.
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FINANCIAL MANAGEMENT FAM701V (FAM300) NOVEMBER 2025 2nd OPPORTUNITY ASSESSMENT
5. The overhead allocation rate includes electricity costs, which are directly related to the
degree of machine usage. If this job were to be undertaken, it is estimated that the machine
time required would be ten hours. The machines incur electricity costs of N$1.25 per hour.
There are no other overhead costs that can be specifically identified with this job.
6. The cost of the estimating time is attributed to the four hours taken by the engineers to
analyse the drawings and determine the cost estimate given above.
7. It is company policy to add 20% to the production cost as an allowance for administration
costs associated with the jobs accepted.
8. This is the standard profit added by the company as part of its pricing policy.
REQUIRED
Prepare a schedule in which you re-calculate the mmrmum price DSM can quote for the
manufacturing contract, using relevant costing principles. Provide a reason for EACH of the values
in your estimate, as well as values omitted. (15)
Source: NWU adapted
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FINANCIAL MANAGEMENT FAM701Y {FAM300) NOVEMBER 2025 2nd OPPORTUNITY ASSESSMENT
Question 3
[25 Marks]
Savanna Comforts (Pty) Limited, a newly established manufacturing company in Otjiwarongo,
manufactures two types of bath robes. One type of robe is sold locally, and the other type is
exported to the Middle East for sale in the gulf region. While the designs are identical, the
material used is different to cater for the different climatic conditions-of the market segments.
The two products are produced with the same equipment, and they utilise the same overhead
resources. In 2026, the company has budgeted to manufacture 60,000 robes for the local market
and 40,000 for the export market. The manufacturing is done in batches of 1,000 robes each.
Analysis of overhead costs
Material handling
N$ 200,000
Material procurement
N$ 40,000
Machine set-up
N$ 180,000
Quality control
N$ 270,000
Production
N$ 610,000
Depreciation
N$ 200,000
TOTAL
N$ 1,500,000
Analysis of cost drivers
Overhead
Cost driver
Local
Export
Material handling
Material movements
100
60
Material procurement
Number of orders
200
200
Machine set-ups
Number of set-ups/ batches
1
1
Quality control
Number of inspections
150
100
Machine hours/ unit
Machine hours/ unit
3
5
Production
Direct labour hours/ unit
0.75
0.50
The company management has been using the "traditional costing approach" to allocate
overheads between the two products, using direct labour hours as the allocation base. They are
thinking of applying the Activity-Based Costing System.
REQUIRED
Calculate the overhead cost per unit, using:
MARKS
a) The traditional costing approach
4
b) The Activity-Based Costing approach
21
TOTAL MARKS QUESTION 3
25
Source: UJ adapted
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