 |
CMA612S- COST AND MANAGEMENT 202- 1ST OPP- NOV 2023 |
|
|
1 Pages 1-10 |
▲back to top |
|
|
1.1 Page 1 |
▲back to top |
nAmlBIA un1VERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCEAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING & FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING
QUALIFICATION CODE: 07BOAC
COURSE CODE: CMA612S
LEVEL: 6
COURSE NAME: COST & MANAGEMENT
ACCOUNTING 202
SESSION: NOVEMBER 2023
DURATION: 3 HOURS
PAPER: PRACTICAL AND THEORY
MARKS: 100
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINERS:
H Namwandi, H Kangala, S Lishokomosi & S Tjitjo
MODERATOR: E Kangootui
INSTRUCTIONS
• This question paper is made up of four (4) questions.
• Answer All the questions in blue or black ink only.
• You are advised to pay due attention to expression and presentation. Failure to do so will
cost you marks.
• Start each question on a new page in your answer booklet and show all your workings.
• Questions relating to this paper 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 and any assumption made by the candidate should be clearly stated.
PERMISSIBLE MATERIALS
Non-programmable calculator
THIS QUESTION PAPER CONSISTS OF 6 PAGES (Including this front page)
1
|
|
1.2 Page 2 |
▲back to top |
|
|
1.3 Page 3 |
▲back to top |
Question 1
25 Marks
Stay Clean manufactures and sells a small range of kitchen equipment. Specifically, the
product range contains a dishwasher (DW), a washing machine (WM) and a tumble dryer
(TD). The TD is of a rather old design and has for some time generated negative a contribution.
It is widely expected that in one year's time, the market for this design of TD will cease, as
people switch to a washing machine that can also dry clothes after the washing cycle has
completed.
Stay Clean is trying to decide whether or not to cease the production of TD now or in 12
months' time when the new combined washing machine/drier will be ready. To help with this
decision, the following information has been provided:
• The normal selling prices, annual sales volumes and total variable costs for the three
products are as follows:
Selling price per unit
Material cost per unit
Labour cost per unit
Contribution per unit
Annual sales
ow
N$200
N$70
N$50
N$80
5 000 units
WM
N$350
N$100
N$80
N$170
6 000 units
TD
N$80
N$50
N$40
(N$10)
1 200 units
• It is thought that some of the customers that buy a TD also buy a DW and a WM. It is
estimated that 5% of the sales of WM and DW will be lost if the TD ceases to be
produced.
• All the direct labour force currently working on the TD will be made redundant
immediately if TD is ceased now. This would cost N$6 000 in redundancy payments. If
Stay Clean waited for 12 months the existing labour force would be retained and
retained at a cost of N$3 500 to enable them to produce the new washing/drying
product. Recruitment and training costs of labour in 12 months' time would be N$1 200
in the event that redundancy takes place now.
• Stay Clean operates a just-in-time (JIT) policy and so all material costs would be saved
on the TD for 12 months if TD production ceased now. Equally, the material costs
relating to the lost sales on the WM and DW would also be saved. However, the
material supplier has a volume-based discount scheme in place as follows:
Total annual expenditure
(N$)
0- 600 000
600 001 - 800 000
800 001 - 900 000
900 001 - 960 000
960 001 and above
Discount
0%
1%
2%
3%
5%
• Stay Clean uses this supplier for all its materials for all the products it manufactures.
The figures given above in the cost per unit table for material cost per unit are net of
any discount Stay Clean already qualifies for.
• The space in the factory currently used for the TD will be sublet for 12 months on a
short-term lease contract if production of TD stops now. The income from that contract
will be N$12 000.
2
|
|
1.4 Page 4 |
▲back to top |
|
|
1.5 Page 5 |
▲back to top |
• The supervisor (currently classed as an overhead) supervises the production of all
three products spending approximately 20% of his time on the TD production. He
would continue to be fully employed if the TD ceases to be produced now.
REQUIRED:
(a) Calculate and recommend whether or not it is worthwhile ceasing to
produce the TD now rather than waiting 12 months (ignore any time value
of money adjustment)
(b) Briefly describe three issues that Stay Clean should consider if it decides
to outsource the manufacture of one of its future products.
(c) Explain the terms 'sunk cost' and 'oooortunitv cost'.
Show all vour workings!
Total
Marks
(18)
(3)
(4)
25
Question 2
25 Marks
Golden Ltd produces 3 types of Chandelier lights - the Diamond X, the Pearly Y, and the
Mirrored Z with the following details.
Selling Price (N$)
Cost-to-profit ratio
Diamond X
350
80%
Pearly Y
400
70%
Mirrored Z
300
75%
Golden Ltd has a production process that involves 3 stages in 3 departments. First, the
products start in the production Assembly department where the structure of the lights is put
together. Secondly, the products go through the Electrical department where the technical
work is done enable technical functionality. Finally, the Accessories department then beautify
and adds the distinct final touches for each chandelier by using diamonds for the Diamond X,
Pearls for the Pearly Y, and mirrors to make the Mirrored Z. The following is a time allocation
of the different Chandeliers spent in the company's 3 departments per unit:
Diamond X (hours per
unit)
Pearly Y (hours per unit)
Mirrored Z (hours per unit)
Assembling
4
2
6
Electrical
2
1
4
Accessories
2
2
1
Due to labour availability, the above departments have maximum limitations on the available
hours. The Assembling department has 12,000 hours available, while the Electrical and
Accessories departments have 11,000 and 9,000, respectively. Furthermore, Golden Ltd can
only produce a total of 300 units of the Pearly Y chandelier, due to the limited supply of quality
pearls.
3
|
|
1.6 Page 6 |
▲back to top |
|
|
1.7 Page 7 |
▲back to top |
REQUIRED:
(a) Formulate a linear programming model that Golden Ltd can use to
maximize profit using the following notations for the products:
• X- Diamond X
• Y- Pearly Y
• Z - Mirrored Z
(b) Assist Golden Ltd in formulating the initial simplex tableau for the above
model, using the above defined notations for the products. Use the
following notations for slack variables:
• S1 - Slack for the Assembling department
• S2 - Slack for the Electrical department
• S3 - Slack for the Accessories department
• S4 - Slack for any demand or supply limits
NB: You are not required to solve the initial table.
(c) Interpret the final simplex tableau below, except for Column S4:
NB: You are not required to interpret Column S4.
Variable
X
X
1
S2
0
S3
0
y
0
Contribution 0
y
z
S1
S2 S3
S4 Solution
0 -1.5 0.25 0
0 -0.5
2,850
0
1 -0.5
1
0
0
5,000
0
-2 -0.5 0
1
-1
2,700
1
0
0
0
0
1
300
0 -105 17.5 0
0
85
235,500
Total
Show all your workinQs!
Marks
(9)
(9)
(7)
25
Question 3
(25 marks)
Sardinia restaurant has been examining the profitability of its set menu. At the beginning of
the year, the selling price was based on the following predicted costs:
Starter
Soup of the day
100g of mushrooms @ N$30 per kg
Cream and other ingredients
N$
3.00
2.00
Main course
Roast beef
Beef 0.10kg @ N$150 per kg
Potatoes 0.2kg@ N$2.50 per kg
Vegetables 0.3kg @ N$9 per kg
Other ingredients and accompaniments
15.00
0.50
2.70
2.3023
Dessert
Fresh tropical fruit salad
Fresh fruit 0.15kg @ N$30 per kg
4.50
4
|
|
1.8 Page 8 |
▲back to top |
|
|
1.9 Page 9 |
▲back to top |
The selling price was set at N$75 which produced an overall gross profit of 60%. During
October 2023 the number of set menus sold was 860 instead of 750 budgeted: this increase
was achieved by reducing the selling price to N$70. During the same period an analysis of the
direct costs incurred showed:
N$
90kg of mushroom
3 000
Cream and other ingredients
1 600
70kg of beef
11 480
180kg of potatoes
400
270kg of vegetables
2 500
Other ingredients and accompaniments
2 000
140kg of fresh fruit
4 500
There are no inventories of ingredients at the beginning or end of the month.
REQUIRED:
(a) Calculate the budgeted profit for the month of October 2023.
(b) Calculate the actual profit for the month of October 2023.
(c) Prepare a statement that reconciles your answers (a) and (b) above,
showing the variances in as much detail as possible (round off your final
variances to be used for reconciliation to the nearest whole number}.
(d) Prepare a commentary going to the restaurant manager that identifies and
discusses the two most siqnificant variances.
Show all vour workim1s!
Total
Marks
(1)
( 1)
(19)
(4)
25
Question 4
(25 marks)
A division of Bud pie is engaged in the manual assembly of finished products F1 and F2 from
bought in components. These products are sold to external customers. The budgeted sales
volume and prices for month 9 are as follows:
Product
F1
F2
Units Price
34 000 N$50
58 000 N$30
Finished goods inventory holding budgeted for the end of month 9 is 1 000 units of F1 and 2
000 units of F2 with no stock at the beginning of that month. The purchased components C3
and C4 are used in the finished products in the quantities shown below. The unit price is for
just-in-time delivery of the components. The company holds no component stocks.
Product
F1 (per unit)
F2 (per unit)
Price (each)
Components
C3
8 units
4 units
N$1.25
C4
4 units
3 units
N$1.80
5
|
|
1.10 Page 10 |
▲back to top |
|
|
2 Pages 11-20 |
▲back to top |
|
|
2.1 Page 11 |
▲back to top |
The standard direct labour times and labour rates and the budgeted monthly manufacturing
overhead costs for the assembly and finishing departments for month 9 are given below:
Product
F1 (per unit)
F2 (per unit)
Labour rate (per hour)
Manufacturinq overhead cost for the month
Assembly
30 minutes
15 minutes
N$10
N$617 500
Finishinq
12 minutes
10 minutes
N$12
N$204 000
Every month a predetermined direct labour hour recovery rate is computed in each department
for manufacturing overhead and applied to items produced in that month.
The selling overhead of N$344 000 per month is applied to products based on a predetermined
percentage of the budgeted sales value in each month.
REQUIRED:
(a)
(b)
(c)
Total
Prepare summaries of the following budgets for month 9:
i. Component purchase and usage (units and value).
ii. Direct labour (hours and value).
iii. Departmental manufacturing overhead recovery rates.
iv. Selling overhead recovery rate.
V. Inventory value at the month end.
Tabulate the standard unit cost and profit of each of F1 and F2 in month 9.
Prepare a budgeted profit and loss account for month 9 which clearly
incorporates the budgeted values obtained in (a) above.
Show all your workings!
Marks
(4)
(2)
( 1)
(1)
( 1)
( 11)
(5)
25
THE END
6
|
|
2.2 Page 12 |
▲back to top |
