MAC2601 May Jun 2013 MEMO 10 June 2013 
MAC2601
May/June 2013: Suggested solution
QUESTION 1
1.1 – C
FIFO Method of valuation
Date
Receipts
Balance
December Quantity Price
Amount Quantity Price
1
3
2562
350
7.32
Issues
7
300
100
Amount Quantity Price
R
300
6.50
300
6.50
350
7.32
1950
732
250
7.32
6.50
7.32
Amount
R
1950
1950
2562
1830
Cost of purchases of 350 units
350 units at R6.90 = R2 415
+Freight costs: R294*50%=R147
Total: 2562
R2 562/350 units = R7,32
Therefore option C is correct.
1.2 - B
1.3 - D
1.4 - A
R
Fixed cost in opening stock (10 000 x R7.50)
Fixed cost in closing stock ( 8 000 x R9.00)
Difference
75 000
72 000
3 000
1.5 - A
1.6 - C
1.7 - B
R
Direct material
Direct labour
Manufacturing overheads
Less: proceeds from by-product
238 500
143 100
95 400
(6 000)
471 000
[TURN OVER]
1.8 - A
R
Sales (25 000 x 90% x R15)
Less: Joint cost
Less: Further processing cost (25 000 x R4)
Profit
337 500
(214 091)¹
(100 000)
R23 409
¹ R471 000 x 25 000/55 000 = R214 091
1.9 - D
1.10 - D
[TURN OVER]
QUESTION 2
a. Labour rate variance
Actual hours @ actual rate
(25*R12*500)
Actual hours @ standard rate
(25*R8*500)
R
150 000
100 000
Unfavourable variance:
50 000
b. Labour efficiency variance
R
Actual hours @ standard rate
(25*R8*500)
Standard hours @ standard rate
(20*R8*500)
Unfavourable variance:
c. Overhead efficiency variance
100 000
80 000
20 000
R
Actual hours @ standard rate
(25*R4*500)
50 000
Standard hours at standard rate
(20*R4*500)
40 000
Unfavourable variance:
10 000
d. Purchase price variance for steel
Actual quantity @ actual price
(500*10*R12)
Actual quantity @ standard price
(500*10*R16)
Favourable variance
R
60 000
80 000
20 000
e. True
[TURN OVER]
QUESTION 3
(a) Number of sales units per product (sales mix) to maximise budgeted profit
Refer to the “steps” on page 177 of the study guide:
Step 1 was already performed as part of the information given.
Step 2: Contribution per unit
Vase
Selling price
Less: Total variable costs
Contribution per unit
May/June 2013: Suggested solution
QUESTION 1
1.1 – C
FIFO Method of valuation
Date
Receipts
Balance
December Quantity Price
Amount Quantity Price
1
3
2562
350
7.32
Issues
7
300
100
Amount Quantity Price
R
300
6.50
300
6.50
350
7.32
1950
732
250
7.32
6.50
7.32
Amount
R
1950
1950
2562
1830
Cost of purchases of 350 units
350 units at R6.90 = R2 415
+Freight costs: R294*50%=R147
Total: 2562
R2 562/350 units = R7,32
Therefore option C is correct.
1.2 - B
1.3 - D
1.4 - A
R
Fixed cost in opening stock (10 000 x R7.50)
Fixed cost in closing stock ( 8 000 x R9.00)
Difference
75 000
72 000
3 000
1.5 - A
1.6 - C
1.7 - B
R
Direct material
Direct labour
Manufacturing overheads
Less: proceeds from by-product
238 500
143 100
95 400
(6 000)
471 000
[TURN OVER]
1.8 - A
R
Sales (25 000 x 90% x R15)
Less: Joint cost
Less: Further processing cost (25 000 x R4)
Profit
337 500
(214 091)¹
(100 000)
R23 409
¹ R471 000 x 25 000/55 000 = R214 091
1.9 - D
1.10 - D
[TURN OVER]
QUESTION 2
a. Labour rate variance
Actual hours @ actual rate
(25*R12*500)
Actual hours @ standard rate
(25*R8*500)
R
150 000
100 000
Unfavourable variance:
50 000
b. Labour efficiency variance
R
Actual hours @ standard rate
(25*R8*500)
Standard hours @ standard rate
(20*R8*500)
Unfavourable variance:
c. Overhead efficiency variance
100 000
80 000
20 000
R
Actual hours @ standard rate
(25*R4*500)
50 000
Standard hours at standard rate
(20*R4*500)
40 000
Unfavourable variance:
10 000
d. Purchase price variance for steel
Actual quantity @ actual price
(500*10*R12)
Actual quantity @ standard price
(500*10*R16)
Favourable variance
R
60 000
80 000
20 000
e. True
[TURN OVER]
QUESTION 3
(a) Number of sales units per product (sales mix) to maximise budgeted profit
Refer to the “steps” on page 177 of the study guide:
Step 1 was already performed as part of the information given.
Step 2: Contribution per unit
Vase
Selling price
Less: Total variable costs
Contribution per unit