# MAC2601 May Jun 2013 MEMO 10 June 2013

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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
Less: proceeds from by-product

238 500
143 100
95
R

Sales (20 000 x R35)
Less: Variable costs
Contribution

700 000
(385 000)¹
315 000

Less: Fixed costs
Net profit

(55 000)
260 000

¹ R185 000 (20 000 x R9,25) + R150 000(20 000 x R7,50) + R50 000 (20 000 x R2,50*)
* R40 000/16 000 = R2.50

d.
Sales (18 000(20 000 x .90) x R40 (R35+R5)
Less: Variable costs
Contribution
Less: Fixed costs (R55 000 + R5 000)
Net profit

R
720 000
(346 500)²
373 500
(60 000)
313 500

²R166 500 (18 000 x R9,25) + R135 000(18 000 x R7,50) + R45 000 (18 000 x R2,50*)
OR
Contribution: R40 – R19,25 = R20,75
R20,75 x 18 000 = R373 500 – R60 000 = R313 500

QUESTION 6

a. Budgeted cost per smart id card
9 places; 5 marks
R
Direct Materials (2.5m^ *R3.50^)
Direct labour (2^*R8^)
Variable selling costs (not part of product costs) ^for not including VSC
Fixed cost per unit (2 ^ *13,75√)
Total budgeted smart ID card cost per unit

8,75
16,00
3,00
27,50
55.25

If they have not shown the zero for the VSC, you can still award the mark for the “^for not including VSC” if it is clear that the VSC has not been included anywhere and they have totalled/attempted to total their costs (which does not include the VSC). This also applies to the alternative methods.
Fixed cost per labour hour
Calculation of the fixed overhead recovery rate