CHAPTER 2

Additional class exercises, previous tests and exams

Class Exercise 1
Company X produce wendy houses. The following costs were incurred during 2009:
Total fixed costs: R250 000
Total units produced: 10 000
Variable cost per unit: R900

Determine:
1. Total variable cost
2. Fixed cost per unit
3. If they estimate to produce 13 500 wendy houses in 2010, calculate the following;
a. Total fixed cost
b. Total variable cost

Class Exercise 2
The following costs are applicable to the production of product Alpha:
Variable cost per unit: R50
Total fixed cost per annum: R125 000

Determine:
1. For a production level of 20 000 units, the total variable cost and the fixed cost per unit.
2. Calculate the total cost if the company produces 25 000 untis.

Class Exercise 3
In the production of wooden chairs, the following costs where incurred in 2009 at a production level of
15 000 chairs:
Direct material: R45 000
Direct labour: R22 500
Factory rent: R1 000 per month
Supervisor salary: R2 500 per month
Cleaner: R9 600 per year

Determine:
1. Variable cost per unit
2. Total fixed cost
3. Total cost for 2010 if the company plan for a production level of 18 000 chairs.

Class Exercise 4
The assistant cost accountant is still new at the job and he knows that you are a student now in Cost
Accounting! He supplies you with the following information for 2009 and asks you to assist him in
certain calculations.

Direct material: R80 000

Direct labour: R60 000
Total units produced: 10 000
Factory rent: R2 000 per month
Depreciation: R10 500 per annum
Other Fixed manufacturing overheads: R2 500 per month
Variable manufacturing overheads: R15 000

Determine:
1. Total variable cost
2. Total fixed cost
3. Total cost for 2010 if the company will be producing 15 000 units.
Class Exercise 5
In the production of 50 000 wooden frames during 2009, the following costs were incurred:

Wood: 2.5m @ R6/m

Labour: 2 hrs @ R15/hr
Supervisor salary: R3 500 per month
Machine rent: R5 000 per machine (each machine has the capacity to produce 10 000 frames)

Determine:
1. Total cost for the production of 50 000 units
2. What will the machine rent be in 2010 if the company will produce 67 500 units?

Class Exercise 6
You have determined that indirect labour expense is a mixed cost. The following information is
supplied:
Labour hrs indirect labour
Jan: 1200 R5 500
Feb: 1600 R6 500
Mar: 1400 R6 000
Apr: 2000 R7 500

Determine the indirect labour expense for May if the labour hrs for May will be 1 500 hrs.

Class Exercise 7
Total variable costs: R11 700
Total costs: R26 000
Number of units produced: 650
Determine:
1. Total fixed costs
2. Variable cost per unit
3. Fixed cost per unit
4. Total cost if 320 units are produced
5. Total cost per unit if 320 units are produced

Class Exercise 8
The following details are available from the production records of XYZ Ltd:

Direct material: 4 kg @ R5.00 per kg (per unit)

Direct labour: 15 hrs @ R6.00 per hour (per unit)

Machines have the capacity for 4 000 units per month, at a lease cost of R8 000 per machine per
month.
Supervisor salary: R4 000 per month

Determine:
1. Calculate total cost and total cost per unit if production hours were:
July: 45 000, Aug: 90 000 and Sept: 38 400
Class Exercise 9
The following costs were incurred in the manufacturing and selling of champagne glasses during the
past financial year:

Depreciation on machines: R15 000 (capacity per machine: 28 000 champagne glasses per annum)
Direct wages: R95 000
Direct material: R130 000
Factory rent: R30 000
Variable selling costs: R45 000

During the past financial year, 28 750 products were manufactured and sold. Selling price is R12 per
unit.

Determine:
1. Total costs, unit costs and profit (all prices are unchanged) at the following production levels:
a) 25 000 units and 23 250 units sold
b) 9 000 units and all sold

Class Exercise 10
Masoka Ltd is a manufacturing concern that assembles computer speakers. The following information
was taken from the records of the company for Sept 2010:

Direct material costs R186 440

Direct labour costs 66 360
Manufacturing overheads
Fixed 134 300
Variable 39 500
Selling expenses (variable) 23 700
Administration expenses (variable) 12 640

A total of 1 580 computer speakers were manufactured during September 2010.

Determine:
1. For the month of September 2010:
a) Gross profit if 1 400 of the 1 580 speakers were sold at a selling price of R310 per
speaker.
b) Conversion cost per unit
c) Prime cost per unit
2. For the month of October 2010, the unit cost per speaker if they plan to manufacture 1 720
speakers.

COST AND MANAGEMENT ACCOUNTING 1

CLASS TEST (A) MARCH 2015 TOTAL: 30 marks
SURNAME:………………………………. INITIALS…………………
STUDENT NO:…………………………. CLASS GROUP……………
MINI TEST 1 45 MINUTES
EXAMINER M MDINGI MODERATOR B.N MDA

QUESTION 1 [12 Marks]

Fill in the missing figures below, all the companies are independent from each other

Company A Company B Company C

Production units 10 000 units 5? 20 000 units

Prime Cost 1? R 185 000 9?

Conversion Cost 2? 6? R 300 000

Direct Material Cost R 44 550 R 90 000 10?

Manufacturing cost per unit 3? R 100 R 25

Direct Labour Cost R 55 450 7? R 150 000

Total Manufacturing Cost R 135 500 8? 11?

Manufacturing Overheads
Cost 4? R 65 000 12?

QUESTION 2 [6 MARKS]

January
Total Fixed Costs R15000.00
Variable cost per unit R5.00
Production units 2000 units

From the above information calculate the following

1 costs:

a. How much is the total variable cost?

b. How much is the fixed cost per unit?

c. How much is the total cost?

2 If in February the business produce 2 500 units:

a. How much will be the total variable cost?

b. How much will be the total fixed cost?

c. How much will be the total cost

QUESTION 3 [7 MARKS]
True or False
1. All the direct cost can be traced on a product
2. Rent is an example of variable cost
3. Conversion cost is equal to direct labour plus direct material
4. Direct material cost is also fixed cost
5. Direct labour cost is a variable cost
6. Fixed cost per unit remain constant regardless of how many units produced
7. Total variable cost remain constant regardless of how many units produced
QUESTION 4 [5 MARKS]
The following are the costs and activity levels incurred at Shooz Manufacturers Ltd for the first quarter of the
year
Month Cost Activity
/Production level
(units)
January R2 750.00 600
February R3 250.00 800
March R3 000.00 700
April R3 750.00 1 000

Required:
Calculate the following using the high/low method:
Variable cost per unit
Fixed cost for April

COST ACCOUNTING 1

SURNAME:………………………………. INITIALS…………………
STUDENT NO:…………………………. CLASS GROUP……………

MINI TEST 1 1 MARCH 2013 45 MINUTES

EXAMINER F.J.R VAN DER LINDE MODERATOR B.N. MDA

QUESTION 1 (10 Marks)

Afcon Ltd uses a direct material (Product code: RM 005) in the production of their finished product. The
following transactions took place during the month of February 2013:

01/02/2013 Balance of 50 units at R20.00 each.

10/02/2013 Purchased 75 units at R25.00 each from Reach Ltd on credit.

19/02/2013 Purchased 25 units at R27.50 each for cash.

22/02/2013 Issued 80 units into production.

25 /02/2013 Returned 10 units bought on the 10/02/2013, to Reach Ltd.

28/02/2013 Received 5 units back from production.

Required:

1.1 Compile a stock ledger card for RM 005 using the FIFO inventory valuation method.

QUESTION 2 (5 Marks)

Indicate whether the following statements are true or false?

2.1 Semi-variable costs are conveniently deemed to be constant in total when

production volume changes.

2.2 A material requisition will be issued when the store needs stock from a supplier.

2.3 Prime cost is the sum total of variable manufacturing cost.

2.4 Management accounting is used to provide information inside the company for planning

and control purposes, and to make decisions.

2.5 A cost center may be defined as a pool or a collection point created to accumulate costs.

Africup Ltd has the following information that relates to their production activities for the
period ending 28 February 2013:

Direct Material R450 000

Indirect Material (all variable) R50 000

Direct Labour R200 000

Manufacturing Overheads

- Factory Rent R12 000

- Other variable overheads R28 000

Selling and Administration costs (40% being variable) R250 000

The production level of 10 000 units was achieved during the period.

Calculate:

3.1. Prime costs (Direct material cost + Direct labour cost)

SOLUTION 3.1

 Direct material cost = R450,000.00

 Plus Direct labour cost = R200,000.00

 PRIME COST =R650,000.00

3.2 Conversion costs (Direct labour cost + Manufacturing overheads cost)

 Direct labour cost = R200,000.00

 Manufacturing/Production overheads cost = R90,000.00

 Indirect material cost = R50,000.00

 Factory Rent = R12,000.00

 Other variable overheads = R28,000.00

 CONVERSION COST =R290,000.00

3.3 Production/Manufacturing cost per unit (Direct material + Direct labour cost + Manufacturing
overheads)

 Direct material cost = R450,000.00

 Direct labour cost = R200,000.00

 Manufacturing/Production overheads cost =R90,000.00

  Total Production/Manufacturing cost = R740,000.00

 Divide by the productin units = (R740,000.00 ÷ 10,000 units)

 Production/Manufacturing cost per unit = R74.00

3.4 Variable production cost per unit

 Direct material cost =R450,000.00

 Direct labour cost =R200,000.00

 Variable manufacturing/Production overheads cost =R78,000.00

 Indirect material cost =R50,000.00

 Other variable overheads =R28,000.00

 Total variable production/manufacturing cost =R728,000.00

 Divide by number of units = 10,000 units

 Variable production cost per unit = R72.80

Total Production/Manufacturing cost

 Total Fixed production cost

 Total Variable production cost

 Direct material cost

 Direct labour cost

 Variable manufacturing/Production overheads costs

3.5 Calculate the Net profit / (Loss) if only 7 500 units were sold at a unit price of R200 each.
SUBJECT
COST ACCOUNTING 1 (FULL TIME ) PAGES TIME
6
11/2 HOURS
CODE
KBR112S,KBR113S & KBR11SX DATE MARKS 9:00
to
24 MARCH 2015 54 10:30

FACULTY OF BUSINESS
CAPE TOWN, BELLVILLE AND WELLINGTON CAMPUSES
ASSESSMENT 1: YEAR COURSE

COURSE: NHC: ACC & NHC: FIS

EXAMINER : FJR VAN DER LINDE

MODERATOR (INTERNAL) : E. TSAGUE

SPECIAL INSTRUCTIONS
 Answer all questions in your answer book.
 Calculations to two (2) decimal places.

REQUIREMENTS
 QUESTION PAPER
 ANSWER SCRIPT
 CALCULATOR, RULER, STATIONERY
HAND IN YOUR QUESTION PAPER.

DO NOT TURN THE PAGE BEFORE THE STARTING TIME

QUESTION 1 (22 Marks)
Zerox Limited is a manufacturing company, producing a product called Zero50. The costs
and expenses incurred during the year ended 31 January 20x15 are as follows:

Materials purchased (Direct R285 000 and Indirect R45 000) R330 000
Materials used (issued) into production (Direct R280 000 and Indirect R30 200) R310 200
Labour / Wages allocated (Direct R120 00, Indirect R40 000 and
Administration & Selling R100 000) R260 000
Rental paid (Factory R144 000 and Administration R120 000) R264 000
Electricity & Water (80% Factory and 20% Administration) R90 000
Telephone (40% Factory and 60% Administration) R36 000
Insurance (60% Factory =R36 000 and 40% Administration) ?
Depreciation charge –PPE (75% Factory and 25% Administration) R120 000
Sales Commission (3% of sales) ?
Units Produced 136 000
Units Sold (selling price per unit is R15.00 per unit) 120 000

REQUIRED
Calculate the following:
A. Prime cost (2)

B. Conversion cost (4)

C. Total Production cost (2)

D. Total manufacturing cost per unit (2)

E. Total Period cost (3)

F. Total cost of operations (2)

G. Net profit / (Loss) for the year. (7)

(22)
QUESTION 2 (17 MARKS)
Mvete Limited is an established company in the manufacturing industry. The company is
manufacturing a very successful product, namely Vete12. The following cost structure is
given to you, the newly appointed Trainee Cost Accountant, to advise management on
the different levels of production:
At the current level of 15 000 units produced and sold:
Direct material R20-00 per unit
Direct labour R375 000
Indirect material R5-00 per unit
Indirect labour (includes the production supervisor’s salary of R240 000;
the remainder is R7.50 per unit) R352 500
Other manufacturing overheads (all variable) R12.50 per unit
Depreciation charge-PPE (production plant & machinery) R375 000
Selling and administrative expenses:
*Variable selling expenses R10.25 per unit
*Fixed selling expenses R5.00 per unit
*Administrative expenses (all fixed) R7.00 per unit
REQUIRED
A. Calculate at the three (3) different production levels of:
1. 15 000 units (current level of production),
2. 20 000 units,
3. 12 000 units.

A1. The variable manufacturing cost per unit, (6)

A2. The fixed manufacturing cost per unit, (3)
A3. The total manufacturing cost per unit. (1)
B. Why is there a difference in the unit cost? Discuss briefly. (2)
C. Assume the company produces and sell 20 000 units, and wishes to make
a net profit of R10.00 per unit. What would be the expected selling price
per unit? (5)

(17)
QUESTION 3 (9 MARKS)
The following are multiple choice questions (1- 6).
Select the best answer from each question (options A – D).
Write 2. B; 3. D; 7. A in your answer book.

3.1 Prime cost is:

A. all costs incurred in manufacturing a product.
B. the total of direct costs.
C. the material cost of a product.
D. the cost of operating a department.

3.2 Which of the following is not a product cost?

A. depreciation-plant machinery
B. raw materials
C. heat, electricity, power –factory
D. salesperson’s commission.

3.3 Fixed costs are conventionally deemed to be:

A. constant per unit of output.
B. constant in total when production volume changes.
C. outside the control of management.
D. those unaffected by inflation.

3.4 Variable costs:

A. are always direct costs.
B. are part of all conversion costs
C. vary in total directly with the amount of production output
D. are constant in total over a relevant range of output.

3.5 The following data relate to two (2) production activity levels in a manufacturing
company:

Number of units produced 4 500 5 750

Manufacturing overheads R269 750 R289 125

Fixed manufacturing overheads are not affected by the number of units produced:
The variable manufacturing cost per unit:
A. is approximately R15.50
B. is approximately R44.44
C. is approximately R59.94
D. cannot be calculated without more information.

3.6 Thandi Limited is preparing the production budget for the next period. Based on
previous experience, it was found that there is linear relationship between production
volume and production costs. The following cost information has been collected in
connection with production:

Volume (units) Costs

1 600 R23 200
2 500 R25 000

What would be the production cost for a production volume of 2 700 units?
A. R5 400
B. R25 400
C. R27 000
D. R39 150
QUESTION 4 (6 MARKS)
4.1 Please select the best answer from the table provided below or complete the following
statements by writing only the missing word.
Cost accounting Responsibility Prime costs
Budget Authority Direct costs
Manufacturing Retailer /merchandising Cost sheet

A. A1………………………… is the power to perform assigned duties, while

A2…………………… is the obligation to carry them out to the best of one’s ability.
B. The process of identifying, summarizing and interpreting information needed for planning
and control, for management decisions and for product costing is termed ……………… .
C. One of the most important tools in cost planning is the……………………..
D. D1 A …………….. company changes raw materials into finished goods, while a
D2 ……………………company sells its inventory in the same form as it had acquired.

(6)

SUBJECT ANNEXURE(S) PAGE TIME

S 1.5
COST ACCOUNTING 1 (FULL TIME) 0 Includin hours
g cover
page
4

SUBJECT CODE DATE MARK

KBR112S/KBR113S/KBR11SX 30 MARCH 2017 S
40

FACULTY OF BUSINESS

CAPE TOWN, BELLVILLE & WELLINGTON CAMPUSES

 COURSE :NHC: ACCOUNTING AND NHC:FIS

EXAMINER : M.P. LOMBARD

MODERATOR : J-P BRUWER
(INTERNAL)

SPECIAL INSTRUCTIONS

 Hand in your ANSWER BOOK and QUESTION PAPER after

completion.
 Only answers in blue or black ink will be marked

REQUIREMENTS

ANSWER BOOK, CALCULATOR & STATIONERY

DO NOT TURN THE PAGE BEFORE THE STARTING TIME

ATTENTION!!

PLEASE ENSURE THAT YOU WRITE YOUR LECTURERS’ SURNAME AND

YOUR CLASS GROUP ON YOUR ANSWER BOOKS!!

GOOD LUCK!!

TIME: 1.5 HOURS 40 MARKS

QUESTION 1 (19 MARKS)

MTN Ltd is a manufacturing company that manufactures cellphones.

The relevant costs for the month of March 2017, when 25 000 units were produced and 20 000 units
were sold, were as follows:

R
Direct material costs 310 000
Direct labour costs 270 000
Indirect material costs - variable 50 000
Indirect labour costs – fixed 72 000
Factory expenses - variable 20 000
Factory expenses - fixed 48 000
Selling expenses - fixed 50 000
Administrative expenses - fixed 70 000

REQUIRED:

Calculate the following for the month of March 2017:

a) The prime cost in total and the prime cost per unit (3)

Solution (a)
Total Prime cost: =R580,0000.00
 Direct material cost =R310,000.00
 Direct labour cost =R270,000.00

Prime cost per unit (R580,000.00 ÷ 25,000 units) =R23.20 per unit

b) The conversion cost in total and the conversion cost per unit (6)

Total conversion cost: = R460,000.00

 Direct labour cost =R270,000.00
 Manufacturing/Production overheads =R190,000.00
o Indirect material cost =R50,000.00
o Indirect labour cost =R72,000.00
o Factory expenses – variable =R20,000.00
o Factory expenses – fixed =R48,000.00

Conversion cost per unit (R460,000.00 ÷ 25,000 units) = R18.40

c) Total variable production cost per unit (2)

 Direct material cost =R310,000.00

 Direct labour cost =R270,000.00
 Indirect material cost =R50,000.00
 Factory expenses – variable =R20,000.00
Total variable production cost =R650,000.00
Divide by the number of units = 25,000 units
Total variable production cost per unit = R26.00

d) Total fixed manufacturing cost =R120,000.00

(1)
 Indirect labour cost =R72,000.00
 Factory expenses - fixed =R48,000.00

e) Total non-manufacturing cost =R120,000.00 (1)

 Selling expenses =R50,000.00
 Administrative = R70,000.00
f) The net profit if the 20 000 cellphones were sold at R40 per unit (6)
QUESTION 2 (8 MARKS)

Omega toys, is a toy manufacturing company.

You are provided with the labour hours and total production costs, of Omega toys, for the last four
months of 2016.

MONTH LABOUR HOURS TOTAL PRODUCTION

COST
September 2 500 R20 000
October 3 500 R25 000
November 4 500 R30 000
December 3 500 R25 000
TOTAL 14 000 R100 000

REQUIRED:

a) Use the high/low method to determine the fixed cost and the variable cost per unit.
(6)
b) Calculate the total estimated production cost for January 2017; if Omega toys are
expecting to work 5 700 labour hours. (2)

QUESTION 3 (7 MARKS)

Sisa Ltd is a manufacturing company that manufactures chairs.

During the 2016 year, Sisa Ltd produced 30 000 chairs, at the following costs.

Wood 1.5 m per chair @ R7.50/m

Labour 3 hrs per chair @ R21/hr
Machine rent: R 16 500 per machine per year (each machine has the capacity to produce 8 000
chairs).
Factory rent R10 000 per month
Factory cleaner R3 000 per month

REQUIRED:

Calculate the following for Sisa Ltd

a) Total cost for the 30 000 units produced during 2016 (5)
b) Calculate what the expected machine rental cost will be for 2017 if Sisa expects to
produce 45 000 units. (2)

QUESTION 4 (6 MARKS)
You are required to respond to the following statements by indicating whether it is true or
false.
Write only your answer (True/False) in your answer book.

a) Depreciation can be classified as a variable cost (1)

b) Based on the number of units produced, total fixed costs will increase as more units are
produced. (1)
c) Management accounting information should not be used by internal stakeholders of a business
to make decisions. (1)
d) Financial accounting makes use of historic, factual information. (1)
e) Organising is a function used in Management accounting. (1)
f) When your production units increase your fixed cost per unit will decrease. (1)

THE END

Memorandum
Class Exercise 7
1. TC = TF + TV
26 000 = ? + 11 700
TF = 26 000 – 11 700 = 14 300

2. Var/unit = 11 700 / 650 = R18/unit

3. Fix/unit = 14 300 / 650 = R22/unit

4. TC = TF + TV
= 14 300 + (18 x 320)
= 20 060

5. TC/unit = 20 060 / 320 = R62.69

Class Exercise 8
1. Units per month: July (45 000 / 15) = 3 000
Aug (90 000 / 15) = 6 000
Sept (38 400 / 15) = 2 560

Var/unit = Dir mat 4x5= 20

Dir lab 15 x 6 = 90
110

TF July: Mach rent (1 mach) 8 000 TC July = 12 000 + (110 x 3

000)
Sup sal 4 000 = R342 000
12 000 TC/unit = 342000/3000 = R114.00

TF Aug: Mach rent (2 mach) 16 000 TC Aug = 20 000 + (110 x 6 000)

Sup sal 4 000 = R680 000
20 000 TC/unit = 680000/6000 = R113.33

TF Sept: Mach rent (1 mach) 8 000 TC Sept = 12 000 + (110 x 2

560)
Sup sal 4 000 = R293 600
12 000 TC/unit = 293600/2560 = R114.70

Class Exercise 9
1. Var/unit = Dir wages 95 000
Dir mat 130 000
225 000 / 28 750 = R7.83

TF (25 000 units) = Depr (1) 7 500 (last year:28750 = 2 mach, so R15000/2
R7500 depr per mach)
= Fact rent 30 000
37 500

TF (9 000 units) = Depr 7 500

= Fact rent 30 000
37 500

25 000 units:
TC = TF + TV = 37 500 + (7.83 x 25 000) = R233 250

TC/unit = 233 250 / 25 000 = R9.33

Sales (12 x 23 250) R279 000.00

COS (9.33 x 23 250) (216 922.50)
62 077.50
Less: Selling costs ( 36 391.30)
(45 000 / 28 750 x 23 250)
Profit 98 468.80
 9 000 units:
TC = TF + TV = 37 500 + (7.83 x 9 000) = R107 970

TC/unit = 107 970 / 9 000 = R12

Sales (12 x 9 000) R108 000

COS (107 970)
30
Less: Selling costs ( 14 086.96)
(45 000 / 28 750 x 9 000)
Loss (14 056.96)

COST AND MANAGEMENT ACCOUNTING 1

MEMORUNDUM
CLASS TEST (A) FEBRUARY 2015 TOTAL: 30
SURNAME:………………………………. INITIALS…………………
STUDENT NO:…………………………. CLASS GROUP……………
MINI TEST 1 45 MINUTES
EXAMINER M. MDINGI MODERATOR B.N MDA

QUESTION 1 [12 Marks]

Fill in the missing figures below, all the companies are independent from each other

Company A Company B Company C

Production units 10 000 units 5?2 500  20 000 units

Prime Cost 1?100 000  R 185 000 9? R350 000 

Conversion Cost 2?90 950  6?160 000  R 300 000

Direct Material Cost R 44 550 R 90 000 10? R200 000 

Manufacturing cost per unit 3? R13.55  R 100 R 25

Direct Labour Cost R 55 450 7?95 000  R 150 000

Total Manufacturing Cost R 135 500 8?250 000  11? R500 000 
Manufacturing Overheads
Cost 4?35 500  R 65 000 12?R150 000 

\
QUESTION 2 [6 MARKS]
From the above information calculate the following
1 costs:
R10 000 
a. How much is the total variable cost?
R 7.50 
b. How much is the fixed cost per unit?
 R 25 000 
c. How much is the total cost?

2 If in February the business produce 2 500 units:

a. How much will be the total variable cost? R 12 500 
b. How much will be the total fixed cost? R15 000 
c. How much will be the total cost R27 500 

QUESTION 3 [7 MARKS]
True or False
1. All the direct cost can be traced on a product True 
2. Rent is an example of variable cost False 
3. Conversion cost is equal to direct labour plus direct material False 
4. Direct material cost is also fixed cost False 
5. Direct labour cost is a variable cost True 
6. Fixed cost per unit remain constant regardless of how many units produced False 
7. Total Variable cost remain constant regardless of how many units produced False 

QUESTION 4 [5 MARKS]

Variable cost per unit R2.50 


Fixed cost for April R1 250 

MEMORUNDUM

CLASS TEST (A) MARCH 2013 TOTAL: 30

SURNAME:………………………………. INITIALS…………………

STUDENT NO:…………………………. CLASS GROUP……………

MINI TEST 1 45 MINUTES

EXAMINER F.J.R VAN DER LINDE MODERATOR B.N MDA

QUESTION 1 (10 marks) Stock ledger card (Product code:RM 005)

DATE RECEIPTS ISSUES BALANCE

Units u/p Total Units u/p Total Units u/p Total

01/02/2013 50 R20.00 R1000.00ü

10/02/2013 75 R25.00 R1875.00ü 50 R20.00 R1000.00

75 R25.00 R1875.00

19/02/2013 25 R27.50 R687.50ü 50 R20.00 R1000.00

75 R25.00 R1875.00

25 R27.50 R687.50
22/02/2013 50 R20.00 R1000.00ü 45 R25.00 R1125.00

30 R25.00 R750.00ü 25 R27.50 R687.50

25/02/2013 (10 R25.00 R250.00) ü 35 R25.00 R875.00ü

25 R27.50 R687.50

28/02/2013 (5 R25.00 R125.00) 40 R25.00 R1000.00ü

ü
25 R27.50 R687.50ü

QUESTION 2 (5 marks)

2.1 Falseü

2.2 Falseü

2.3 Falseü

2.4 Trueü

2.5 Trueü

QUESTION 3 (15 marks)

3.1 Prime Costs

D. Material R450 000 ü

D. Labour 200 000 ü

Total R650 000

3.2 Conversion Costs

D. Labour R200 000 ü

Manufacturing Overheads:

Indirect Material 50 000 ½

Factory Rent 12 000 ½

Other variable MOH costs 28 000½ R90 000½

Total R 290 000

3.3 Production Cost per unit

Prime costs R650 000 ü

Manufacturing Overheads R90 000ü

Indirect Material R50 000

Factory Rent 12 000

Other variable MOH costs 28 000

Total production cost R740 000 / 10000 units

Production cost per unit R74.00 ü

3.4 Variable Production Costs per unit

Prime costs (DM +DL) R650 000 ü

Factory overheads: Indirect material R50 000

: Other 28 000 R78 000ü

Total variable cost R728 000 / 10 000 units

Variable production cost per unit R72.80 ü

3.5 Net Profit / (Loss)

Sales (7 500 X R200.00 ) R1 500 000 ü

COGS (7 500 X R74.00) ( R555 000) ü

Gross Profit R945 000

Selling and Distribution (R250 000) ü

Net Profit R695 000 ü

SUBJECT
COST ACCOUNTING 1 (FULL TIME ) PAGES TIME

8 11/2 HOURS

CODE DATE MARKS 9:00

to
KBR112S, KBR113S & KBR11SX 24 MARCH 2015 54 10:30

FACULTY OF BUSINESS
CAPE TOWN, BELLVILLE AND WELLINGTON CAMPUSES
ASSESSMENT1: YEAR COURSE

COURSE: NHC: ACC & NHC: FIS

EXAMINER : FJR VAN DER LINDE

MODERATOR : E.TSAGUE
(INTERNAL)
SPECIAL INSTRUCTIONS
 Answer all questions

REQUIREMENTS
 QUESTION PAPER
 ANSWER SCRIPT
 CALCULATOR, RULER, STATIONERY
MEMORANDUM
NB:  means equivalent to ½ MARK. P means mark on principle as correct.

DO NOT TURN THE PAGE BEFORE THE STARTING TIME

QUESTION 1 (21 MARKS) Suggested Solution
A. Prime cost

Prime cost = Direct Materials + Direct Labour

= R280 000 + R120 000 = R400 000
B. Conversion cost = Direct Labour + Manufacturing Overheads
= R120 000 + R426 600 = R546 600+
C. Total Product cost / Manufacturing cost
Total MNFcost = Direct Material + Direct Labour + MNF Overheads
= R280 000 + R120 000 + R426 600 = R826 600
or = Prime cost + MNF Overheads
= R400 000 + R426 600 = R826 600
or = Direct Material + Conversion cost
= R280 000 + R426 600 = R826 600
D. MNF Cost per unit
MNf cost per unit = Total MNF cost / Units produced
= R826 600/ 136 000 units = R6.08P
E. Total Period /Non-Mnf cost
Total Non-Mnf cost = Administration expenses + Selling expenses
= Rxxx + Ryyy = R367 600P
F. Total cost of operations
Total cost of operations = Mnf costs + Non-Mnf costs
= Production costs + Period costs
= R826 600 + R367 600 = R1 194 200P
G. Net Profit / (Net Loss): for year
Sales (120 000 u x R15 p/u) R1 800 000 
Cost of sales (120 000 u x R6.08 p/u) ( 729 600) 
-----------------
Gross Profit R1 070 400
Operating expenses
W2. Administrative & Selling expenses 367 600
 Salaries & wages R100 000 
 Rental paid 120 000 
 Electricity & water (20% of R90 000) 18 000 
 Telephone (60% of R36 000) 21 600 
 Insurance (40% = R36 000 x 100/60 =R60 000) 24 000 
 Depreciation charge-PPE (25% of R120 000) 30 000 
 Sales commission 54 000 

(3% of R1 800 000 <120 000u x R15.00 p/u>) ------------

Net profit / (Net loss): for year 702 800 
QUESTION 1
Workings:
Calculate the following:
W1. Mnf Overheads
Indirect material used R30 200
Indirect labour allocated 40 000
Rental paid –factory (given) 144 000
Electricity & water (80% of R90 000) 72 000
Telephone (40% of R36 000) 14 400
Insurance (60% of R60 000 <R36 000 x 100/60>) 36 000
Depreciation charge-PPE (75% of R120 000) 90 000
Total Mnf Overheads R426 600
(NB: Marks allocated on solution;  each)

Question 2 (17 MARKS) Suggested Solution

Production levels
(1) Current (2) Projected (3) Projected

15 000 units 20 000 units 12 000 units

Manufacturing cost per unit:
* Variable:
Direct materials R20.00 R20.00 R20.00
Direct labour (R375 000 /15 000u) R25.00 R25.00 R25.00
Manufacturing overheads
Indirect materials R5.00 R5.00 R5.00
Indirect labour R7.50 R7.50 R7.50
Other R12.50 R12.50 R12.50
A1. Total variable cost R70.00 R70.00 R70.00 
*Fixed:
Manufacturing overheads
Indirect labour (sup. salary) R16.00 R12.00 R20.00 
(R240 000 /15000u, 20 00u, 12 000u)
Depreciation charge-PPE
R25.00
(R375 000 /15 000u, 20 000u, 12 000u) R18.75 R31.25
A2. Total fixed cost R41.00 R30.75 R51.25 
A3. Total manufacturing cost R111.00 R100.75 R121.25 P (10)
(NB: possible 10 ½ marks, give a bonus ½ mark if all calculations are correct)

A4. The difference in the unit cost is due to the impact of fixed cost, which is constant
in total, but changes as the volume/ quantity changes, as per above.  (2)
 QUESTION 2 Suggested
Solution
A5. Expected selling price to realise a profit of R10.00 per unit: At production level of
20 000 units
Total manufacturing cost per unit (as above) R100.75 
Total non-manufacturing cost per unit
Variable: selling R10.25 
Fixed: selling (15 000u x R5.00p/u =R75 000 / 20 000u) R3.75
: administrative (15 000u x R7.00 p/u =R105 000 /20 000u) R5.25
Total cost of operations per unit R120.00 
Expected net profit per unit R10.00
Expected selling price per unit R130.00  (5)

QUESTION 3 (9 MARKS) Suggested Solution

3.1 B
3.2 D
3.3 B
3.4 C
3.5 A  See workings
3.6 BSee workings

(9)

QUESTION 3
Workings to multiple choice questions 3.5, 3.6 ,3.9, 3.10
Calculate the following:
3.5 Fixed costs in total remain constant, but total variable costs increases as volume changes.
Overheads Output (units)
High R289 125 5 750
Low R269 750 4 500
Change R19 375 1 250
Variable cost per unit = R19 375 / 1 250 units = R15.50
3.6 at Production of 2 700 units: Units Costs
2 500 R25 000
1 600 R23 200
Changes 900 R1 800
Variable cost per unit R1 800 / 900 units = R2.00 p/u
Substituted in activity: 2 500 units 2 700 units
Total cost R25 000 R25 400
Variable cost (2 500u x R2 p/u) R5 000 (2 700u x R2 p/u ) R5 400
Fixed cost R20 000 R20 000
 QUESTION 4 (6 MARKS) Suggested Solution
4.1
A. A1. Authority  A2. Responsibility
B. Cost accounting
C. (b) budget
D. D1. Manufacturing D2. Retail /Merchandise

SUBJECT

COST ACCOUNTING 1(FULL TIME) MEMO

CODE DATE MARKS

KBR112S/KBR113S/KBR11SX 30 MARCH 2017 40

FACULTY OF BUSINESS

CAPE TOWN, BELLVILLE & WELLINGTON CAMPUSES

COURSE : NHC: ACCOUNTING AND NHC:FIS

EXAMINER : M.P. LOMBARD

MODERATOR : J-P BRUWER
(INTERNAL)
 SPECIAL INSTRUCTIONS

 Hand in your ANSWER BOOK and QUESTION PAPER after completion.

 Only answers in blue or black ink will be marked

REQUIREMENTS

ANSWER BOOK, CALCULATOR & STATIONERY

QUESTION 1 (19 MARKS)

a)
Direct material cost R310 000
Direct labour cost R270 000
Prime cost total R580 000
R580 000 ÷ 25 000 units = R23,20 per unit 
b)
Direct labour cost R270 000
MOH cost R190 000
o Indirect material R50 000
o Indirect labour R72 000
o Other moh variable R20 000
o Other moh fixed R48 000
Conversion cost total R460 000
R460 000 ÷ 25 000 = R18,40 per unit 
c)
Direct material R310 000
Direct labour R270 000
Indirect material R50 000
Other moh variable R20 000
Variable production cost total R650 000
R650 000 ÷ 25 000 = R26,00 per unit 
d)
Indirect labour R72 000
Other moh fixed R48 000
Fixed manufacturing cost total R120 000
e)
Selling expenses R50 000
Admin expenses R70 000
Non-manufacturing cost total R120 000
f)
Sales (20 000 x 40) R800 000
Cost of sales (R616 000)
Direct material R310 000
Direct labour R270 000
Indirect material R50 000
Indirect labour R72 000
 MOH variable R20 000
MOH fixed R48 000
Total manufacturing cost R770 000
÷ units produced ÷ 25 000
x units sold x 20 000
Gross profit R184 000
Selling and admin cost (R120 000)
Net profit R64 000

QUESTION 2 (8 MARKS)
 
a) R30 000 highest cost - R20 000 lowest cost = R10 000
4 500 highest hours - 2 500 lowest hours 2 000
  = R5 var cost/hour

Total cost - Total variable cost = Fixed cost

High: R30 000 - (4 500 x R5) = R7 500
OR
Low: R20 000 - (2 500 x R5) = R7 500

b) (5 700 labour hours x R5 var cost/hour) + R7 500 fixed cost

= R28 500 variable cost + R7 500 fixed cost
= R36 000 Total cost

QUESTION 3
(7 MARKS)
a)
Wood(30 000 x 1.5 x R7,50) R 337 500
Labour(30 000 x 3 x R21,00) R1 890 000
Machine rent(R16 500 x 4) R 66 000
Factory rent(R10 000 x 12) R 120 000
Factory cleaner(R3 000 x 12) R 36 000
Total cost R2 449 500

b) 45 000 units ÷ 8 000 units per machine = 5,625 machines

= 6 machines x R16 500/machine
= R99 000

QUESTION 4 (6 MARKS)
a) False
b) False
c) False
d) True
e) True
f) True