Faculty FACULTY OF BUSINESS AND ACCOUNTING

END ASSESSMENT Paper Code AMAC/G23/E-

Assessment Name 01
(Eg: End/Sup)

Module Name MANAGEMENT Module Code A7-MAC-17

ACCOUNTING

JUL-DEC 2023 Submission Mode BLACKBOARD

Semester
(E.g Turnitin, blackboard,
( E.g Jul-Dec-2021)
hardcopy)
Total Marks 24 HOURS
Duration
100 (E.g.,
mins/hours/days/weeks

Assessment Type SUBMISSION Submission Date

(Applicable for
(Eg:
submission-based
Written/Practical/Sub
exams only)
mission)

3202 Instructions

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8 1. Please type your student ID and Campus on your answer sheet
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Eff Date:2. This assessment is worth 100 marks

3. Presentation and neatness of work is a requirement

4. Type your answers using Times Roman or Arial 12, spacing 1.5
5. Answer ALL questions.
6. Scientific Calculators are allowed. (Financial Calculators are not allowed)
7. Save the file using student ID, module abbreviation, Month, Year (e.g. SGB123456_MAC_END JD 2023).
|Rev 00 8. Harvard style of referencing should be used wherever possible
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9. Usage of AI tools in this assessment is not allowed. All AI detected sections will not be marked.
10. All cases of suspected plagiarism will be treated seriously. Your attention is drawn to the sections on plagiarism in
the student regulations
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00 11. Submit your answer script through blackboard on or before 2023 0800 Hours.
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 SECTION A [40 MARKS]

1. Enrich Store is a newly established entity in Lesotho. It has been 2 years now in operations and its management are
considering on how to improve performance and profitability of the enterprise. You recently advise them to establish
management accounting office in their company.
Management have asked you to provide more information on Management Accounting, What is it, what are the
significance of management accounting in real-life scenarios and discuss how it contributes to the success of
organizations. Provide practical examples of how management accounting techniques can be applied to improve
decision-making, measure performance, increase efficiency, and enhance customer service. Additionally, highlight the
role of management accountants in budgeting, spending, and investments. (8 Marks)

2. Mr Phasumane, “Hokocho plantation” founder and owner, is trying to estimate the costs and revenue associated with
producing one of his products. He has provided you with the following data for the past 6 months for your reference;
April 100 units M96,500
May 40 units M40,500
June 148 units M137,700
July 72 units M69,300
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August 45 units M38,250
September 120 units M106,500
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Predict the total costs for the next month of October, assuming that 95 units will be produced using HighLow
forecasting technique. (4 Marks)

3. Matebesi bakery, one of the bakery in Maseru districts, has been in operation since 1987. Due to high inflation in later
years, its management normally review selling prices on an annual basis to ensure that they are generating expected
profits as per the company policy. It is the company’s policy to generate 20% profit margin from each loaf to be sold.
For the upcoming year, it is estimated that 30,000 loaves will incur the following costs; Material costs
|Rev 00
1 M205,000,
Staff wages, M93,600,
Support staff M111,600,
Building overheads, M37,800 and Other
factory overheads M27,000.
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Required;
-
SR Determine the selling price per loaf. (4 Marks)
A
-QP 4. Drum-starters, tailoring company, has recently received a special order from BU community to make 500 branded T-
shirts for their 25th Anniversary celebration. All materials and related accessories will need to be purchased from their
long established relationship supplier. As for labour, 600 hours will be needed to accomplish such work. Currently,
the company has spare capacity of about 200 hours. Other alternatives available to accomplish the job is to work

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 overtime or to outsource once-off staff. Overtime is paid at time and half of the basic rate while the once-off labour
would be paid M360 per hour. Basic rate of the company is M180 per hour.
Advice on the minimum labour costs to be incorporated in the quote? (4 marks)

5. Liberty Co., one of the respected companies in the city, reported M86,104.00 as a profit in the past reporting period.
Company’s management requested a clarification on the difference between marginal costing and absorption costing.
As part of that exercise, profit reconciliation would be required. The following information has been given;
Product’s cost card
Direct materials M40.00
Conversion costs M71.60
Fixed Costs M115.20
Full Production costs M226.80

Further Information
Production 24,7740 units
Sales 24,500 units
Closing Stock 570 units
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Required;
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8 Calculate profit to be reported under marginal costing technique. (4 Marks)
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Eff Date:

6. Manonyane ambers (pty) ltd management is considering to acquire Enrich store as they are considering it to have a
huge potential to be the best store in Lesotho provided it could be under competent management. Due to their limited
funds and nature of transaction, they considered to fund that with the bank loan. As part of the bank’s requirements,
you have been requested to assist with 4 month cash flow projection
As per your request, the following information has been provided;
i. Budgeted sales;
|Rev 00
1
$
January 450,000
February 756,000 March
1 270,000 April
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SR
on current trend, 20% of
A
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cash sales. However, due
to some changes in
policies and strategies to

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 be implemented, it is
expected that from
February, cash sales
would be 25% of total
sales.
• The company allows its customers two months credit and based on historical information, 1% of debtors
become irrecoverable.
ii. The company use 25% profit margin for all their prices.
iii. They are currently using JIT (Just In Time) inventory management technique but they are planning to change
that effectively from end of January on account of recent supplier’s struggle to deliver on time. New policy
will be to have enough inventory to cover the next two months sales at the end of each month.
iv. Their suppliers offer them 2% settlement discount when they pay a month after sales and they are willing to
use that opportunity each time they buy.
v. Other related costs for each month;
• Selling and Distribution 2% of sales
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• General expenses M40,500, including M4,500 for depreciation.
• 1.5% will be charged based on overdraft at the beginning of the month by the bank, if any.
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Eff Date:
Required;
Prepare the cash budget for the 4 months till end April. (16 marks)

SECTION B
7. You have recently been appointed as a management accountant for Furung Co., the company that produces three
products namely, Pullet, Dynamic and Coils. Since established, Overheads have been treated using conversional
|Rev 00 costing approach. However, due to some developments, management have been advised to change to activity based
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costing.
Projected figures for the next year are as follow:
Pullet Dynamic Coils
1 Volume (units) 7,500 6,000 9,000
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- Selling price per unit M135 M218 M234
SR
Material usage (kg) per unit 4 6 8
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Machine hours per unit 1 1.4 1.8
No. production runs per annum 32 24 16
No. purchase orders per annum 48 56 84

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 No. deliveries to retailers per annum 48 30 62

The annual overhead costs have been analysed as:

M
Set up costs 238,950
Running costs 597,600
Procurement costs 432,000
Delivery costs 488,880
Required:
Calculate the full cost per unit for each product using;
(i). Conversional costing. (Labour hours are considered as an appropriate base for absorption). (5 marks)
(ii). Activity based costing. (9 marks)
(iii). Comment on management’s consideration to change from the conversional approach to Activity based
approach based on your calculations above. (6 marks)
8. Mohalalitoe F&E (pty) ltd manufactures couches. Each couch’s standard cost is given below;
Maloti (M)
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Materials 25 meters @ M9.00/m 225.00
Labour costs 2 hours @ M36/hour 72.00
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8 Variable overheads 2 hours @ M18/hour 36.00
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Eff Date: Fixed factory overheads 2 hours @ M27/hour
-09 54.00
387.00
Selling price 450.00
Standard Profit 63.00

Budgeted production and sales units for August 2023 was 2, 000 tables while actual results were as follow;
Actual production 1,800 units
Actual Sales 1,600 units
|Rev 00 $ $
1
Revenue for 1,600 units 831,600.00
Materials 54,000 metres @ M8.10/m 437,400
Labour 3,500 hours 137,340
1 Variable Overheads 61,920
00
Fixed Overheads 113,850
-
SR Total Production costs for 1,800 units 750,510
A Less; Closing Inventory (200 units @ M387.00) (77,400) (673,110)
-QP Profit 158,490

As part of the budgetary control, you are required to;

(a). Perform detailed variance analysis using data given above, showing each and every sales and costs variances.
(16 marks)
(b). Prepare the operating Statement showing a reconciliation between budgeted and actual profit. (6 marks)

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 (c). Provide meaning and implication of the labour rate and efficiency variances calculated above and also provide
two possible reasons for each. (8 marks)

9. The following details relate to Delta and Beta, two products which are produced by Wealth-craft Co:
Delta Beta
Material (at M900 per kg) 1,440 1,080
Labour (at M270 per hour) 540 810
Variable production overhead 450 450
Total production cost 2,430 2,340

Demand (units) 750 580

Selling price per kilogram M 3,780 3,600
1,750 kg of material and 3,250 hours of labour will be available in the period.

(a). Define limiting factor and determine it in above scenario if any. (4 marks)
(b). Determine the optimal production mix to maximize profit. (6 marks)

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|Rev 00
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