Manac 3 Sem 1 Test 1 2023

FACULTY OF ACCOUNTING AND INFORMATICS
DEPARTMENT OF MANAGEMENT ACCOUNTING

TEST 1
INSTRUCTIONAL PROGRAMME DIPLOMA IN COST AND MANAGEMENT ACCOUNTING
DIPLOMA IN ACCOUNTING
INSTRUCTIONAL OFFERING MANAGEMENT ACCOUNTING III MODULE 1

SUBJECT CODE MACA301/MGTA312/MANA301/ MACT311/
MCCA301/MCCB312
DATE 29 MARCH 2023
DURATION 1,5 HOURS
TOTAL MARKS 50
NUMBER OF PAGES 6 (INCLUDING COVER PAGE)
EXAMINERS MS D.N. MKHIZE/DR C.J. NYIDE
MODERATOR MR S. KHUZWAYO
QUESTION TOPIC MARKS MINUTES

1 STANDARD COSTING 18 32
2 STANDARD COSTING 15 27
3 FLEXIBLE BUDGET 17 31
TOTAL 50 90
==========================================================================
QUESTION 1: (18 MARKS: 32 MINUTES)
1.1 Choose the correct alternative for each of the questions/statements and write
down the alphabet corresponding to your choice next to the question number.
Use the following information to answer 1.1.1 and 1.1.2.
The budgeted selling price of one of C’s range of chocolate bars was R6.00 per bar. At the
beginning of the budget period market prices of cocoa increased significantly and C decided
to increase the selling price of the chocolate bar by 10% for the whole period. C also
decided to increase the amount spent on marketing and as a result actual sales volumes
increased to 15 750 bars which was 5% above the budgeted volume. The standard
contribution per bar was R2.00, however, a contribution of R2.25 per bar was actually
achieved.
1.1.1 The sales price variance for the period was:

A. R9 450 A
B. R9 450 F
C. R9 000 A
D. R9 000 F (2 marks)
1.1.2 The sales volume contribution variance for the period was:
A. R1 500.00 F
B. R3 937.50 F
C. R3 750.00 F
D. R1 687.50 F (2 marks)
1.2 A company operates a manufacturing business and uses labour, materials and
overheads in production. The following information was extracted from the monthly
budget:
Production 1 000 units

Direct labour 4 000 hours
Fixed overheads (full capacity) R32 000
Fixed overheads are allocated on the basis of labour hours.
The following actual results were recorded:
2
850 units were produced during the month and 3 475 labour hours were used. Fixed
overheads of R35 400 were incurred.
Which of the following alternatives, if any, represents the fixed overhead volume
efficiency variance for the month?
A. R8 200 U
B. R600 U
C. R531 U
D. R2 290 F
E. None of the above (2 marks)
1.3 During April, 80 000 units of product were produced. The standard quantity of
material allowed per unit was 2kg at a standard cost of R5 per kg. If there was a favourable
materials usage variance of R40 000 for April, the actual quantity of materials used must
have been:
A. 168 000 kg
B. 152 000 kg
C. 84 000 kg
D. 76 000 kg (2 marks)
1.4 During October, 16 000 direct labour hours were worked at a standard cost of R6 per
hour. If the labour rate variance for October was R4 000 unfavourable, the actual
cost per labour hour must be:
A. R6.25
B. R6.00
C. R5.75
D. None of the above (2 marks)
3
1.5 A company produces a product that requires two types of materials, i.e., Material A
and Material B. Details of the material quantities and costs for August are given in
the table below.
Material A Material B
Budget Actual Budget Actual

Quantity (kg) 24 000 23 000 36 000 38 000
Cost per kg R2.40 R2.30 R1.30 R1.38
Budgeted and actual output of the product for August was 12 000 units.
Required:
1.5.1 Calculate the material mix variance for August. (4 marks)
1.5.2 Calculate the material yield variance for August. (4 marks)

DN manufactures and sells a single product. The company uses a just-in-time (JIT)
purchasing and production system and as a result holds no inventory of raw materials or
finished goods. The standard selling price and standard variable costs of the product are
as follows:
R
Selling price per unit 400
Variable costs per unit:
8 kg of material @ R20 per kg 160
6 hours of labour @ R14 per hour 84
The following information is available for April:
1. Budgeted production and sales were 2 500 units. Actual production and sales
were 2 850 units at a selling price of R385.
2. Actual usage of material was 24 900 kg at R18 per kg.

3. 18 800 hours were worked and paid for at a rate of R15.50 per hour.
4
Required:
2.1 Prepare a statement that reconciles the budgeted contribution with the actual
contribution. Your statement should show the variances in as much detail as possible. (11
marks)
2.2 Prepare calculations that show the total material usage variance separated into
planning and operational variances. (4 marks)
Nosipho Zulu recently inherited a toy factory from her father. She wondered how useful is
the machining department to the business, and she requested you, as the newly appointed
Management Accountant to evaluate it and advise accordingly. The performance report of
the machining department is provided below (machine hours are used as the cost driver):
ZULU Toys machining department: Performance report for the period ending 31
December 2022
Budget Actual Variance
Machine hours 12 000 10 000
Variable costs: (R) (R) (R)
Indirect material 8 400 7 600 800
Indirect labour 2 400 2 100 300
Utilities 18 000 17 100 900
Machine setup 4 800 4 700 100
Total variable overheads costs 33 600 31 500 2 100
Fixed overheads costs:
Maintenance 32 500 32 150 350
Inspection 27 000 27 000 0
Total fixed overheads costs 59 500 59 150 350
Total overheads costs 93 100 90 650 2 450
5
Required:
What changes, if any, would you recommend be made to this performance report to
determine whether the machining department manager is controlling costs effectively?
Prepare a new performance report to show those changes (13 marks), and comment in your
findings (4 marks)

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FACULTY OF ACCOUNTING AND INFORMATICS

DEPARTMENT OF MANAGEMENT ACCOUNTING

INSTRUCTIONAL PROGRAMME DIPLOMA IN COST AND MANAGEMENT ACCOUNTING

INSTRUCTIONAL OFFERING MANAGEMENT ACCOUNTING III MODULE 1

DURATION 1,5 HOURS

NUMBER OF PAGES 6 (INCLUDING COVER PAGE)

EXAMINERS MS D.N. MKHIZE/DR C.J. NYIDE

QUESTION TOPIC MARKS MINUTES

1.1.1 The sales price variance for the period was:

Production 1 000 units

Fixed overheads are allocated on the basis of labour hours.

The following actual results were recorded:

Budget Actual Budget Actual

1.5.1 Calculate the material mix variance for August. (4 marks)

1.5.2 Calculate the material yield variance for August. (4 marks)

QUESTION 2: (15 MARKS: 27 MINUTES)

The following information is available for April:

2. Actual usage of material was 24 900 kg at R18 per kg.

QUESTION 3: (17 MARKS: 31 MINUTES)

Budget Actual Variance

Machine hours 12 000 10 000

Variable costs: (R) (R) (R)

Indirect material 8 400 7 600 800

Indirect labour 2 400 2 100 300

Utilities 18 000 17 100 900

Machine setup 4 800 4 700 100

Total variable overheads costs 33 600 31 500 2 100

Fixed overheads costs:

Maintenance 32 500 32 150 350

Inspection 27 000 27 000 0

Total fixed overheads costs 59 500 59 150 350

Total overheads costs 93 100 90 650 2 450

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