MAC2601/103/3/2021

Tutorial letter 103/3/2021

Principles of
Management Accounting

MAC2601
Semester 1 and 2

Department of Management Accounting

IMPORTANT INFORMATION:

Please activate your myUnisa account and your myLife e-mail

address. Please also ensure that you have regular access to the
myUnisa module site (MAC2601-21-ALL), as well as your group (e-
tutor) site.

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 MAC2601/103

CONTENTS
1. Introduction …………………….…………………….......................................................... 2
2. Plagiarism.…………………............................................................................................. 4

3. Assignment 01 Due Date…………..……………...............................................................5

4. Assignment 01/21 (both semesters) …….………………..................................................6

5. Frequently asked questions….…………….…….............................................................15

6. References …………………………......…………………………..................................... 16

NB: This tutorial letter must be read in conjunction with tutorial letter 101/21,
tutorial letter 102/21 and the study guides (or learning units), as well as the
Welcome Message and Announcements on myUnisa.

1. INTRODUCTION
Dear Student

This tutorial letter (103) contains assignment 1 for both semesters 1 and 2 of 2021. You will find
important general information about assignments 1 and 2 in your Tutorial Letters 101, 102 and
online. It is very important that you refer to Tutorial Letters 101 and 102 for more information
about Assignments 1 and 2 before you attempt this assignment.

It is also very important that you read section 2 of this tutorial letter before you start working on
your assignments. This section is about plagiarism and the plagiarism declaration that you make
by submitting any MAC2601 assignment. The assignments should be your own work, and no-
one should assist you with your assignments at all. We do not allow any group work in
terms of assignments.

Several students contravened this declaration in the previous semester and were awarded
0% for their assignments. This means that these students would have had very low semester
marks – see in the applicable paragraph below how the weighting works. Do not let anyone fool
you into buying an assignment or letting you pay for "classes" in which they do the assignment
with you. This is not allowed. Neither is it allowed that the answers to any of the questions are
shared on WhatsApp groups or in any other way, whether with or without remuneration. The
assignments need to reflect your knowledge and understanding of the principles of management
accounting: not of anyone else.

The assignments are also intended to help students with their studies, so if a student does not do
the assignments on his/her own, he/she is not only acting in a dishonest way, but also forfeiting
very important preparation for the examination.
Many of you are studying towards a professional accounting qualification (want to become a
CA (SA), CGMA, etc.). SAICA, CIMA and other professional bodies in the accounting industry
require conduct of the highest ethical standard. For example, both the SAICA Code of
Professional Conduct and the CIMA Code of Ethics have integrity as one of its fundamental

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principles (SAICA 2017; CIMA 2015). Honesty is a key part of integrity. Copying in a MAC2601
assignment is dishonest and unethical and we cannot allow students to get away with it.

On a more positive note, we are proud to say that there are students who work very hard on
their assignments. Also, each semester there are students who maybe did not do that well in
the assignments, but who used the opportunity to learn from their mistakes and perform well
in the examination. We provide detailed solutions to assignments, with additional teaching
notes that you can learn from, independent of your assignment marks. However, we would like
to advise you to rather start early and do as well as possible in the assignments, as they
determine your semester mark that carries a weight of 20% in the calculation of your final mark
for the module. Assignment 1 weighs 25% in the calculation of your semester mark and
assignment 2 weighs 75%.

Your examination mark, in turn, weighs 80% in the calculation of your final mark. It is possible
to do well in this module and remember not to give up if you perhaps find the module difficult
at first: there were even students who obtained 100% in the previous examination of this
module.

To conclude, we would like to encourage you to work hard throughout the semester and to ask
the lecturers if you need help with understanding any of the principles that are discussed in the
course. Also, familiarize yourself with all the announcements that are posted on myUnisa, as
they form an integral part of the course. We also include other information in this tutorial letter
that may clarify the principles and/or completing your assignments.

Kind regards,

Name Telephone Office Building E-mail

number number
S Mapheto (Mr) 012 429 8300 1-31 Simon Radipere
M Molise (Mr) 012 429 3111 1-46 Simon Radipere MAC2601-21-S1@unisa.ac.za
G Nkomo (Ms) 012 429 8526 1-46 Simon Radipere
Any changes in lecturers' details will be communicated via myUnisa.

MAC2601 Lecturers

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2. PLAGIARISM

As mentioned in the previous section, we do not allow any group work in this module. Students
may not work together on their assignments at all and no-one may assist you with any of your
MAC2601 assignments. If the lecturers find that your assignment is similar to the assignment
of another student, you will get 0% for your assignment. It is unacceptable that anyone,
including an external institution, helps you with the assignment.

By submitting any MAC2601 assignment, you automatically declare (see Plagiarism Declaration
below) that you have done and submitted your own work and that you are aware of the potential
consequences of plagiarism.

Plagiarism is the act of taking the words, ideas and thoughts of others and passing them off as your
own. It is a form of theft and involves a number of dishonest academic activities. All students receive
access to the Disciplinary code for students (latest version) at registration. Please study the code.
You must read Unisa's Policy on copyright infringement and plagiarism.

Plagiarism declaration for all MAC2601 assignments

PLAGIARISM DECLARATION

I declare that this assignment is my own work.

By submitting any MAC2601 assignment, I also declare that:

I have read the Unisa Students' Disciplinary Code.

I know what plagiarism is, that plagiarism is wrong and that disciplinary steps can be taken
against me if it appears that I plagiarised.
I have not allowed any other student to copy my work and have not copied from the work of
anyone else (including, but not limited to, other students and institutions).
I have not received any assistance with the assignment. I have not worked on the
assignment in a group.
For written assignments, I have referenced all the sources that I have used.
I know that if I am deemed to be in violation of this declaration, I will receive 0% for the
assignment(s) involved.

Please note: You do not have to submit the declaration. By submitting a MAC2601
assignment, you automatically declare that you adhere to all the above with regard to
the assignment.

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3. ASSIGNMENT 01/2021 DUE DATE

Assignment Unique number Due dates

Assignment 01 784883 28 May 2021

4. ASSIGNMENT 01/2021 (FIRST AND SECOND SEMESTER): MULTIPLE

CHOICE

Instructions and further information:

 For this assignment, you have to study Topics 1 to 4 of the study guide.
The submission of the compulsory assignment 01/21 will prove that you are an active
student and will therefore earn you admission to the examination.

 Marks awarded for Assignment 01/21 weighs 25% in the calculation of your semester mark.

 The due date for this assignment is 28 May 2021 and no extension of time will be given for
the submission of the assignment.
This assignment must be submitted electronically via myUnisa. Please visit
http://www.unisa.ac.za/sites/myunisa/default/ Assignments-&-
Examination/Assignments/Assignment-submission-with-myUnisa on how to submit
assignments via myUnisa. The following link also provides some more information about Unisa
assignments:http://www.unisa.ac.za/sites/myunisa/default/Assignments-&-
Examination/Assignments/General-information-about-assignment-submission.

 The unique number for this Assignments is 784883.

 Each correct multiple-choice answer carries one mark in assignment 01, but two marks in the
exam.

 Round to two decimal places where necessary, unless a question has specific rounding
requirements.

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ASSIGNMENT 01/ 21 (FIRST AND SECOND SEMESTER) – MULTIPLE CHOICE

MAC2601: COMPULSORY ASSIGNMENT 01/2021 (Semester 1 and 2)

Year Semester Assignment Due date Unique number

number
2021 1 and 2 01 Refer to TL 001 784883

Before you attempt doing this assignment:

 Study the relevant topics in the study material as indicated on pages 6-7 of Tutorial Letter
101/2021.

 You are reminded that your assignment must be your own work.

THE MARK YOU EARN FOR COMPULSORY ASSIGNMENT 01 WILL WEIGH 25% IN THE
CALCULATION OF YOUR YEAR MARK.

 The marks earned for your compulsory assignments carry the following weights in the
calculation of your year mark:

Assignment Weighting
number
Assignment 1 25%
Assignment 2 75%
Year mark 100%

 Complete this assignment online. Refer to the Study@Unisa brochure on how to submit a
multiple-choice questions assignment via myUnisa.

 Remember to submit this assignment online with the correct unique number (784883).

 This assignment consists of 20 multiple-choice questions. All questions must be answered.

Consider each scenario and its related questions independently.

 Each question has only one correct answer from the four (4) given options.

 Each correct multiple-choice answer carries one mark in assignment 01, but two marks in the
examination.

 Round to two decimal places where necessary, unless a question has specific rounding
requirements.

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Assignment 01/2021, SEMESTER 1 AND 2 – MULTIPLE-CHOICE

QUESTION 1

Which one of the following cannot be a cost object?

(1) The Western Cape region of an organisation that has operations in each of the nine
provinces in South Africa.
(2) The sales value of one unit of a particular product.
(3) An order from a customer for 50 000 units of an organisation’s product.
(4) A construction project undertaken on behalf of the South African Government.

QUESTION 2

Which one of the following cannot be both a manufacturing cost and a variable cost?

(1) Direct material costs

(2) Direct labour costs
(3) Variable manufacturing overheads
(4) Variable selling costs

Use the following information to answer questions 3, 4, and 5:

Buzzy Bee (Pty) Ltd (“Buzzy Bee”) specialises in the manufacturing and selling of honey-based
skincare products. Buzzy Bee pays a contractor a semi-variable fee for delivering its products. The
following actual information is available for the six-month period ended 31 August 2020 and
indicates the number of products delivered per month as well as the associated total monthly semi-
variable delivery costs.

Month Delivery volume in Total delivery costs in Rand

units
March 18 000 R212 000
April 17 600 R207 600
May 19 500 R217 500
June 16 100 R200 000
July 16 000 R200 000
August 17 200 R206 300

The company uses this historical actual information as basis for its budget for the next six months
ending 28 February 2021. For the budget period, no increases in variable delivery cost per unit and
monthly fixed delivery cost are expected. After the six months budget period the delivery contract
will be reviewed.

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QUESTION 3

The budgeted variable delivery cost per unit for the six-month period ending 28 February 2021,
using the high-low method, is estimated at per unit (rounded to two decimal places).

(1) R5,15
(2) R5,00
(3) R11,76
(4) R11,91

QUESTION 4

The budgeted fixed delivery costs in total for the six-month period ending 28 February 2021,
using the high-low method, is estimated at (rounded to the nearest Rand).

(1) R720 000

(2) R702 794
(3) R120 000
(4) R17 500

QUESTION 5

The budgeted variable delivery cost per unit for the six-month period ending 28 February 2021,
using the simple regression analysis method, is estimated at per unit (rounded to two decimal
places).

Please use the following formulae in your question 5 workings:

Σxy = aΣx + bΣx2

Σy = an + bΣx

(1) R11,76
(2) R11,88
(3) R5,00
(4) R5,20

Use the following information to answer questions 6, 7 and 8:

Princess Paper Products (Pty) Ltd (“PPP”) produces and sells paper plates in packs that consist of
50 paper plates packaged in a reusable plastic container. One such a pack is referred to as a unit.
PPP has a 31 August financial year-end. PPP does not keep opening or closing inventories of any
type.

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The following information regarding PPP was extracted from budgets and management accounts:

Financial year 2020 2021

Actual Budget
Sales units 200 000 240 000
Selling price per unit R36 R38
Direct material costs R2 200 000 R2 700 000
Direct labour costs per unit R4,00 R4,20
Variable manufacturing overheads R1 400 000 R1 800 000
Sales commission R700 000 ?
Administration costs ? R500 000

Additional information:

 The sales commission is a semi-variable cost. For the duration of the 2020 financial year, the
variable sales commission was R2 per unit. In 2021, the variable sales commission per unit is
expected to increase by 5% from 2020 figures, whilst the fixed sales commission is expected to
remain the same as in 2020.

 The administration costs are fixed costs. The amount of budgeted administration costs for the
2021 financial year is 1,25 times the actual administration costs incurred in the 2020 financial year.

QUESTION 6
Assuming an actual break-even point of 58 334 units for the 2020 financial year, the actual
margin of safety ratio for the 2020 financial year was.

(1) 70,83%.
(2) 141 666 units.
(3) 242,85%.
(4) R5 099 976.

QUESTION 7
The budgeted break-even point in units for the 2021 financial year is.

(1) 86 645
(2) 53 157
(3) 61 777
(4) 61 776

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QUESTION 8
The contribution ratio for the 2020 financial year was (rounded to two decimal places).

(1) 33,33%
(2) 38,89%
(3) 34,08%
(4) 23,61%

Use the following information to answer questions 9 and 10:

Koena’s Kitchenware (Pty) Ltd (“Koena’s”) manufactures and sells a variety of kitchen utensils and
uses a traditional absorption costing system. You have the following information available regarding
Koena’s fixed manufacturing overheads for the 2019 and 2020 financial years.

Financial year 2019 2020

Budgeted Actual Budgeted Actual
Fixed manufacturing R7 200 000 R7 000 000 R7 332 850 R7 500 000
overheads (FMO)
Direct labour hours 900 000 906 500 894 250 941 200
Manufacturing units 360 000 370 000 365 000 362 000

Koena’s allocates FMO based on direct labour hours.

QUESTION 9

The predetermined FMO allocation rate for the 2019 financial year was (rounded to two decimal
places).

(1) R20,00.
(2) R8,00.
(3) R8,20.
(4) R7,72.

QUESTION 10

The over-/under allocated FMO for the 2020 financial year is.

(1) R217 840 over applied.

(2) R217 840 under applied.
(3) R167 150 over applied.
(4) R167 150 under applied.

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Use the following information to answer questions 11 and 12:

Friedrich’s Bakery (“Friedrich’s”) bakes and sells bread and biscuits. Friedrich uses a lot of free-
range eggs (“eggs”) in his bakery and is trying to figure out what the most economic order quantity
will be. Friedrich estimated that he will need on average 80 eggs per day for the 250 days that he
intends to bake during the 2021 financial year. He also calculated that it costs him R0,05 per egg
per annum to keep the eggs fresh and safely stored. Friedrich is requiring a return of 10% per
annum on his investment in the business and purchases the eggs at R3,00 each.

His friend, Tsakane, gives Friedrich a discounted rate of R50 ordering cost for each order that
Friedrich places at Tsakane Farming. Friedrich buys all the required eggs exclusively from Tsakane
Farming and incurs no internal ordering costs other than the discounted cost per order charged by
Tsakane.
Tsakane Farming uses custom-made packaging cartons that are not similar to the traditional half-a-
dozen or full-dozen size egg cartons. As such, Tsakane’s packaged eggs per order are therefore
not necessarily divisible by six.

QUESTION 11

The budgeted Economic Order Quantity (EOQ) for eggs is.

(1) 6 325
(2) 11 547
(3) 1 690,31
(4) 2 391

QUESTION 12

Assuming eggs are ordered in arbitrary order sizes of 500 eggs per order, which one of the
following statements is correct if all the other variables remain as given in the scenario?

(1) The annual carrying cost will be R50.

(2) Friedrich will have to place 250 orders during the 2021 financial year.
(3) The average inventory on hand is 250 eggs.
(4) The total ordering cost for the year will be R25 000.

Use the following information to answer questions 13 and 14:

Keveshnie’s Decor (Pty) Ltd (“KD”) is a company that produces hand-made home decorations.
Randy Livhuno is an interior decorator that decided to join KD a few years ago. Randy’s gross
remuneration is R22 000 per month. Randy only performs direct labour functions. KD requires
highly accurate costing of cost objects and KD’s share of the pension fund contributions of its
employees forms a substantial part of labour cost. The following monthly information regarding
Randy’s employment is also available:

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R
Randy’s own contribution to his pension fund 2 000
KD’s contribution to Randy’s pension fund 2 500
Randy’s membership fees of the Institute of Interior Designers (“IID”), 250
contributed and paid over to the IID directly by KD
Randy’s own contribution to his medical aid 1 450
KD’s contribution to Randy’s medical aid -

QUESTION 13

Randy’s monthly total cost to company (based on only the above information) is.

(1) R24 750

(2) R28 200
(3) R25 450
(4) R24 500

QUESTION 14

KD’s contribution to Randy’s pension fund should be:

(1) Charged to fixed manufacturing overheads.

(2) Subtracted from Randy’s taxable income when KD calculates Randy’s net wage payable.
(3) Incorporated into direct labour costs.
(4) Charged to selling and administrative costs.

Use the following information to answer questions 15 and 16:

Tsakane Farming (Pty) Ltd (“Tsakane”) has several farming operations, of which free-range egg
producing is one. Tsakane orders high quality chicken feed on a regular basis to feed their freely
roaming chickens. Chicken feed is kept in consumable inventory. The price of this chicken feed per
kilogram fluctuates based on agricultural commodity prices, such as the prices of different grains.
You have the following information available regarding the actual details of and movements in
Tsakane’s chicken feed for the first few days of November 2020:

Day Details Kilograms Price per kg

1 Opening inventory 200 R25
4 Purchases 600 R28
5 Purchases 400 R24
8 Issues to the hen pens (1 000) ?

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QUESTION 15

Tsakane’s total closing inventory Rand-value for chicken feed as at 8 November 2020 (round to
two decimal places throughout your workings) would be if the first-in-first-out (FIFO) method of
inventory valuation is applied.

(1) R5 230
(2) R4 800
(3) R5 134
(4) R5 000

QUESTION 16

The Rand-value of one kilogram of chicken feed in Tsakane’s closing inventory as at 8

November 2020 (round to two decimal places throughout your workings) would be if the weighted
average method of inventory valuation is applied.

(1) R25,67
(2) R24,00
(3) R26,40
(4) R26,15

Use the following information to answer questions 17, 18, 19 and 20:

Carnarvon Caps (Pty) Ltd (“Carnarvon Caps”) manufactures and sells two types of headwear,
namely the Cricket Hat (“CH”) and the Fashion Visor (“Visor”). The company has a 31 December
year-end.

On 31 December 2019, Carnarvon Caps had 5 000 units of CH and 8 000 units of Visor on hand.
Depending on whether direct or absorption costing principles were applied, the following inventory
values would be associated with these units:

CH Visor
Direct costing value R320 000 ?
Absorption costing value ? R720 000

Details of the actual manufacturing costs for the financial year ended 31 December 2020 were as
follows:
 Direct material costs of R25 per unit of CH and R40 per unit of Visor were incurred.
 Other direct costs in the form of packaging costs were incurred at R5 per unit, irrespective of
product type.
 Direct labour costs of R21 per unit and R32 per unit were incurred for CH and Visor, respectively.
 Variable manufacturing overheads of R19 per unit of CH and R16 per unit of Visor were incurred.

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Details of the actual non-manufacturing costs for the financial year ended 31 December 2020 were
as follows:
 Variable selling costs in the form of sales commission were incurred at R3 per unit, irrespective of
product type.
 Total fixed administration costs amounted to R1 000 000 and R800 000 for CH and Visor,
respectively.

Additional information:
 CH sells at R120 per unit and Visor sells at R160 per unit.
 During the 2020 financial year, 85 000 units of CH were produced and 82 000 sold, whereas
56 000 units of Visor were produced and 54 000 sold.
 The predetermined blanket overhead rate for the 2019 financial year was R9 per unit and
increased to R10 per unit for the 2020 financial year. The management accountant of Carnarvon
Caps remembers correctly from her MAC2601 studies that applied fixed manufacturing
overheads are included in product costs when absorption costing principles apply.
 Carnarvon Caps uses the First-In-First-Out (FIFO) method of inventory valuation.

QUESTION 17

The actual absorption costing product cost per unit in respect of the units of CH manufactured
during the 2020 financial year is _________.

(1) R79.
(2) R73.
(3) R80.
(4) R70.

QUESTION 18

The actual direct costing product cost per unit in respect of the units of Visor manufactured
during the 2020 financial year is _________.

(1) R93
(2) R81
(3) R96
(4) R70

QUESTION 19

The actual total contribution of Carnarvon Caps (rounded to the nearest Rand) is for the 2020
financial year.

(1) R7 453 667

(2) R7 526 000
(3) R7 436 000
(4) R7 958 000

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QUESTION 20

The actual gross profit per unit of the Visor is for the 2020 financial year.

(1) R40
(2) R103
(3) R70
(4) R57

5. FREQUENTLY ASKED QUESTIONS

The following are examples of questions that the lecturers frequently get regarding assignments:

Q: Do I submit my assignment through the post?

A: No, we do not allow it due to COVID19 protocols and restrictions, all assignment must be submitted
online via myUnisa.

Q: Why have I not received my assignment 01 marks yet?

A: Assignment 01 is a multiple-choice (MCQ) assignment. It is marked automatically by the computer

system. However, assignment 02 takes longer to process and mark as it is a written assignment that
is marked by a (human) internal or external marker. Marks are captured as individual assignments
are marked and therefore not released all at once for all the students registered for the module as
with MCQ assignment. It can take more than a month after the due date for your marks for assignment
01 to become available. If you, however, suspect that your assignment was not received by the
University, etc., please contact Student Assessment Administration urgently and before the exam
date.

It is very important that you do not wait for your assignment 1 results or marked assignment
before you work through your own attempt to answer the questions together with the tutorial
letter 201. Do self-evaluation and ensure that you understand exactly how all the amounts in Tutorial
Letter 201 are arrived at and why the discussion questions were answered as they were in the
suggested solution.

Q: What do I do if I do not agree with my assignment 01 mark?

A: Please e-mail a copy of your marked and returned assignment to MAC2601-21-S1@unisa.ac.za

before the exam date, clearly indicating with what and why you do not agree. The lecturers will
investigate whether your marks need to be adjusted or not. No assignment marks will be adjusted
after the exam date, so make sure that you follow up with us in time.

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6. REFERENCES
CIMA (Chartered Institute of Management Accountants). CIMA code of ethics for professional
accountants [Online]. Available from: https://www.cimaglobal.com/Documents/Ethics/
CIMA%20Code%20of%20Ethics%202017.pdf [Accessed: 11/05/2018].

COETZEE, W.J., JORDAAN, A.H., SITHOLE, S.K.M., VERSTER, J.M. 2012a. Principles of
management accounting: study guide 1 of 2 for MAC2601. Pretoria: University of South Africa.

COETZEE, W.J., NTULI, S.B., VERSTER, J.M. 2012b. Principles of management accounting: study
guide 2 of 2 for MAC2601. Pretoria: University of South Africa.

SAICA (South African Institute of Chartered Accountants). Code of professional conduct of the South
African Institute of Chartered Accountants: 2017/2018 Edition [Online]. Available from:
https://www.saica.co.za/Portals/0/Technical/accounting/documents/Code%20of%20Professional%2
0Conduct.pdf/ [Accessed: 11/05/2018].

© UNISA 2021

All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means without prior written
permission of Unisa.

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