MACC271+2021+EXAM+OPP+1+solution+-+Electronic+marking+plan 1

MACC271 - EXAM OPP 1 - 2021
Suggested Solution
Cover sheet
Student number:
Surname & Initials: #N/A
Question No Marks obtained

Question 1.1:
Question 1.2:
Question 1.3:
Question 1.4:
Question 2.1:
Question 2.2:
Question 2.3:
Question 2.4:
Question 2.5:
Question 2.6:
Question 3.1:
Question 3.2:
Question 3.3:
Question 3.4:
Question 3.5:
Question 4.1:
Question 4.2:
Question 5.1:
Question 5.2:
Question 5.3:
Question 5.4:
Question 5.5:
Question 6.1:
Question 6.2:
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QUESTION 1 MACC Café (OH)
1.1. Identify and list the non-manufacturing overhead items. Provide a reason to support your answe
Electricity of the admin department

Rental of the admin department
Product marketing
These items do not relate to the manufacturing process.
1.2. Calculate the pre-determined manufacturing overhead rate per machine hour.
Manufacturing overhead Budgeted
Consumables R 4,000.00
Salaries R 95,000.00
Depreciation R 20,000.00
Insurance R 24,000.00
Rental expense R 87,300.00
Electricity R 93,840.00
R 324,140.00
Activity 72,000
OH rate per machine hour R 4.50
1.3. Calculate the manufacturing overhead budgeted variance. State whether the variance is favourab
Formula = budgeted OH less actual overhead
Budgeted OH
Actual OH
Consumables R 3,800.00
Salaries R 98,000.00
Depreciation R 20,000.00
Insurance R 26,000.00
Rental expense R 94,090.00
Electricity R 99,360.00
R 341,250.00
Variance
1.4. Calculate the manufacturing overhead volume variance. State whether the variance is favourable
Formula = (Budgeted activity less actual activity) x pre-determined man OH rate
Budgeted activity (machine hours) 72,000

Actual activity (machine hours) 74,000
Difference 2,000
Pre-determined OH rate R 4.50
R 9,003.89
Favourable
The machines were operational for more hours than expected, thus favourable.
OH) 10 MARKS
de a reason to support your answer.
0.5
0.5
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Available 2
MAX 2
machine hour.
0.5
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Available 2.5
MAX 2.5
e whether the variance is favourable or unfavourable.
R 324,140.00 0.5 P
0.5
0.5
0.5
R 341,250.00
-R 17,110.00 0.5 P
unfavourable 0.5 P
Available 3
MAX 3
whether the variance is favourable or unfavourable.
0.5
0.5
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0.5 P
0.5 P
Available 2.5
MAX 2.5
Notes to marker Marks awarded
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QUESTION 2 Charlies Bakery (CVP) 24 MARKS
Calculate the optimal sales mix which will maximise the profit for Charlies Bakery in the fourth
2.1 quarter. You need to take the limited labour hours into account.
Brownies Cupcakes Doughnuts

Selling price R 5.00 R 9.60 R 9.00
Variable cost R 2.60 R 6.00 R 5.80
Contribution p/u R 2.40 R 3.60 R 3.20
Labour hours p/u 0.2 0.16 0.18
Contribution p/h R 12.00 R 22.50 R 17.78
3 1 2
Optimal mix: Hours p/u Units Total needed Available
Hours available 5,800

Cupcakes 0.16 11,250 1,800 4,000
Doughnuts 0.18 9,000 1,620 2,380
Brownies 0.2 11,900 2,380

Amount of brownies:
Hours available 2,380
Demand 2,700 13500 units
2.2 Calculate the average contribution per unit taking the sales mix in Rand into account.

Selling price R 5.00 R 9.60 R 9.00
Variable cost R 2.60 R 6.00 R 5.80
Contribution p/u R 2.40 R 3.60 R 3.20
Sales mix in rand 25.00 48.00 27.00

Units 5 5 3 13.00
Total contribution R 12.00 R 18.00 R 9.60 R 39.60

Weighted Average contribution R3.05
Assume that the average contribution amounted to R2.50 per unit. Calculate the
2.3 contribution margin.
Weighted Average contribution R3.05 given
Weighted Average selling price R 7.69
Weighted Average Contribution margin ratio 40%
Calculate the total break-even point in units and Rand-value for the given sales mix.
In addition, calculate the break-even point for each type of product in units and in
2.4 Rand-value.
Break-even in units
Total fixed cost R 65,000.00 (R28 000 + R37 000)

Average contribution R 3.05 given
Break-even 21,311 units

Mix units 5 5 3 13
BE per item 8,197 8,197 4,918
Break-even in Rand
Total fixed cost R 65,000.00

Contribution margin 40% given
Break-even R 162,500.00

Mix rands 25% 48% 27%
BE per item R 40,625.00 R 78,000.00 R 43,875.00
R40,983.61 R78,688.52 R44,262.30
Assume that the average contribution amounted to R2.50 per unit. Calculate the total
2.5 target sales in units to reach a R35 000 after tax profit for the quarter.
Average contribution R 3.05 given
Normal fixed cost R 65,000.00

Profit before tax R 50,000.00
Target profit BE 37,704.92 units

2.6 Define the term degree of operating leverage.
Operating leverage is the measurement of how sensitive net profit is for a percentage
change in sales.
If operating leverage is high, a small percentage increase in sales, will result in a greater
increase in net profit.
Example
24 MARKS
akery in the fourth
No attempt at sectio
Question attempte
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0.5 P
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0.5 + 0.5 P Half for the hours needed and other half the units produced
0.5 P
TOTAL 7
MAX 7
Question attempte
0.5
0.5
0.5 + 0.5 + 0.5 Must divide with selling price. Correct for all products.
1 P Mark for multiplying contribution p/u with units.

1 P Mark for deviding total contribution with total units.
TOTAL 4.5
MAX 4.5
Question attempte
1 + 0.5 1 mark for total sales mix, 0.5 for total units
0.5 P
TOTAL 2
MAX 2
Question attempte
+ R37 000) 0.5 + 0.5 Half each
0.5 P For using the correct formula
0.5 P
0.5 + 0.5 + 0.5 P Half each
0.5 + 0.5 P 0.5 for fixed cost, 0.5 for CM
0.5 P
0.5 + 0.5 + 0.5 P Half each
TOTAL 6.5
MAX 6.5
Question attempte
0.5
1
0.5 P Correct formula

TOTAL 2
MAX 2
Question attempte
1
1
TOTAL 3
MAX 2
Marks awarded Marker comments
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QUESTION 3 Baker Pan
3.1. Use relevant costing principles and advise management if the offer from Pillsbury should be acce
Calculation
1. Cost if manufactured in house

Direct material
Direct labour
Manufacturing overhead variable R20 per unit allocated
Fixed = R180 000
15000kg allocation base
Fixed allocated per kg
=R180 000 / 15 000
R 12.00
Thus variable OH
=R20 - R12
R 8.00
Total relevant cost
2. Cost if bought from supllier
Direct material
Direct labour =R35 x 20%
Manufacturing overhead variable =R8*25%
Purchase price of icing per kg
Total relevant cost
Conclusion:
Bakers Pan should not purchase from the outside supplier.
It will be more expensive with R1 (R94 - R93) per kg.
3.2. Use relevant costing principles and calculate the maximum price which Bakers Pan would be will
Avoidable costs if purchased from outside Calculation
Direct material
Direct labour =R35*80%
Manufacturing OH variable =R8*75%
Maximum price
The max price should be R61.70
3.3. Discuss four qualitative factors which Bakers Pan should take into account before a decision reg
1. Will the supplier be able to supply the quantities we need?

2. Will the icing be of the required standard and quality?
3. Will the supplier be able to supply on schedule?
4. Will our customers be happy with the new product?
5. What will we use the free capacity for?
Any other valid point.
3.4. 15 000kg vs 22 000 kg
15,000
Sales income 2,400,000

Variable cost 1,395,000
Additional fixed cost
Profit 1,005,000
Conclusion:
Manufacture and sell 22 000 kg as the profit is higher.
Alternative
Contribution per unit R67.00
Difference in units 7,000
Total contribution R469,000.00
Additional fixed cost R150,000.00
Profit R319,000.00
Conclusion:
Manufacture and sell 22 000 kg as the profit is higher.
3.5 Define the term sunk cost and give an example.
Costs already incurred, thatcan

incurred and should
not not be taken by
be changed into
a account
decision for
nowdecisionmaking
or in the futurepurposes
Example
22 MARKS
r from Pillsbury should be accepted or not. Show all your calculations.
Amount
R 50.00 0.5
R 35.00 0.5
0.5
0.5 P
R 8.00 0.5 P
R 93.00 0.5 P
R - 0.5
R 7.00 1
R 2.00 1 P
R 85.00 0.5
R 94.00 0.5 P
1 P
0.5 P
TOTAL 9
MAX 9
which Bakers Pan would be willing to pay any external supplier per kg of icing.
Amount
R 50.00 0.5
R 28.00 0.5
R 6.00 0.5
R 84.00
0.5 P
TOTAL 2
MAX 2
o account before a decision regarding the offer is made.
1
1
1
1
1
1
TOTAL 6
MAX 4
22,000
3,520,000 0.5 + 0.5 + 0.5

2,046,000 0.5 + 0.5 + 0.5 P
150,000 0.5
1,324,000 0.5 P
319,000 1 P
1 + 0.5 P
1
0.5 P
0.5
0.5 P
319,000 1
TOTAL 5
MAX 5
aking purposes 1
1
1
TOTAL 3
MAX 2
ow all your calculations. Marks awarded
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For calculation 0 ✘
For including OH in the calc 0 ✘
If nothing else is included 0 ✘
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P - if the OH rate was calculated incorrectly above. 0 ✘
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If nothing else is included 0 ✘
Conclusion sould be in line with clacs. 0 ✘
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xternal supplier per kg of icing.

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0.5 for R160, 0.5 for 15 000, 0.5 for 22 000 0 0 0

0.5 for VC, 0.5 for 15 000, 0.5 for 22 000 0 0 0
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Marker comments
QUESTION 4 Cakes Calore 18 MARKS
4.1 Prepare the schedule of cost of goods manufactured for the month of October 2021.
Raw Material O/B 19,200

Purchases 30,400
Raw Material C/B - 24,800
Raw Material Used 24,800
Indirect Material Used - 10,800
Direct Material Used 14,000
Direct Labour 27,075
Prime cost 41,075
Overhead Allocated 44,027
Production cost 85,102
Work in Process O/B 70,000
Work in Process C/B - 142,400
Cost of goods manufactured 12,702
Overhead calculation
Indirect materials 14,800

Rent of the premises 12,000
Industrial equipment depreciation 3,600
Packaging 1,800
Kitchen supervisor salary 14,000
Overhead actual for September 46,200
Escalation 7%
Total budgeted for October 49,434
Hours 640
Rate per hour 77
Allocated OH 44,027.16
4.2 Prepare the schedule of cost of goods sold for the month of October 2021.
Cost of goods manufactured 12,702

Finished Goods O/B 52,000
NWUUSER:
Finished Goods C/B - 48,000 AFR paper R4800
Cost of sales 16,702
Over allocated - 2,627
Cost of sales Actual 14,075
Overhead calculation
Indirect materials 10,800
Factory rent 12,000
Industrial equipment depreciation 3,040
Packaging 1,560
Supervisor salary 14,000
Total actual 41,400
Allocated 44,027
Over allocated - 2,627
MARKS
Marks awarded Marker comment
October 2021. Question attempted ✘ ###
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USER:
per R4800 0.5 0 ✘ ###
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QUESTION 5 Milkshake Mega 15 MARKS
5.1 Calculate the contribution for each of the two milkshake flavours.
Bar One (A)
Selling price R 28.00
Material: Milk R 4.00

Material: Add-ins R 6.00
Labour: Skilled R 10.00
Labour: Unskilled R 3.00
Marketing R 1.40
Contribution per bottle R 3.60
Not required
Contribution per LF: milk R 9.00
Contribution per LF: skilled labour R 18.00
5.2 Formulate the goal function and restrictions for a normal month.
Goal function = 3.6A + 4.8B
Restrictions 0.2A + 0.15B < 1500

0.4A + 0.45B < 3500
5.3 Calculate the optimum sales mix in units by making use of the algebraic method.
0.2A + 0.15B < 1500

0.4A + 0.45B < 3500
0.6A + 0.45B < 4500

0.4A + 0.45B < 3500
0.2A < 1000
A < 5000
0.2A + 0.15B < 1500

0.2(5000) + 0.15B < 1500
0.15B < 500
B < 3333.33
5.4 Calculate the profit before tax for the month.
Contribution: Bar One R 18,000.00

Contribution: Banana R 16,003.20
Less fixed costs -R 6,200.00
Profit before tax R 27,803.20
5.5 List two factors which complicates the application of linear programming.
May be difficult to identify scarce recources.
Do not take the following into account:
Acceptability of the production plan
If the production plan is realistic
Constant contribution margin per unit and utilization of resources per unit, regardless of output quantity
Assumptions are made that output and the use of recources are perfectly divisible.
15 MARKS
Marks awarded Marker comments
Banana (B)
R 24.00 0.5 0 ✘ ###
R 4.50 0.5 + 0.5 0 0 ###

R 3.00 0.5 + 0.5 0 0 ###
R 7.50 0.5 + 0.5 0 0 ###
R 3.00 0.5 + 0.5 0 0 ###
R 1.20 0.5 + 0.5 0 0 ###
R 4.80
R 10.67
R 32.00
Available 5.5 0
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of the algebraic method. No attempt at section ✘ ###

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ar programming. No attempt at section ✘ ###

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ces per unit, regardless of output quantity 1 0 ✘ ###
are perfectly divisible. 1 0 ✘ ###
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QUESTION 6 Waffle Truffle 11 MARKS
Calculate the expected net income after tax for the 2022 budgeted financial year by making use of
format and taking into account the following:
Waffle Truffle estimates that the sales volume for the 2022 year will increase to 15 000 packs. The
6.1 and other cost behavior patterns will remain constant as in the 2021 financial year.
Income statement according to variable costing method

Units
Income statement according to absorption method
Sales 15,000 1
Cost of sales
Opening stock 850
Production costs 16,000
Material 4
Labour 5
Man OH - var 6
Man OH - fixed 6
Closing stock - 1,850 2 & 7
Gross profit
Sales and admin costs 8
Net profit before tax
Tax (30%)
Profit after tax
Calculations:
1. Selling price per pack 2021

=R720 000 / 12 000
R 60.00
2022 SP
=60 x 1.05
63.00
2. Closing stock in units

=Opening + Production - Sales
= 850 + 16 000 - 15 000
1,850
3. Production in 2021
= Sales + CS - OS
12,375
4. Material (variable)
2021 cost per unit
R20.00
2022 with 10% increase

R22.00
5. Labour (variable)
2021 cost per unit
R10.00
2022 with 10% increase

R11.00
6. Man OH
2022 total OH R 28,375.00

2021 total OH R 24,750.00
Difference R 3,625.00
Change in production 3,625.00
Variable OH per unit R 1.00
Man OH 2021 R 24,750.00

Variable portion R 12,375.00
Fixed portion R 12,375.00
Budgeted fixed OH R 12,375.00

Budgeted production 16,000.00
PFMO R 0.77
7. 2022 cost per unit
Material R 22.00
Labour R 11.00
Var OH R 1.00
Fixed OH R 0.77
Total man cost R 34.77
8. Sales and admin costs
Cost equation Y = 8000 + 3x
Total S&A 2021 R 140,000.00

Less sales variable R 36,000.00
Fixed sales and admin R 104,000.00
Calculate the sales figure, in Rand, to be reached if Waffle Truffle requires an after tax net profit
6.2 of R182 000 for the 2022 budgeted year.
New contribution
Selling price R 63.00
Less: variable costs R 37.00
R 26.00
Target profit
After tax R 210,000.00
Before tax R 300,000.00
Break-even
Fixed costs + TP R 416,375.00
Contribution pu R 26.00
BE in units R 16,014.42
Sales value R 1,008,908.65

11 MARKS
ed financial year by making use of the contribution
will increase to 15 000 packs. The selling price

2021 financial year. Marks awarded Marker comments
Rand Rand
945,000 0.5 See calc 0 ✘ ###

519,244
27,200 0.5 0 ✘ ###
352,000 0.5 P See calc 0 ✘ ###

176,000 0.5 P See calc 0 ✘ ###
16,000 0.5 P See calc 0 ✘ ###
12,375 See calc
- 64,331 See calc
425,756
149,000 See calc
276,756
- 83,026.76 0.5 P 0 ✘ ###
193,729
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le requires an after tax net profit

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MACC271 - EXAM OPP 1 - 2021

Question No Marks obtained

Electricity of the admin department

These items do not relate to the manufacturing process.

Manufacturing overhead Budgeted

OH rate per machine hour R 4.50

Formula = budgeted OH less actual overhead

Formula = (Budgeted activity less actual activity) x pre-determined man OH rate

Budgeted activity (machine hours) 72,000

Pre-determined OH rate R 4.50

de a reason to support your answer.

e whether the variance is favourable or unfavourable.

whether the variance is favourable or unfavourable.

No attempt at section ✘ ###

No attempt at section ✘ ###

No attempt at section ✘ ###

Note: Depends on the students' answer. MWE 0 ✘ ###

Brownies Cupcakes Doughnuts

Optimal mix: Hours p/u Units Total needed Available

Hours available 5,800

Brownies 0.2 11,900 2,380

Brownies Cupcakes Doughnuts

Sales mix in rand 25.00 48.00 27.00

Total contribution R 12.00 R 18.00 R 9.60 R 39.60

Weighted Average selling price R 7.69

Weighted Average Contribution margin ratio 40%

Total fixed cost R 65,000.00 (R28 000 + R37 000)

Break-even 21,311 units

Brownies Cupcakes Doughnuts

Total fixed cost R 65,000.00

Brownies Cupcakes Doughnuts

Average contribution R 3.05 given

Normal fixed cost R 65,000.00

Target profit BE 37,704.92 units

akery in the fourth

1 P Mark for multiplying contribution p/u with units.

0.5 P For using the correct formula

0.5 + 0.5 P 0.5 for fixed cost, 0.5 for CM

0.5 P Correct formula

No attempt at section ###

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1. Cost if manufactured in house

Total relevant cost

2. Cost if bought from supllier

Total relevant cost

Avoidable costs if purchased from outside Calculation

1. Will the supplier be able to supply the quantities we need?

3.4. 15 000kg vs 22 000 kg

Sales income 2,400,000

3.5 Define the term sunk cost and give an example.

Costs already incurred, thatcan

r from Pillsbury should be accepted or not. Show all your calculations.

o account before a decision regarding the offer is made.

3,520,000 0.5 + 0.5 + 0.5

For including OH in the calc 0 ✘