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M1.1 Marks SM
Price Variance
Material Standard Price Actual Price Difference Act Quantity (purchased) Variance
Silica sand R 12,00 R 8,50 R 3,50 370 000,00 R 1 295 000,00 F 1,5 1,5
Electiricity R 1,30 R 1,50 R -0,20 4 625 000,00 R -925 000,00 U 1,5
Usage Variance
Silica sand 250 000,00 345 000,00 -95 000,00 R 12,00 R -1 140 000,00 U 2 1,5
Electiricity 2 000 000,00 4 625 000,00 -2 625 000,00 R 1,30 R -3 412 500,00 U 2 2
Total 2 250 000,00 4 970 000,00 R -4 552 500,00 U
Material Mix
Silica sand 552 222,22 345 000,00 207 222,22 R 12,00 R 2 486 666,67 F 2
Electiricity 4 417 777,78 4 625 000,00 -207 222,22 R 1,30 R -269 388,89 U 2
Total 4 970 000,00 4 970 000,00 R 2 217 277,78 F
Material Yield
Standard input for actual Actual input for
Material output actual output Difference Standard Price Variance
(standard mix) (standard mix)
Silica sand 250 000,00 552 222,22 -302 222,22 R 12,00 R -3 626 666,67 U 2
Electiricity 2 000 000,00 4 417 777,78 -2 417 777,78 R 1,30 R -3 143 111,11 U 2
Total 2 250 000,00 4 970 000,00 R -6 769 777,78 U
Total Mat. Yield + Total Mat. Mix variance: R -4 552 500,00 Total Usage Variance: -R 4 552 500,00
Material Standard Price Actual Price Difference Act Quantity (purchased) Variance
Normal Prduction 2 000 000,00 3 940 000,00 -1 940 000,00 R 1,30 R -2 522 000,00 U 1 M 1
2
MFAC7319 - Test 2 - Paper 2 - 2023 - Memorandum: Question 1.2
M1.2 Marks SM
The unfavourable electricity usage variance indicates more electricity was used than budgeted (0.5). The reasons for this variance could include: 0,5 0,5
- The potentially lower quality sand, possibly requires more energy during processing. 1 1
Electricity Price Variance
The unfavourable electricity price variance indicates a higher price was paid for electricity than budgeted (0.5). This is due to the unexpected increase in price by
1,5 1,5
the municipality (1).
The impact of electricity supply was material and unpredictable (1): unexpected price hikes and unscheduled load shedding (0.5). This might be an ongoing thing,
2,5
CelluTech might need to consider alternative sources of energy (1).
Other valid points 3
Available 14,5 6,5
Maximum 7 6,5
MFAC7319 - Test 2 - Paper 2 - 2023 - Memorandum: Question 1.3
M1.3 Marks SM
Holding cost per kilogram R10 + (R8.5 x 10%) R 10,85 1,5 M 1,5
The most accurate price is the R8.5 offered by the new supplier
Cost per kilogram R 8,50
(ChipSupplies) in August 2022
WACC 10%
Order cost (given) R 350,00
Demand "The August 2022 actual production is likely to be an accurate
estimate for monthly production going forward." 4 140 000,00 kg 0,5 0
Therefore: 345 000kg x 12 months
The discount offer should be taken as it results in the lowest cost 0,5 M 0,5
10 9
MFAC7319 - Test 2 - Paper 4 - 2023 - Memorandum: Question 1.1
M1.1 Marks SM
6
MFAC7319 - Test 2 - Paper 4 - 2023 - Memorandum: Question 1.2
M1.2 Marks SM
WeatherGuard:
Total manufacturing overhead R 160,00 0,5 0,5
Fixed maufacturing overhead (same for both): R 30,00 1 1
Difference = Variable manufacturing overhead (160 - 30) R 130,00 1 1
14 11
MFAC7319 - Test 2 - Paper 4 - 2023 - Memorandum: Question 1.3
M1.3 Marks SM
Pricing per container is R644.44 (R5.8 million / 9 000 units) (1) which is lower than current selling price of R780 for standard WeatherGuard
range, and other customers may insist on lower price (1) 2 1
The potential to supply Construction2000 products in future – pricing levels therefore set now, to the disadvantage of Deluxe Paints. 1
Potential to supply in future – advantage of a possibility of repeat order for special paint? 1
Will it be possible to obtain the necessary materials, and on time? (Only one supplier of colourants). 1