MANAGEMENT ACCOUNTING III MODULE I SUPPLEMENTARY EXAMINATION MEMORANDUM 2023

Question: 1 Advanced Standard Costing (40 Marks: 70 Minutes)

PART A (25 Marks: 45 Minutes)
1.1 Actual profit for April

R R

Sales 2 200 @ 37 81 400✓

Production costs (64 275) ✓m

Opening (400 x 24) 9 600✓

Material Metal 13 000

Welding 7 475

Labour 25 200

Manufacturing overheads Variable (8 000 x 1.1) 8 800✓

Fixed 5 000

Less closing inventory (200 x 24) (4 800) ✓

Gross profit 17 125

Less: selling and admin (11 500)

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 MANAGEMENT ACCOUNTING III MODULE I SUPPLEMENTARY EXAMINATION MEMORANDUM 2023

Profit 5 625✓m✓a

1. 2 Reconciliation of budget to profit

Budget profit 6 000

Sales volume variance (2 200 – 2 000) x R10✓ 2 000F✓m

Standard profit 8 000

Sales price (36 – 37) x 2 200 2 200F✓

Metal price (2 – 2) 6 000 0✓

Welding price (3 – 2.30) 3 250 2 275F✓

Material mix

- Metal [(9 750 x ¾) – 6 500] x 2✓ 1 625F✓m

- Welding [(9 750 x ¼) – 3 250] x 3✓ 2 437.50U✓m

Material yield

- Metal [(2 000 x 3) – (9 750 x 3/4)] 2✓ 2 625U✓m

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 MANAGEMENT ACCOUNTING III MODULE I SUPPLEMENTARY EXAMINATION MEMORANDUM 2023

- Welding [(2 000 x 1) – (9 750 x ¼)] 3✓ 1 312.50U✓m

Labour rate (22 – 21) 1 200 1 200F✓

Labour efficiency (1 000 – 1 200) 22 4 400U✓

Manufacturing overhead rate (8000/1000 – 8800/1200) 1 200 800F✓

Manufact. overhead efficiency (1 000 – 1 200) 8 1 600U✓

Manufacturing overhead [(8000 + 6000) – (5000+7 100) 1 900F✓

Actual profit 5 625

PART B (15 Marks: 27 Minutes)

1.3 Sales Mix Variance

Product Actual sales Actual sales in Differences Standard Sales Mix

quantity budgeted in units Margin ® variance ®
proportion

X 6000 8 800 (40%) √ (2 800) 20 56 000½A½

Y 7000 7 700 (35%) √ (700) 12 8 400½A½

Z 9000 5 500 (25%) √ +3 500 9 31 500½F½

22000 22 000 ½ 32 900½A½

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 MANAGEMENT ACCOUNTING III MODULE I SUPPLEMENTARY EXAMINATION MEMORANDUM 2023

½ x 9 =4,5 marks
1.4 Sales Yield Variance

Product Actual sales in Budgeted Differences Standard Sales Yield

budgeted sales quantity in units Margin ® variance ®
proportion

X 8 800 (40%) 8 000 (40%) √ +800 20 16 000½ F½

Y 7 700 (35%) 7 000 (35%) √ +700 12 8 400½ F½

Z 5 500 (25%) 5 000 (25%) √ +500 9 4 500½F½

22000 20 000 ½ 28 900 ½F½

½ x 9 = 4,5 marks
Question: 2 Inventory Management (25 Marks: 45 Minutes)
2.1
Average Reorder Safety Stock Weekly Stock- Prob. Expected Weekly Total
usage point Stock Out out Cost Weekly Holding Cost
S/O Cost Cost
@ R10 (SS xR3)

500 900 400 0 0 .05 0 R1 200  R1 200 

500 900 200 200  R2 000  .05 R100 

700 0 0 .15 0

R100 R600  R700 

500 900 0 400  R4 000  .05 R200 

700 200  R2 000  .15 R300 

500 0 0 .60 0

R500 0 R500 

Optimum safety stock = 0 kg. 

 = ½ mark

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 MANAGEMENT ACCOUNTING III MODULE I SUPPLEMENTARY EXAMINATION MEMORANDUM 2023

 = 1 mark

18 x ½ + 1 x 1 = 10 marks

2.2

EOQ=
√ 2 ×50 000 × R 40
R2
=
√
4 000 000
2
=1 414.21 ≈ 1 415 kg(3 marks)

Saving that can be made from ordering 2 500kg at a time:

Saving in the purchase price

R50 000
(50 000kg x R50 x 2%)

Saving in ordering cost

R613
[(50 000/2 500 x R40) – (50 000/1 415 x R40)]

Increased holding cost

(R1 085) 
[(2 500 – 1 415) x R2] / 2

Net savings R49 528

It is clear that the benefit of the saving outweighs the cost and therefore the decision should be
to take the quantity discount and order in batches of 2 500kg. 
2.3

All the systems mentioned have the ability to enhance the value of the supply chain. It makes
linkages with suppliers and customers easier and faster, meaning the possibility of higher
volumes of business and better service-delivery. As customer-value is enhanced, shareholder
value will also improve. 

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 MANAGEMENT ACCOUNTING III MODULE I SUPPLEMENTARY EXAMINATION MEMORANDUM 2023

2.4

If relationships with managers are managed carefully, it can lead to cost savings, which is
especially important if cost leadership is the focus of an organisation. If there is a good standing
relationship, it may also mean better quality goods and services and better lead times in
production, which is the goal of an organisation with a differentiation focus. 

Question: 3 Budgets and Budgetary Control (25 Marks: 45 Minutes)

3.1 Sales budget

Mondi Hilton Total

Sales unit 2 500 3 200

Sales price R120 R150

Total sales value R300 000 R480 000 R780 000

2

3.2 Finished goods budget

Cost per unit calculation

Mondi Hilton

Material cost – A (R2 x 20) R40 -

Material cost – B (R5 x 10) - R50

Labour cost (R10 x 4) & (R10 x 5) R40 R50

Total cost per unit R80 R100

Opening finished goods

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 MANAGEMENT ACCOUNTING III MODULE I SUPPLEMENTARY EXAMINATION MEMORANDUM 2023

Mondi Hilton Total

50% of 1st half sales units 500 1 000

Cost per unit R80 R100

Total costs R40 000 R100 000 R140 000

4/2 = 2

Closing finished

Mondi Hilton Total

50% of 1st half unit sales of 600 1 250

the following year

Cost per unit R80 R100

Total costs R48 000 R125 000 R173 000

4/2 = 2

3.3 Production budget

Mondi Hilton

Unit sales 2 500 3 200

Planned closing inventory 600 1 250

Available units 3 100 4 450

Less: Planned opening inventory (500)  (1 000) 

Planned production 2 600 3 450

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 MANAGEMENT ACCOUNTING III MODULE I SUPPLEMENTARY EXAMINATION MEMORANDUM 2023

8/2 = 4
3.4 Raw material stock budget

Opening raw material

Material A Material B Total

1 250 x 50% x 20kg x R2 R25 000

1 600 x 50% x 10kg x R5 R40 000

Total costs R25 000 R40 000 R65 000

2/2 = 1

Closing raw material

Material A Material B Total

1 500 x 50% x 20kg x R2 R30 000

2 000 x 50% x 10kg x R5 R50 000

Total costs R30 000 R50 000 R80 000

2/2 = 1
3.5 Raw material purchases budget

Material A Material B Total

Planned production 2 600 3 450

Add: Closing raw materials 750 1 000

Available materials 3 350 4 450

Less: Opening raw materials (625)  (800) 

2 725 3 650

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 MANAGEMENT ACCOUNTING III MODULE I SUPPLEMENTARY EXAMINATION MEMORANDUM 2023

Usage per unit 20kgs 10kgs

Planned raw material purchases 54 500 36 500

Cost per unit R2 R5

Total purchases R109 000 R182 500 R291 500

12/2 = 6

3.6 Labour budget

Mondi Hilton Total

Planned production 2 600 3 450

Required hours 4hrs 5hrs

Total hours required 10 400 17 250 22 650

Rate per hour R10 R10

Total labour costs R104 000 R172 500 R276 500

6/2 = 3

3.7 Statement of Comprehensive Income

R R

Sales 780 000

Less: cost of sales (520 000)

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 MANAGEMENT ACCOUNTING III MODULE I SUPPLEMENTARY EXAMINATION MEMORANDUM 2023

Opening Inventory

- Finished goods 140 000

- Raw materials 65 000

Purchases 291 500

Direct labour 276 500

Less: Closing inventory

- Finished goods (173 000) 

- Raw materials (80 000) 

Gross Profit 260 000

8/2= 4

Question: 4 Flexible Budget (10 Marks: 18 Minutes)

Normal production Static budget Flexible budget Flexible budget

20 000 18 000 21 000
Direct Material R100 000 R90 000√ R105 000√
Direct Labour R400 000 R360 000√ R420 000√
Variable overheads R60 000 R45 000√ R52 500√
Fixed overheads R50 000 R50 000√ R50 000√

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MANAGEMENT ACCOUNTING III MODULE I SUPPLEMENTARY EXAMINATION MEMORANDUM 2023

R610 000 R545 000√ R627 500√

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