University of Johannesburg

Department of Commercial Accounting

Cost and Financial Management 3A (CFM33A3 & CFM3AA3)

Suggested Solution

Date: 29-Apr-19
Marks: 50
Duration: 90 minutes

Page 1 of 5 05/02/2024 22:55:15

Question 1 ( 17 )

Actual Flexible budget Variance F/(U)

Pay-as-you-go customers sales R26,400,000 1.0 R24,000,000 1.0 R2,400,000 0.5 (F) 0.5
Contract customers sales R28,800,000 1.0 R31,104,000 1.0 R2,304,000 0.5 (U) 0.5
Commission - see actual marks below (R10,800) 2.0 (R6,998.40) 1.0 R3,802 0.5 (U) 0.5
Salaries (R48,000,000) 0.5 (R50,400,000) 0.5 R2,400,000 0.5 (F) 0.5
Promotions (R75,000) 1.0 (R67,500) 1.0 R7,500 0.5 (U) 0.5
ICASA license renewal (R1,350,000) 0.5 (R1,476,000) 0.5 R126,000 0.5 (F) 0.5
Profit/Loss R5,764,200 R3,153,502 R2,610,698 (F)
6.0 5.0 3.0 3.0
Total marks 17.0
DATA SET
Pay-as-you-go customers - actual 10,000
Pay-as-you-go customers - Actual rate R220
Pay-as-you-go customers - Budgeted rate R200
Contract customers - actual 8,000
Contract customers - Actual rate R300 0.5
Contract customers - Budgeted rate (increase by 8%) R324
Actual average monthly salary per employee R20,000
Budgeted average monthly salary per employee R21,000
Total number of employees 200
Call center agent - 10% of employees 20 0.5
Actual number of cases per month per agent 3 0.5
Actual Commission % 5% 0.5
Budgeted Commission % 3%
Number of customers recruited 1,500
Actual rate paid per customer recruited R50
Budgeted rate paid per customer recruited R45
ICASA rate - budgeted R82
ICASA rate - actual R75

Q1 Page 2 of 5 05/02/2024 22:55:15

QUESTION 2 ( 21 )

2.1 Acrylic yarn price variance

SP - AP x AQ purch = Variance
R125 0.5 R132 1.0 4,028 1.0 R28,196 0.5 (U) 0.5 3.0

Total cost of acrylic yarn R531,696

Actual kg used per blanket 1.9
Standard kg per blanket (2400/1000) 2.4
Actual production & sales (2 240 -120) 2,120
Total actual kg 4,028
Actual rate per kg R132.00

Acrylic yarn quantity variance

SQ - AQ used x SP = Variance
5,088 1.0 4,028 0.5 R125.00 R132,500 0.5 (F) 0.5 2.0

VMOH Expenditure variance

SR - AR x AH = Variance
R22.00 0.5 R23.50 0.5 5,830 1.0 R8,745 0.5 (U) 0.5 2.5

Actual machine hrs per blanket 2.75

Actual sales (2 240 -120) 2,120
Total actual machine hour 5,830
Standard machine hrs per blanket 2.55
Standard machine hours 5,406

VMOH Efficiency variance

SH - AH x SR = Variance
5,406 1.0 5,830 0.5 R22.00 R9,328 0.5 (U) 0.5 2.0

Fixed MOH expenditure variance

BFO - AFO Variance
R82,500 1.0 R81,900 0.5 R600 0.5 (F) 0.5 2.0

Normal annual production 2,500

Budgeted rate R33
Actual production (sales) 2,120

Q2 Page 3 of 5 05/02/2024 22:55:15

 Fixed MOH volume variance
BFO Alloc FO Variance F/U
R82,500 R69,960 1.0 R12,540 0.5 (U) 0.5 1.5

Total Marks 13

2.2 Acrylic yarn price variance:

The price could have increased due to a change in a supplier 1.0
Any other valid reason

Reason for variable manufacturing overheads expenditure variance:

More machine hours could have been clocked due to a faulty machine 1.0
Any other valid reason
Total Marks 2

2.3 Direct labour efficiency is calculated as follows:

(SH -AH) x SR
(x - 4 900) R13
Actual hours 4,900 0.5
Standard rate per hour R13 0.5
Therefore make standard hours (x), and solve for x as follows:
Standard hours x standard rate 13x
Actual hours x SR (4 900 x R13) R63,700 0.5
Favourable variance R5,200 0.5
Therefore, SH x SR (FB) = R68,900 1.0

Therefore standard hours 5,300 1.0

Actual sales & production 2,120 1.0
Standard hr per blanket 2.50 1.0

Total Marks 6

Q2 Page 4 of 5 05/02/2024 22:55:15

QUESTION 3 ( 12 )

Actual profit R230,000 0.5

Ingredients: price variance (unfavourable) R34,000 0.5
Ingredients: quantity variance (favourable) (R22,500) 0.5
Direct labour rate variance ((AR-SR)*AH) - favourable (R18,000) 1.0 3.0

Standard rate R26

Total actual payment R216,000
Actual labour hours per bottle 1.50
Std labour hours per bottle 1.25
Actual sales (5 000 x 1,20) 6,000
Total actual labour hours 9,000 1.0
Total standard labour hours 7,500 1.0
Actual labour rate R24.00 1.0

Direct labour efficiency variance ((AH-SH)*SR) - unfavourable R39,000 1.0 2.0

Variable manufacturing overheads expenditure variance - favourable (R22,600) 0.5
Variable manufacturing overheads efficiency variance - unfavourable R28,400 0.5
Sale price variance ((AP-SP) x AV) - unfavourable R150,000 1.0
Sale volume variance (AV -BV) x SM - favourable (R85,100) 1.0 4.5

Standard units to be sold 5,000

Actual units sold 6,000
Actual selling price R125
Standard selling price R150

Standard Margin:
Standard selling price R150.00 0.5
Less
Ingredients ((R11,50 - 0,75) x 1,2kgs) (R12.90) 1.0
Direct labour (1,25 hours x R26) (R32.50) 1.0
Variable manufacturing overheads ((45/60)*R26) (R19.50) 1.0
Standard Margin R85.10

Budgeted Profit R333,200 1.0

Total marks 14.0
Max marks 12.0

Q3 Page 5 of 5 05/02/2024 22:55:15