SUBJECT ANNEXURES PAGES DURATION

PROJECT ACCOUNTING 4 – PART TIME 1 5 120 mins

CODE TEST DATE MARKS VENUE

PJA400S/PDA440C May 2010 120 LT2

FACULTY OF BUSINESS

MAY ASSESSMENT: SEMESTER 1

COURSE: B. Tech. Project Management

EXAMINER : S. Fore
INTERNAL MODERATOR : N. Bray
EXTERNAL MODERATOR : M. Wilson-Trollip,

SPECIAL INSTRUCTIONS

1. THIS IS A CLOSED BOOK ASSESSMENT - You must answer all questions.

2. Credit will be given for neatness and presentation.

3. Own interpretation and integration of subject information is essential.

4. You may use a calculator.

REQUIREMENTS

Write your answers in ink in the provided exam book .

Page 1 of 5
 QUESTION 1 (Total marks: 8)

Define the following Project Accounting terms:

1.1 Earned Value [2]
1.2 Budget at Completion (BAC) [2]
1.3 Budgeted cost for Work Scheduled (BCWS) [2]
1.4 Actual Cost for Work Performed (ACWP) [2]

QUESTION 2 (Total Marks: 24)

A company has the option of embarking on Project B or C, spanning five years.

Each has a Capital Investment of R10,000 respectively. The details of the
envisaged annual project net income for the projects are as given in the table
below. The company uses an interest rate of 10 %.

PROJECT B C
Year No. Project Net Project Net
Income, Income,
R R
1 4,000 2,000
2 4,000 2,000
3 2,500 2,000
4 2,000 5,000
5 1,500 5,000

2.1 Based on the Net Present Value, which project would you advise the company to
undertake? [8]

2.2 Using the return on investment (ROI), which project is the most viable? [6]

2.3 Determine the IRR for the two projects using linear interpolation and identify the
best project to invest in, based on this approach.

[Hint: Use another discount factor of 12%] [10]

Page 2 of 5
QUESTION 3 (Total marks: 32)

JJB Inc. has been in business for some years .You act as the accountant and you
have been given the following list of balances at 30.04.97.
ITEM R
(Thousands
)
Capital @ 1.05.96 120
Drawings 2
Plant at cost 83
Plant Depreciation @1.05.96 13
Office Equipment at cost 31
Office Depreciation @1.05.96 8
Debtors 200
Creditors 40
Sales 900
Purchases 516
Returns inwards 47
Discounts received 2
Discounts allowed 4
Provision for Doubtful Debts 23
@1.05.96
Printing & Stationary 38
Salaries 44
Light & Heat 26
Bank Overdraft 50
Bad Debts written off 80

You ascertain that stock at 1.05.96 was R84,000; and the stock at 30.04.97 was
R74,000. You are also given the following information at 30.04.97:

 Wages accrued amount to R3,000.

 It is agreed that provision for bad debts remain at R23,000.

 Depreciation on Plant is charged at 10% per annum on cost.

 Depreciation on office equipment is at 20% p.a. on the net book value at year
end.

 Light and heating include insurance prepaid at R3,000.

Requirements

3.1 Prepare a Trading and Profit and loss Account for year ended 30.04.97
[20]

Page 3 of 5
3.2 Prepare a balance sheet at 30.04.97
[12]

QUESTION 4 (Total marks: 37)

You are given that a project that entails the construction of a house, out buildings
and landscaping the garden as presented in the table below:

Activit Description Duration / days Costs (BAC) /R

y
100 Garage 3 9,000
200 Greenhouse 2 2,000
300 Foundations 1 1,000
400 Walls 3 12,000
500 Roofs 5 10,000
600 Doors 3 6,000
700 Plumbing 2 4,000
800 BIC’s 3 6,000
900 Wiring 4 8,000
1000 Finishes 2 4,000
1100 Painting 2 6,000
1200 Driveway 2 8,000
1300 Garden 4 8,000
1400 Fence 4 4,000

Data Capture at timeline 8 days is shown below:

Activity Actual Actual Actual Finish %

Cost Start Complete
100 11,000 3 May 6 May 100
200 2,000 7 May 8 May 100
300 2,000 1 May 2 May 100
400 11,500 4 May 6 May 100
500 7,000 7 May Crash 50
600 4,000 7 May - 66.6
700 2,500 8 May - 50
800 0 - - -
900 0 - - -
100 1,500 8 May - 50
0
110 0 - - -
0
120 7,000 2 May 3 May 100
0
130 3,000 8 May - 25
0

Page 4 of 5
 140 3,500 4 May 7 May 100
0

4.1 Set up an Earned Value Table using the following abbreviated field headings:
[34]

Activit BAC BCWS PC BCWP ACWP S CV EAC

y V

The Planned Values (PV) at timenow 8 for activities 500, 600, 700, 1000 and 1300
are R6,000; R6,000; R4,000; R2,000 and R4000 respectively.

4.2 Comment on the findings in 4.1

[3]

QUESTION 5 (Total marks: 19)

5.1 Define the following terms

5.1.1 Opportunity Cost. [2]
5.1.2 Sunk Cost. [2]
5.1.3 Cost Driver. [2]
5.1.4 Direct Cost. [2]

5.2 A speaker at Acoustic Concepts has a selling price of R250 and the variable
expenses of manufacture amount to R150. Given that the total fixed expenses
are R35,000, determine the breakeven point.
[3]

5.3 Peter Dube owns a furniture manufacturing company. He has decided to embark
on manufacturing a special table. The cost to manufacture an unfinished table is
R350, made up as follows:

 Direct Material= R150

 Direct Labour = R100
 Variable Overheads= R60
 Fixed Overheads=R40

The selling price per unit is R500.The company has unused capacity which can
be utilized to complete the unit and the selling price then would be R600. In
order to complete a unit ; direct material and direct labour cost will increase by
R20 and R40 respectively. In addition, variable overheads will increase by R24
but there will be no change in fixed overheads. Should the unfinished tables be
processed further or sold as ‘unfinished’?
[8]

Total Marks (120)

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