minutes

Question 1 9 13,5
Question 2 16 24
Question 3 17 25,5
Question 4 18 27
0
60

Full mark
Half a mark
Full mark with error (principle mark)
Half a mark with error (principle mark)
 Question 1

(a) Accurate
Complete
Cost beneficial
Understandable
Relevant
Authoritative
Timely
Easy to use 4

b) Integrity Being straightforward, honest and truthful in all professional and business relationships.
Objectivity Do not allow bias, conflict of interest or the influence of other people to override professional judgement.
Professional competence Maintain an ongoing commitment to improve professional knowledge and skill. 5
Confidentiality Do not disclose professional information unless there is specific permission, legal or professional duty to do so.
Professional behaviour Comply with relevant laws and regulations and avoid any action that could negatively affect the reputiation of the profession.

GRAND TOTAL 9
Question 2

a) Calculate the contribution margin per ticket for Adventure Travel.

Selling Price/Revenue (2 800 x 0.15) 420 1

Less Variable cost See calc 1 -62,50
Contribution 357,50 1

Calc 1 Units
High 47 300,00 270
Low 44 800,00 230
2 500,00 40 62,50 3

Margin = Contribution/Sales
= 357,50/420
= 85,12% 1 mwe
6

b) How many tickets must Travel Point sell to earn a profit of R15 000 per month?

Number of tickets to be sold = Fixed cost + Fixed target

Contr. Per unit

= 30 425 + 15 000 1
357,5 0,5 mwe

= 127 0,5 mwe

Fixed costs (R47 300 - (270 x R62,50) 30 425 1 mwe

3

c)
Calculate the margin of safety if Travel Point sells 280 tickets and explain what this figure means.

Margin of safety ratio

Sales 280 0,5
Break-even sales (30 425 / R357,5) 85 0,5 mwe
Margin of safety tickets 195
Margin of safety ratio (195 / 280) 69,61% 1 mwe

Sales can drop by 69,61% before Travel Point will break even. If sales 1
drop by more than 69.61%, TP will start making a loss.
3

d) The seller price per unit is constant within the relevant range. 1
The variable cost per unit and the total foxed costs are not affected by changes in production or sales throughout the relevant range. 1
The number of units produced is equal to the.number of units sold, i.e. inventories do not change. 1
Costs can be accurately divided into variable and fixed costs, and there is a linear relationship between cost and activity. 1
In organisations that produce a variety of products the sales mix is constant. 1
Changes in total costs and revenues are only caused by changes in the level of production/sales. 1
max 4
Question 3

Sales commission 5,00%

Overhead allocation rate (of direct material cost) 60,00%

August
Opening inventory ** 1 100
+ Units produced 5 800
Available 6 900
- Closing inventory 2 000
Units sold 4 900

** Balancing figure

a)

August
Direct material R18,00
Direct labour R24,50 1
Variable manufacturing overheads R8,20
Variable manufacturing cost R50,70 1
Fixed manufacturing overheads allocated R10,80 1
Absorption cost R61,50 1 mwe
Max 4

b) August
Sales R910 000 0,5
Cost of Sales (R246 802)
Opening inventory Calc 1 R54 142 3
Production (5 800 x R50.70) R294 060 1 mwe
Closing inventory (2000 x R50.70) (R101 400) 1 mwe
Commission (R910 000 x 5%) (R45 500) 1
Contribution R617 698 1 mwe
- Fixed cost (R343 000)
Manufacturing overheads R123 000 1
Marketing cost R220 000 1
Net profit R274 698 0,5 mwe
Max 10
Calc 1
Calculation of unit cost: July
Direct material (R18.00 x 100/103) R17,48 0,5
Direct labour (R24.50 x 100/103) R23,79 0,5
Variable manufacturing overheads (R8.20 x 100/103) R7,96 0,5
Variable manufacturing cost R49,22 0,5 mwe
Fixed manufacturing overheads allocated R10,49
Absorption cost R59,71

Opening inventory (1100 x 49,22) 54 142,00 1 mwe

c) Fixed overheads included in opening inventory (1100 x 10,49) - 11 533,98 1 mwe

Fixed overheads included in closing inventory (2000 x 10.80) 21 600,00 1 mwe

Increase in absorption profit 10 066,02 1 mwe
Max 3
Question 4
a)
Workings:
Cash sales 30,00%
Credit sales 70,00%

Credit collections:
Month of sale 40,00%
Discount 5,00%
30 days 30,00%
60 days 28,00%

Credit sales: Collected in:

Total May
March R230 000 R45 080 1
April R200 000 R42 000 1
May R225 000 R59 850 1
June R400 000
July R420 000
R146 930

Purchases:
Paid in:
Purchases May

April R64 000 R51 200 1

May R69 700 R13 940 1

R65 140

Cash budget:
May
Opening cash balance (R120 000) 1
Total receipts R214 430
Cash sales R67 500 1
Collections from debtors R146 930 1 mwe

Total payments R82 140

Cash purchases R13 940 1
Payments to creditors R51 200 1 mwe
Selling and marketing costs R17 000 1
Net cash inflow R132 290
Closing cash balance R12 290 1 mwe Only get this mark if depreciation was not included

12

It can handle big volumes of data 1

b) It is quicker than a manual system 1
It is more accurate than a manual system 1
It is easier to access and to make changes to the system 1

planning 0,5
c) control 0,5
co-ordination 0,5
communication 0,5
motivation 0,5
evaluation 0,5

Max 2