CAMC301/CAMA301 Test 1: Suggested Solution: a) i. The role of a management accountant includes setting prices, controlling operations and making product related decisions. It also encompasses the processes and techniques that focus on the effective and efficient use of organisational resources to support managers in their tasks of enhancing both customer value and shareholder value. It focuses on preparing information for making decisions about planning, directing and controlling an organisation's operations. (max 2 marks) ii. Any two reasonable examples, eg .: Assigning selling prices to manufactured items, and Decisions to discontinue manufacturing operations, or expand operations etc.(max 2 marks) Total: 4 marks b) Working 1 Depreciation 96 000 Electricity 17 500 Insurance (machinery) 5 000 Machine consumables & 38 305 maintenance (MH) 28 294 66 599 Packing materials 0 77 500 77 500 Rent 20 000 Supervision 12 526 Total indirect overheads 189 331 Total machine hours 815 N1 Indirect overheads / MH R232.31/MH Processing R Mixing R 48 000 32 500 2 500 7 500 10 000 30 000 11 750 24 276 210 544 602 N2 R349.74/MH N1 = [126 000/2000 x 5] + [50 000/1 000 x 10] = 815 machine hours N2 = [126 000/2000 x 4] + [50 000/1 000 x 7] = 602 machine hours Total R 144 000 50 000 399 875 Total: 11 marks Cost per unit c) calculation: DM per unit =5000/2000 2.50 DL per unit =500/2000 0.25 D Overheads =4000/2000 2.00 Indirect overheads: Processing (W1) =(232.31 × 5)/2000 Mixing (W1) =(349.74 × 4)/2000 Total cost per unit Mark up 70% Selling price 10.25 calcs Regular (R) 0.58 0.70 =(349.74 ×7)/1000 2.45 6.03 calcs =10000/1 000 10.00 =800/1 000 0.80 =5 000/1 000 5.00 =(232.31 × 10)/1 000 2.32 Luxury (R) 70% 20.57 34.97
Total: 7 marks d) Budgeted Absorption Income Statement of Morning Fuel (Pty) Ltd for the month ended 31 May 2021. Sales Regular = [(126 000 - 2000) x 10.25] 1 271 000 Luxury = [(50 000-500) x 34.97] Cost of sales: (1 765 935) Production costs 1 788 280 Regular = 126 000 x 6.03 759 780 Luxury = 50 000 x 20.57 1 028 500 Less closing stock Regular = (2000 × 6.03) (12 060) Less closing stock Luxury = (500 x 20.57) (10 285) Gross profit 1 236 080 Selling and administration costs (275 101) Variable selling costs 5% x 3 002 015 (150 101) Fixed administration costs (125 000) Net income 960 979 Alternative calculation of production costs R R 3 002 015 1 731 015 * Production costs R95 difference due to rounding above* 1 788 375 DM - Regular = 5 000 x (126 000/2 000) 315 000 DM - Luxury = 10 000 x (50 000/1 000) 500 000 DL - Regular = 500 x (126 000/2 000) 31 500 DL - Luxury = 800 x (50 000/1 000) 40 000 D/overheads - Regular = 4 000 x (126 000/2 000) 252 000 D/overheads - Luxury Indirect overheads 399 875 =