Acc/531 Week 4

Table of Contents
Question
Descriptions
Page
Question 1
Multiple Choice Questions
4
Question 2
Absorption costing and standard costing
Use the information provided below to prepare the Budgeted Income Statement for the year ended 30 June 2013 using the absorption costing method
2.2.1 Calculate the direct labour efficiency variance
2.2.2 Explain 2 possible causes of an unfavourable direct labour efficiency variance
5

Question 3.1

Question 3.2
Question 3.3

Question 3.4

Question 3.5 Cost-Volume-Profit Analysis
Calculate the total marginal income and net profit/loss if all the tables are sold Calculate the margin of safety (in units)
Calculate the break-even value using the marginal income ratio if
(Answer must be expressed in years, months and days)
Calculate the Accounting Rate of Return (ARR) for Project A. (Answer expressed to two decimal places)
Calculate the Net Present Value (NPV) of Project B and Project C Calculate the Internal Rate of Return (IRR) of Project B (Answer expressed to two decimal places). (Round off amounts to the nearest rand).
Calculate the Internal Rate of Return (IRR) of Project B (Answer expressed to two decimal places)
Question 2

2.1 Absorption costing method

Income statement 30 June 2013

R
Sales (330 XR40 500) = 13 365 000

Less: manufacturing cost of sales = 8 441 130

Opening inventory (40 x R40 500) = 1 620 000

Fixed production cost = 945 000

Variable production cost (350 X 16 875) = 5 906 250
Goods available for sale = 8 471 250
Less: Closing inventory (8 471 250 /R16 875 = (30 120) = R502
Gross profit = 4 923 870 Other costs = 375 750
Variable selling and admin cost (330 X 2025) = 668 250 Fixed selling and administrative cost = (292 500)

Net profit = 4 548 120

2.2 Direct labour efficiency

= (AT – ST) SR

= 38 – 36 X 550

= 2 X 550

=