# Accounting English Paper 1 2015 Questions and Answers Part 4

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Question 5

## Princess Bin Factory

### Production Cost Statement for the Year Ended 28 February 2015

 Raw/Direct material cost check operation 742,500 Ρ Direct labour cost 452,000 Π + 114,000ΠΠ one part correct 566,000Ρ Prime cost 1,308, 500Π Factory overhead cost (256,270 Π + 75,030 (rent) ΠΠ – 4,500 Π) one part correct 326,800Ρ Total manufacturing cost check operation 1,635, 300 Ρ Work in process (1 March 2013) 58,500 Π 1,693, 800 Work in process (28 Feb 2014) check operationmust be subtracted (66,300) Ρ Cost of production of finished goods 1 627,500 ΠΠ 46,500 R 35

### Income Statement for the Year Ended 28 February 2015

 Sales 2,180, 000 Π Cost of sales ( Π) Π One part correct (1,400, 000) Gross profit check operation 780,000 Ρ Operating expenses (213,800) Selling and distribution cost (127 100Π - 1 240 ΠΠ) 125,860 Ρ Administration costs (62 930Π + 25 010Ρ) if of rent above 87,940Ρ Net profit for the year check operation (subtracted) 566,200Ρ

## Robs Pencils

Comment on the fixed cost per unit. Note that fixed costs increased from R. 236,800 in 2013 to R. 238,000 in 2014.

• The fixed cost per unit decreased from R. 3,20 to R. 2,80. Π
• Economies of scale (more units were produced in 2014) Π

Calculate the break-even point for the year ended 30 June 2014.

units Ρone part correct

Do you consider the level of production to be satisfactory or not?

• Quote and explain figures to support your opinion.
• Not satisfactory Π
• Explanation ΠΠ quoting figures Π (mark according to BEP calculation above)
• Although the business produced more goods than last year, (85 000 – 74 000) , it failed to break even this year. (86 456 – 85 000) Low profit last year/loss this year.

Identify one problem regarding the variable costs. Quote appropriate figures to support your answer.

Cost identified Π figures Π

Raw materials costs increased from R. 4,00 to R. 5,50 per unit.

Provide two suggestions that Rob can use to address the problem identified.

Any two suggestions: ΠΠ ΠΠ

• Monitor production techniques to minimize wastage
• Train workers
• Look for local suppliers – reduce transport cost

Question 6

Explain the importance of comparing budgeted figures with actual figures achieved for the same period.

• One valid explanation ΠΠ
• Deviations can be determined, and remedial measures will be put in place establish whether the budgeting was realistic to identify trends of mismanagement of cash.

Calculate the missing amounts (indicated by a, b and c) in the Debtors՚ Collection Schedule for the budgeted period March to May 2015.

 a 6,048 ΠΠ b 5,320 Π c 15,750 Π

Calculate the budgeted total sales for March 2015.

ΠΠ

Calculate the amount budgeted for payments to creditors during May 2015.

40,000

70,000 Π Π Π = 28,000 Ρ any one part correct

Or

Calculate the budgeted salaries of the shop assistants for April 2015.

25,500Π + 137,700Π = 163,200Ρ any one part correct

Calculate the % increase in the salary of the manager expected in May 2015.

3,200 (1 mark)

(19,200 – 16,000) Π/16,000 Π = 20 % Ρ any one part correct

Calculate the amount of the additional loan expected to be acquired on 1 April 2015.

875Π Π = 75,000Ρ any one part correct

An official of the local municipality has offered to recommend Brakpan Stationers to supply stationery to the value of R. 500,000. However, he will only do this if Vukile pays him R. 20,000 in cash. Give Vukile advice in this regard. State TWO points.

Any two suggestions ΠΠ ∴ ΠΠ

• This is a bribe which is unethical.
• If this information is made public, it will have a negative effect on the business in the future.
• Vukile must tender formally to the municipality to secure the contract through the normal processes.