PBA4807 Accounting for managers ASSIGNMENT 02 INDMIDUAL ASSIGNMENT: MANAGEMENT A
ID: 2517877 • Letter: P
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PBA4807 Accounting for managers ASSIGNMENT 02 INDMIDUAL ASSIGNMENT: MANAGEMENT ACCOUNTING Due date: 23 April 2018 MARKS 50 Question 1 30 marks You are the manager of Compounders Ltd. The company mies compound for smaler plastic extrusion companies Compounders Ltd has six (6) mixing machines with a maximum capacity (100%) of 250 ton per month. However, due to power cuts, the machines are amenty berg operated at 75% of rstaled capacity One (1) ton of a compound mixture consists of two (2) raw materials: 0.7 ton of Electrolye and 0.3 ton of Copper Wire. Assume no wastage. There are no opening and closing inventories. All raw materials purchased are being used in the month of purchase, and all compound mixed are being soild in the month mixed. Each mixing machine requires two (2) operators. The company is operating a nine (9) hour shft and each machine operator eams R75 per hour. No weekend time nor overtime is The company is a price setter and the pricing policy is based on a mark-up of the total production cost at 50%. The company incurred the following costs for the month 1 mport (purchase) raw material for one month's production. Material Electrolyte @ R60 2. The import oosts amount to R1,000 per 250 ton of Material Electrolyte and R1,500 per per ton and Copper Wire R95 per ton. R120 ton of Copper Wire 3. Paid the wages based on a twenty (20) working days. 4. The factory foreman eams a salary of R15,000 per month 5. The cost of security is as follows: Guard at the entrance of the factory R3,500 per month and the guaed at the entrance to the admin offices R3,750 per month 6. The monthly rental amounts to R25,000. Rent is allocated based on floor space occupied. The factory occupies 9,100 m2 and the office block 3,900 m2 Office expenses amounts to R64,000 per month. 8. Compound delivery cost amount to R1,200 per 125 ton of compound delivered Page 11 of 13 OUNISA Graduate School of Business LeadershipExplanation / Answer
Production per month(Tons) 1125 (6machines*250 tons/machine*0.75 capacity) No. Cost incurred Production cost(R) Period cost.(R) Direct Material Cost: 1 Electrolyte 47250 (0.7*1125*60) 2 Copper wire 32063 (0.3*1125*95) 3 Import cost of electrolyte 4500 (1000*(1125/250) 4 Import cost of copper wire 14063 (1500*(1125/120) 5 Total Material Costs 97875 6 Direct Labor Costs 162000 (2operator per machine*6 machines*9 hours per day*20 days*R75 per hour) 7 Factory foreman salary 15000 8 Cost of securities 7250 (3500+37500) 9 Rent expense 17500 7500 production =(9100/(9100+3900))*25000, Period=(3900/(9100+3900))*2500 10 Office expense 64000 11 Compound delivery cost 10800 1200*(1125/125) Total Cost 390250 89550 Total Production Cost 390250 Mark up (50%) 195125 (0.5*390250) Selling Price for 1125 tonnes 585375 Selling Price per ton 520.33 (585375/1125) Cost incurred Variable Cost.(R) Fixed Cost.(R) Direct Material Cost: 1 Electrolyte 47250 2 Copper wire 32062.5 3 Import cost of electrolyte 4500 4 Import cost of copper wire 14062.5 5 Total Material Costs 97875 6 Direct Labor Costs 162000 7 Factory foreman salary 15000 8 Cost of securities 7250 9 Rent expense 25000 10 Office expense 64000 11 Compound delivery cost 10800 Total Cost 368550 111250 Total Fixed Cost 111250 Total Variable Cost 368550 Variable cost per ton 327.60 (368550/1125) 1.3 Contribution per ton produced Selling price per ton 520.33 Variable cost per ton 327.60 Contribution per ton produced 192.73 (520.33-327.60) 1.4 Breakeven tons to be mixed: Fixed Cost per month 111250 Contribution per ton 192.73 Breakeven tons to be mixed: 577 (111250/192.73)
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