University of Johannesburg

Department of Commercial Accounting

Cost and Financial Management 3A (CFM33A3)

Suggested Solution

Date: 4-Jun-19
Marks: 100
Duration: 180 minutes

Page 1 of 7 05/02/2024 22:55:15

Question 1 { 24.0 }

1.1 Production budget

Smart phone Tablet
Needed for sales 3,600 1.0 1,200
Closing inventory 869 1.0 490 1.0
Opening inventory (790) 0.5 (445) 0.5
Production 3,679 1.0 1,245 1.0
6.0
Material purchases budget
Aluminium Silicon
Smart phone 0.38 0.18
Tablet 0.54 0.47

Needed for production 1,398.02 1.0 662.22 1.0

Smart phone 672.03 1.0 584.92 1.0
Tablet
Closing inventory 298.92 1.0 26.40 1.0
Opening inventory (159.00) 0.5 (66.00) 0.5
Purchases 2,209.97 1.0 1,207.54 1.0
Price per kg R729.81 1.0 R8.68
Value of purchases R1,612,858 1.0 R10,481 1.0 R1,623,340 1.0
13.0
1.2 Overheads budget Hrs per u
Smart phone 3.70
Tablet 7.40
VMOH: Smart phone 13,612 1.0 R22.00 R299,471 0.5
VMOH: Tablet 9,209 1.0 R22.00 R202,605 0.5
R502,075
Fixed MOH R1,200,000 0.5
Less Admin salary (R24,000) 0.5
Foreman - N/A
Total MOH R1,678,075 1.0
5.0

Q1 Page 2 of 7 05/02/2024 22:55:15

Question 2 { 15.0 }

2.1 Cash budget

Feb March
Income from beds - 42.5% R535,500 1.0 R696,150 1.0
Income from beds - previous month R480,600 1.0 R560,700 1.0
Other income R69,400 0.5 R69,400 0.5
Rental income R18,350 0.5 R6,117 1.0

Total receipts R1,103,850 R1,332,367

Expenses R1,053,333 R1,107,215

Cleaning services R2,000 0.5 R2,080 1.0
Other expenses R131,333 0.5 R131,333 0.5
Salaries R920,000 R920,000 0.5
Bed sheets (R58 800 P - R4 998) R53,802 2.0

Cash surplus/(deficit) R50,517 1.0 R225,151 1.0

Opening balance (R177,000) 0.5 (R126,483) 0.5
Closing balance (R126,483) 1.0 R98,668 1.0
16.5

Q2 Page 3 of 7 05/02/2024 22:55:15

Question 3 { 17.0 }

3.1 Actual petrol sales R2,234,000

Unfavourable variance R333,012 1.0
Flexible budget amount R2,567,012 1.0
2.0
3.2 Flexible budget sales R2,567,012 0.5
Actual sales volume 112,456 0.5
Budgeted price per liter R22.83 1.0

Original budget sales R2,021,987 0.5

Budgeted price per liter R22.83 0.5
Budgeted sales volume 88,579 1.0
4.0
3.3 Actual amount R800,997
Favourable variance R66,789 1.0
Flexible budget amount R867,786 1.0
2.0
3.4 Hours needed for 56 L of petrol 2.07 1.0
Actual sales volume - petrol 112,456
Total hours 232,409 1.0
56L in a batch 56
Total hours for petrol production 4,150 1.0

Hours needed for 33 L of diesel 2.60 1.0

Actual sales volume - diesel 118,709
Total hours 308,643 1.0
33L in a batch 33
Total hours for diesel production 9,353 1.0

Total hours 13,503 0.5

Budgeted rate per hour R10.00
Flexible VMOH R135,030 0.5
Actual VMOH R145,609
FB variance R10,579 0.5 U 0.5
8.0
3.5 Fixed MOH - flexible budget R123,000 1.0 1.0

Q3 Page 4 of 7 05/02/2024 22:55:15

QUESTION 4 { 28 }
Variances
Sales price variance
AP - SP x AQ = Variance F/U
R1,550.00 R1,550.00 600 R0 (U) NOT REQUIRED

4.1 Sales margin volume variance

AQ - BQ x SMP = Variance F/U
600 550 0.5 R720.00 1.0 R36,000 0.5 (F) 0.5 2.5

4.2 Direct material price variance

SP - AP x AQ = Variance F/U
R80.00 0.5 R85.00 1.0 4,353 1.0 R21,765 0.5 (U) 0.5 3.5

4.3 Direct material quantity (usage) variance

SQ - AQ x SP = Variance F/U
4,800 1.0 4,353 0.5 R80.00 R35,765 0.5 (F) 0.5 2.5

4.4 Direct labour rate variance

SR - AR x AH = Variance F/U
R50.00 0.5 R48.00 1.0 719 1.0 R1,438 0.5 (F) 0.5 3.5

4.5 Direct labour efficiency variance

SH - AH x SR = Variance F/U
780 1.0 719 0.5 R50.00 R3,063 0.5 (F) 0.5 2.5

4.6 VMOH rate / expenditure variance

SR - AR x AH = Variance F/U
R25.00 1.0 R22.50 1.5 2,700 1.0 R6,750 0.5 (F) 0.5 4.5

4.7 VMOH efficiency variance

SH - AH x SR = Variance F/U
3,000 1.0 2,700 0.5 R25.00 0.5 R7,500 0.5 (F) 0.5 3.0
23.0
4.8 Fixed MOH expenditure variance
AFO - BFO Variance F/U
R166,000 1 R180,000 R14,000 (F) GIVEN 1.0

Budget Flexed Actual Variance

Sales R852,500 R930,000 R930,000 R0 (U
DM (R352,000) (R384,000) (R370,000) R14,000 (F)
DL (R35,750) (R39,000) (R34,500) R4,500 (F)
VMOH (R68,750) (R75,000) (R60,750) R14,250 (F)
FMOH (R180,000) (R180,000) (R166,000) R14,000 (F)
Profit R216,000 R252,000 R298,750 R46,750 (F)
Test R46,750 GIVEN

4.8 Profit Recon

Budgeted profit R216,000 0.5
Add: favourable variances R104,515 0.5
Sales price variance R0
Sales margin volume variance R36,000 0.5
Direct material quantity (usage) variance R35,765 0.5
Direct labour rate variance R1,438 0.5
Direct labour efficiency variance R3,063 0.5
VMOH rate / expenditure variance R6,750 0.5
VMOH efficiency variance R7,500 0.5
Fixed MOH expenditure variance R14,000

Deduct: unfavourable variances (R21,765)

Direct material price variance R21,765 0.5
Actual profit R298,750 0.5
5

Q4 Page 5 of 7 05/02/2024 22:55:15

QUESTION 5 { 16.0 }

5.1 Services 160 200

Volume MOH
High 200 R12,800
Low (160) (R12,000)
Difference 40 0.5 R800 0.5

Variable MOH per unit R20.00 1.0

At high level:
Total MOH R12,800
Total variable MOH (R4,000)
Total fixed cost R8,800 1.0
Or:
At low level:
Total MOH R12,000
Total variable MOH (R3,200)
Total fixed cost R8,800

Marginal income statement:

Volume 65 1.0
% Per unit Total
Services Fee 100.00% R250.00 R16,296 1.0
Variable cost 46.00% R115.00 R7,496 1.0
Primary cost R95.00 0.5
Manufacturing overheads R20.00 0.5
Contribution 54.00% R135.00 R8,800
Fixed cost R8,800 0.5
Operating income R0
7.5
5.2 MOS
Services Fee at high level 200 Or: R50,000 0.5
Break-even value 65 R16,296 0.5
Margin of safety value 135 R33,704
Margin of safety ratio 67% 67% 0.5
Services can drop with 67% before Linda will break even 1.0 2.5

Q5 Page 6 of 7 05/02/2024 22:55:15

 5.3 Selling Price
Volume 160 0.5
% P/U Total
Services Fee R263.75 1.0 R42,200
Variable cost R115.00 R18,400
Primary cost R95.00 0.5 R15,200
Manufacturing overheads R20.00 0.5 R3,200
Contribution 56.40% R148.75 1.0 R23,800 1.0
Fixed cost R8,800 0.5
Operating income R15,000 5.0

5.4 DOL
Total contribution R120,000
Profit before interest & tax R35,000
DOL 3.43 1.0 1.0

Q5 Page 7 of 7 05/02/2024 22:55:15