MAC2601 Oct/Nov 2014 exam paper — questions

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  1. Question 1.1 · Nature and behaviour of costs; cost estimation · 2.5 marks

    Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. Blue Sky Industries Limited's freight and logistics division, run by Sam Smith, only despatches standard recorded parcels ordered online. Over several months the following units-posted and total-cost figures were recorded: 35 000 units cost R10 005 000; 40 000 units cost R11 380 000; 45 000 units cost R12 755 000; 48 000 units cost R13 580 000; 55 000 units cost R15 575 000; and 57 000 units cost R16 125 000. Using this information, determine the fixed cost component at the activity level of 40 000 units.Show the full question

  2. Question 1.2 · Nature and behaviour of costs; cost estimation · 2.5 marks

    Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. Using the same units-posted and total-cost data for Blue Sky Industries Limited's freight and logistics division (35 000 units at R10 005 000; 40 000 units at R11 380 000; 45 000 units at R12 755 000; 48 000 units at R13 580 000; 55 000 units at R15 575 000; and 57 000 units at R16 125 000), calculate the fixed cost at the activity level of 57 000 units.Show the full question

  3. Question 1.3 · Nature and behaviour of costs; cost estimation · 2.5 marks

    Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. Sam Sales is the marketing executive responsible for the FOX Sat FXS1 decoders. Each decoder, imported from the PRC, has a landed cost of R300. Sam wants to earn a gross profit on sales of 37,5%. Calculate the mark-up on cost, expressed in Rand.Show the full question

  4. Question 1.4 · Cost-volume-profit analysis · 2.5 marks

    Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. The marketing section that sells the FOX Sat FXS1 decoders incurs fixed costs of R3 486 000 per month and is required to earn a contribution of 10% on sales. The board of directors has fixed the selling price of the FXS1 decoders at R450,00 per unit. Determine how many decoder units must be sold for the section to break even.Show the full question

  5. Question 1.5 · Accounting for material, labour and overheads; inventory valuation · 2.5 marks

    Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. The Sports Entertainment division imports the Blue Ray 3D TV. During September 2014 the following movements occurred: on 31 August 2014 the closing stock was 351 units valued at R3 845,00 each; on 3 September 2014, 450 units were purchased for a total of R1 755 000; on 4 September 2014, import freight of R390,00 per unit was incurred on the 450 TVs; on 11 September 2014, 500 units were sold at R9 000,00 each; on 18 September 2014, 300 units were purchased for a total of R1 185 000; on 19 September 2014, import freight of R350,00 per unit was incurred on the 300 TVs; on 23 September 2014, 100 units were sold at R8 750,00 each; and on 23 September 2014 a delivery freight cost of R420,00 per unit was incurred on those 100 TVs sold. Calculate the value of the closing stock on 30 September 2014 using the First-In-First-Out (FIFO) basis of accounting.Show the full question

  6. Question 1.6 · Accounting for material, labour and overheads; inventory valuation · 2.5 marks

    Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. Using the same September 2014 stock movement information for the Sports Entertainment division's Blue Ray 3D TV (closing stock of 351 units at R3 845,00 on 31 August; purchases of 450 units for R1 755 000 on 3 September with import freight of R390,00 per unit on 4 September; sales of 500 units at R9 000,00 each on 11 September; purchases of 300 units for R1 185 000 on 18 September with import freight of R350,00 per unit on 19 September; and sales of 100 units at R8 750,00 each on 23 September with delivery freight of R420,00 per unit), calculate the value of the closing stock on 30 September 2014 using the weighted average cost basis of accounting.Show the full question

  7. Question 1.7 · Accounting for material, labour and overheads; inventory valuation · 2.5 marks

    Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. Assume, for the Sports Entertainment division's Blue Ray 3D TV, that all stock on hand was completely sold out on 11 September 2014, leaving no stock available on 12 September 2014. Given that further purchases and sales then occurred as previously described (300 units purchased on 18 September 2014 for a total of R1 185 000, with import freight of R350,00 per unit on 19 September 2014, followed by a sale of 100 units at R8 750,00 each on 23 September 2014, with delivery freight of R420,00 per unit on that sale), calculate the gross profit percentage earned on the units sold on 23 September 2014.Show the full question

  8. Question 1.8 · Budgeting · 2.5 marks

    Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. The High Volt Division manufactures large, heavy-duty transformers mainly supplied to local councils. Based on past experience, the division's capacity has never exceeded 10 units per month, and September 2014 was the first month in which a performance bonus scheme was introduced. The original budget for September 2014 for the High Volt Division was as follows: sales of 10 units at a price of R485 000 per unit, giving total sales of R4 850 000; cost of production comprising material of 10 units at R125 000 per unit (total R1 250 000), labour of 700 units at R950 per unit (total R665 000), and variable overheads of 10 units at R110 140 per unit (total R1 101 400); giving a gross profit of R1 833 600; less expenses being fixed costs (including management and administration) of R650 800, sales commission of 10% of sales amounting to R485 000, and fixed head office charges of R200 000; resulting in a budgeted net profit of R497 800. In flexing this budget, the following must be taken into account: (1) 11 units were actually manufactured and sold, with the selling price unchanged from the original budget; (2) although 70 units of labour were used per transformer produced, management had introduced an incentive policy under which a production bonus is earned for every unit manufactured in excess of 10 transformers, the bonus being equal to 10% of the labour cost for 70 units; (3) the fixed cost remained unchanged; and (4) head office charges remained the same. Flex the budget and determine what the new budgeted net profit is.Show the full question

  9. Question 2(a) · Accounting for material, labour and overheads; inventory valuation · 15 marks

    Beta Limited kept records of its purchases and issues of material Alpha during July 2014, as follows: on 1 July there was an opening inventory of 200 units at R5 each; on 4 July the company purchased 1 500 units at a 10% discount off the opening inventory price; on 8 July it purchased a further 1 000 units at R5,50 each, with freight costs of R500 paid on this purchase; on 9 July, 2 000 units were issued to production; on 12 July, 500 of the units bought on 8 July were returned to the supplier; and on 15 July, 300 of the units issued to production on 9 July were returned to the store. Beta Limited applies the first-in-first-out (FIFO) method of inventory valuation. Using the first-in-first-out (FIFO) method of inventory valuation, calculate the closing inventory of material Alpha for Beta Limited as at 31 July 2014, taking into account the opening inventory of 200 units at R5 each, the purchase of 1 500 units on 4 July at a 10% discount on the R5 price, the purchase of 1 000 units on 8 July at R5,50 each plus R500 freight costs, the issue of 2 000 units to production on 9 July, the return of 500 units (from the 8 July purchase) to the supplier on 12 July, and the return of 300 units (from the 9 July issue) to the store on 15 July.Show the full question

  10. Question 2(b) · Accounting for material, labour and overheads; inventory valuation · 3 marks

    Beta Limited kept records of its purchases and issues of material Alpha during July 2014, as follows: on 1 July there was an opening inventory of 200 units at R5 each; on 4 July the company purchased 1 500 units at a 10% discount off the opening inventory price; on 8 July it purchased a further 1 000 units at R5,50 each, with freight costs of R500 paid on this purchase; on 9 July, 2 000 units were issued to production; on 12 July, 500 of the units bought on 8 July were returned to the supplier; and on 15 July, 300 of the units issued to production on 9 July were returned to the store. Beta Limited applies the first-in-first-out (FIFO) method of inventory valuation. Prepare the journal entry to record the transaction that took place on 12 July 2014, being the return to the supplier of 500 units of material Alpha that had been purchased on 8 July 2014.Show the full question

  11. Question 2(c) · Accounting for material, labour and overheads; inventory valuation · 2 marks

    Beta Limited kept records of its purchases and issues of material Alpha during July 2014, as follows: on 1 July there was an opening inventory of 200 units at R5 each; on 4 July the company purchased 1 500 units at a 10% discount off the opening inventory price; on 8 July it purchased a further 1 000 units at R5,50 each, with freight costs of R500 paid on this purchase; on 9 July, 2 000 units were issued to production; on 12 July, 500 of the units bought on 8 July were returned to the supplier; and on 15 July, 300 of the units issued to production on 9 July were returned to the store. Beta Limited applies the first-in-first-out (FIFO) method of inventory valuation. Prepare the journal entry to record the return on 15 July 2014 of 300 units of material Alpha, which had originally been issued to production on 9 July 2014, back to the store.Show the full question

  12. Question 3(a) · Job costing · 15 marks

    XYZ Limited manufactures a variety of products for its clients according to each client's specifications. The following details were obtained for the month of July. Opening inventory of raw materials stood at R45 000 at the start of the month, and further material purchases during the month amounted to R165 000. There was no opening work-in-process (WIP) at the beginning of July. Materials requisitioned to jobs were: Job 1 R55 000, Job 2 R83 000 and Job 3 R41 500, giving a total of R179 500. Wages paid for the month were: Job 1 (500 hours) R60 000, Job 2 (800 hours) R95 000, Job 3 (350 hours) R55 000, and indirect labour R35 000, totalling R245 000. Other manufacturing overheads incurred during July consisted of factory rental R12 000, electricity and water R18 000, and depreciation R25 000, amounting to R55 000 in total. Overheads are absorbed into jobs on the basis of direct labour hours; the annual budgeted manufacturing overheads amount to R100 000 and the estimated average normal capacity is 2 000 direct labour hours per year. During July, Jobs 1 and 2 were finished and billed to the clients for R150 000 and R250 000 respectively. For XYZ Limited, work out the profit or loss made in July on each individual job (Job 1, Job 2 and Job 3) as well as the overall profit or loss for the company for the month, using the information given about materials requisitioned, wages paid, overheads incurred and absorbed, and the invoiced amounts for the completed jobs (Job 1 billed at R150 000 and Job 2 billed at R250 000).Show the full question

  13. Question 3(b) · Job costing · 2 marks

    XYZ Limited manufactures a variety of products for its clients according to each client's specifications. The following details were obtained for the month of July. Opening inventory of raw materials stood at R45 000 at the start of the month, and further material purchases during the month amounted to R165 000. There was no opening work-in-process (WIP) at the beginning of July. Materials requisitioned to jobs were: Job 1 R55 000, Job 2 R83 000 and Job 3 R41 500, giving a total of R179 500. Wages paid for the month were: Job 1 (500 hours) R60 000, Job 2 (800 hours) R95 000, Job 3 (350 hours) R55 000, and indirect labour R35 000, totalling R245 000. Other manufacturing overheads incurred during July consisted of factory rental R12 000, electricity and water R18 000, and depreciation R25 000, amounting to R55 000 in total. Overheads are absorbed into jobs on the basis of direct labour hours; the annual budgeted manufacturing overheads amount to R100 000 and the estimated average normal capacity is 2 000 direct labour hours per year. During July, Jobs 1 and 2 were finished and billed to the clients for R150 000 and R250 000 respectively. State the Rand value of XYZ Limited's closing inventory of raw materials and the closing work-in-process (WIP) balance as at the end of July, based on the transactions described.Show the full question

  14. Question 3(c) · Job costing · 3 marks

    XYZ Limited manufactures a variety of products for its clients according to each client's specifications. The following details were obtained for the month of July. Opening inventory of raw materials stood at R45 000 at the start of the month, and further material purchases during the month amounted to R165 000. There was no opening work-in-process (WIP) at the beginning of July. Materials requisitioned to jobs were: Job 1 R55 000, Job 2 R83 000 and Job 3 R41 500, giving a total of R179 500. Wages paid for the month were: Job 1 (500 hours) R60 000, Job 2 (800 hours) R95 000, Job 3 (350 hours) R55 000, and indirect labour R35 000, totalling R245 000. Other manufacturing overheads incurred during July consisted of factory rental R12 000, electricity and water R18 000, and depreciation R25 000, amounting to R55 000 in total. Overheads are absorbed into jobs on the basis of direct labour hours; the annual budgeted manufacturing overheads amount to R100 000 and the estimated average normal capacity is 2 000 direct labour hours per year. During July, Jobs 1 and 2 were finished and billed to the clients for R150 000 and R250 000 respectively. Determine whether XYZ Limited over-recovered or under-recovered its production overheads for July, and calculate the amount of this over- or under-recovery, using the actual overheads incurred of R55 000 plus indirect labour of R35 000, the overhead absorption rate based on budgeted annual overheads of R100 000 and normal capacity of 2 000 direct labour hours per annum, and the actual direct labour hours worked on Jobs 1, 2 and 3 (500, 800 and 350 hours respectively).Show the full question

  15. Question 4(a) · Process and joint product costing · 6 marks

    Mathembu Daniels (Pty) Ltd produces whisky using a process costing system. Raw materials are introduced at the start of the process, while conversion costs are incurred evenly throughout the process. For May 2014, the opening work-in-progress (WIP) stood at 70 000 units, 20% complete, with associated costs of R325 000 for material and R128 000 for conversion costs (CC). During the month, 150 000 units were put into production, incurring further costs of R560 000 for material and R1 800 000 for conversion costs. By month-end, 190 000 units had been completed and transferred out, while 25 000 units remained in closing WIP, which was 90% complete. Normal wastage is set at 4% of the units that reach the wastage point, and this wastage occurs at the end of the process. The company applies the FIFO method for inventory valuation. Using the May 2014 information for Mathembu Daniels (Pty) Ltd's whisky process (opening WIP of 70 000 units at 20% completion, 150 000 units put into production, 190 000 units completed and transferred, and 25 000 units in closing WIP at 90% completion, with normal wastage of 4% of units reaching the wastage point at the end of the process, valued under FIFO), prepare the quantity statement for the scenario.Show the full question

  16. Question 4(b) · Process and joint product costing · 2 marks

    Mathembu Daniels (Pty) Ltd produces whisky using a process costing system. Raw materials are introduced at the start of the process, while conversion costs are incurred evenly throughout the process. For May 2014, the opening work-in-progress (WIP) stood at 70 000 units, 20% complete, with associated costs of R325 000 for material and R128 000 for conversion costs (CC). During the month, 150 000 units were put into production, incurring further costs of R560 000 for material and R1 800 000 for conversion costs. By month-end, 190 000 units had been completed and transferred out, while 25 000 units remained in closing WIP, which was 90% complete. Normal wastage is set at 4% of the units that reach the wastage point, and this wastage occurs at the end of the process. The company applies the FIFO method for inventory valuation. Based on the same May 2014 data for Mathembu Daniels (Pty) Ltd (material costs of R325 000 for opening WIP and R560 000 added during production; conversion costs of R128 000 for opening WIP and R1 800 000 added during production), prepare the production cost statement for the scenario.Show the full question

  17. Question 4(c) · Process and joint product costing · 6 marks

    Mathembu Daniels (Pty) Ltd produces whisky using a process costing system. Raw materials are introduced at the start of the process, while conversion costs are incurred evenly throughout the process. For May 2014, the opening work-in-progress (WIP) stood at 70 000 units, 20% complete, with associated costs of R325 000 for material and R128 000 for conversion costs (CC). During the month, 150 000 units were put into production, incurring further costs of R560 000 for material and R1 800 000 for conversion costs. By month-end, 190 000 units had been completed and transferred out, while 25 000 units remained in closing WIP, which was 90% complete. Normal wastage is set at 4% of the units that reach the wastage point, and this wastage occurs at the end of the process. The company applies the FIFO method for inventory valuation. For Mathembu Daniels (Pty) Ltd's May 2014 whisky process, where normal wastage amounts to 4% of the inputs reaching the wastage point (which occurs at the end of the process), calculate the Rand value of the normal loss and allocate it appropriately for purposes of the cost allocation statement of the scenario.Show the full question

  18. Question 4(d) · Process and joint product costing · 6 marks

    Mathembu Daniels (Pty) Ltd produces whisky using a process costing system. Raw materials are introduced at the start of the process, while conversion costs are incurred evenly throughout the process. For May 2014, the opening work-in-progress (WIP) stood at 70 000 units, 20% complete, with associated costs of R325 000 for material and R128 000 for conversion costs (CC). During the month, 150 000 units were put into production, incurring further costs of R560 000 for material and R1 800 000 for conversion costs. By month-end, 190 000 units had been completed and transferred out, while 25 000 units remained in closing WIP, which was 90% complete. Normal wastage is set at 4% of the units that reach the wastage point, and this wastage occurs at the end of the process. The company applies the FIFO method for inventory valuation. Using all the information provided for Mathembu Daniels (Pty) Ltd's May 2014 whisky production process (including the quantity statement, production cost statement and the allocated normal loss value), prepare the cost allocation statement for the scenario.Show the full question

  19. Question 5A(a)(i) · Standard costing and variance analysis · 4 marks

    Question 5 is split into two independent parts, both of which had to be answered. Part A concerns Poli Limited, which budgeted a material cost of R160 000 for producing 20 000 units per month, with each unit designed to use 4 kg of material at a standard cost of R2 per kg. During the month, the actual material cost was R200 000 for 24 000 units produced, using 90 000 kg of material in total. Part B concerns ABC Limited's results for February 2014. Budgeted figures were: selling price per unit R500; variable manufacturing overheads that vary with labour hours worked R75 000; labour hours 1 500; and units produced 2 000. The actual results for February were: sales of 2 300 units for R1 104 000; variable manufacturing overheads that vary with hours worked of R73 000; and 1 520 labour hours worked. All units produced during the month were sold, and there was no opening or closing inventory. For Poli Limited, using the budgeted material cost of R160 000 for 20 000 units per month (4 kg per unit at a standard cost of R2 per kg) and the actual results of R200 000 spent on 90 000 kg of material used to produce 24 000 units, calculate the material purchase price variance.Show the full question

  20. Question 5A(a)(ii) · Standard costing and variance analysis · 4 marks

    Question 5 is split into two independent parts, both of which had to be answered. Part A concerns Poli Limited, which budgeted a material cost of R160 000 for producing 20 000 units per month, with each unit designed to use 4 kg of material at a standard cost of R2 per kg. During the month, the actual material cost was R200 000 for 24 000 units produced, using 90 000 kg of material in total. Part B concerns ABC Limited's results for February 2014. Budgeted figures were: selling price per unit R500; variable manufacturing overheads that vary with labour hours worked R75 000; labour hours 1 500; and units produced 2 000. The actual results for February were: sales of 2 300 units for R1 104 000; variable manufacturing overheads that vary with hours worked of R73 000; and 1 520 labour hours worked. All units produced during the month were sold, and there was no opening or closing inventory. Still using Poli Limited's budgeted figures (20 000 units per month, 4 kg per unit, standard cost R2 per kg) and actual figures (24 000 units produced, 90 000 kg of material used, actual material cost R200 000), calculate the material quantity variance.Show the full question

  21. Question 5A(a)(iii) · Standard costing and variance analysis · 2 marks

    Question 5 is split into two independent parts, both of which had to be answered. Part A concerns Poli Limited, which budgeted a material cost of R160 000 for producing 20 000 units per month, with each unit designed to use 4 kg of material at a standard cost of R2 per kg. During the month, the actual material cost was R200 000 for 24 000 units produced, using 90 000 kg of material in total. Part B concerns ABC Limited's results for February 2014. Budgeted figures were: selling price per unit R500; variable manufacturing overheads that vary with labour hours worked R75 000; labour hours 1 500; and units produced 2 000. The actual results for February were: sales of 2 300 units for R1 104 000; variable manufacturing overheads that vary with hours worked of R73 000; and 1 520 labour hours worked. All units produced during the month were sold, and there was no opening or closing inventory. Based on the material purchase price variance and material quantity variance already calculated for Poli Limited, determine the total material variance for the month.Show the full question

  22. Question 5A(b) · Standard costing and variance analysis · 2 marks

    Question 5 is split into two independent parts, both of which had to be answered. Part A concerns Poli Limited, which budgeted a material cost of R160 000 for producing 20 000 units per month, with each unit designed to use 4 kg of material at a standard cost of R2 per kg. During the month, the actual material cost was R200 000 for 24 000 units produced, using 90 000 kg of material in total. Part B concerns ABC Limited's results for February 2014. Budgeted figures were: selling price per unit R500; variable manufacturing overheads that vary with labour hours worked R75 000; labour hours 1 500; and units produced 2 000. The actual results for February were: sales of 2 300 units for R1 104 000; variable manufacturing overheads that vary with hours worked of R73 000; and 1 520 labour hours worked. All units produced during the month were sold, and there was no opening or closing inventory. With reference to Poli Limited's use of a standard costing system, state two ways in which a standard costing system can improve cost control.Show the full question

  23. Question 5A(c) · Standard costing and variance analysis · 2 marks

    Question 5 is split into two independent parts, both of which had to be answered. Part A concerns Poli Limited, which budgeted a material cost of R160 000 for producing 20 000 units per month, with each unit designed to use 4 kg of material at a standard cost of R2 per kg. During the month, the actual material cost was R200 000 for 24 000 units produced, using 90 000 kg of material in total. Part B concerns ABC Limited's results for February 2014. Budgeted figures were: selling price per unit R500; variable manufacturing overheads that vary with labour hours worked R75 000; labour hours 1 500; and units produced 2 000. The actual results for February were: sales of 2 300 units for R1 104 000; variable manufacturing overheads that vary with hours worked of R73 000; and 1 520 labour hours worked. All units produced during the month were sold, and there was no opening or closing inventory. Give two reasons why organisations, such as Poli Limited, choose to use a standard costing system.Show the full question

  24. Question 5B(d)(i) · Standard costing and variance analysis · 3 marks

    Question 5 is split into two independent parts, both of which had to be answered. Part A concerns Poli Limited, which budgeted a material cost of R160 000 for producing 20 000 units per month, with each unit designed to use 4 kg of material at a standard cost of R2 per kg. During the month, the actual material cost was R200 000 for 24 000 units produced, using 90 000 kg of material in total. Part B concerns ABC Limited's results for February 2014. Budgeted figures were: selling price per unit R500; variable manufacturing overheads that vary with labour hours worked R75 000; labour hours 1 500; and units produced 2 000. The actual results for February were: sales of 2 300 units for R1 104 000; variable manufacturing overheads that vary with hours worked of R73 000; and 1 520 labour hours worked. All units produced during the month were sold, and there was no opening or closing inventory. For ABC Limited, using the budgeted selling price of R500 per unit and the actual sales of 2 300 units generating R1 104 000 in revenue for February 2014, calculate the selling price variance.Show the full question

  25. Question 5B(d)(ii) · Standard costing and variance analysis · 3 marks

    Question 5 is split into two independent parts, both of which had to be answered. Part A concerns Poli Limited, which budgeted a material cost of R160 000 for producing 20 000 units per month, with each unit designed to use 4 kg of material at a standard cost of R2 per kg. During the month, the actual material cost was R200 000 for 24 000 units produced, using 90 000 kg of material in total. Part B concerns ABC Limited's results for February 2014. Budgeted figures were: selling price per unit R500; variable manufacturing overheads that vary with labour hours worked R75 000; labour hours 1 500; and units produced 2 000. The actual results for February were: sales of 2 300 units for R1 104 000; variable manufacturing overheads that vary with hours worked of R73 000; and 1 520 labour hours worked. All units produced during the month were sold, and there was no opening or closing inventory. For ABC Limited, using the budgeted variable manufacturing overheads of R75 000 that vary with 1 500 budgeted labour hours, and the actual variable manufacturing overheads of R73 000 incurred over 1 520 actual labour hours worked in February 2014, calculate the variable manufacturing overhead rate variance.Show the full question

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