Question 1

Modise manufactures plastic toys. In determining the cost of making a toy, classify the
following costs as direct or indirect costs.
200 kilograms of plastic to be melted and poured into various moulds………….
New mops for the cleaners to clean the factory floor each afternoon…………….

Feedback
The correct answer is:
200 kilograms of plastic to be melted and poured into various moulds. → Direct cost,
New mops for the cleaners to clean the factory floor each afternoon. → Indirect cost

Question 2

If a company increases its activity within the relevant range, indicate the effect on the
following costs:
Total variable costs will………..
Total variable cost per unit will………….
Feedback
The correct answer is:
Total variable costs will → increase,
Total variable cost per unit will → remain the same

Question 3

Complete the following statements by choosing the correct answer:

Direct labour and direct material used in the factory are equal to total……………...

The salary of the factory cleaner is …………………………..

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer:

Direct labour and direct material used in the factory are equal to total [prime] costs.

The salary of the factory cleaner is a/an [indirect] labour cost.

Question 4

Consider the following statements and state whether they are true or false:
In order to ensure compliance with IFRS, marketing and distribution costs should not be
apportioned to the cost of goods manufactured…………..
The higher the ordering cost of a company, the higher its holding cost will be……….
Feedback
There is an inverse relationship between ordering cost and holding cost. Thus the higher
the ordering cost of a company, the lower the holding cost will be, and the higher the
holding cost, the lower the ordering cost will be.
The correct answer is:
In order to ensure compliance with IFRS, marketing and distribution costs should not be
apportioned to the cost of goods manufactured. → True,
The higher the ordering cost of a company, the higher its holding cost will be. → False

Question 5

Several costs incurred by Umshiza Golf Equipment (Pty) Ltd are listed below. For each of
the costs listed below, indicate whether it is a product or period cost:
Depreciation on the laptop used by the managing director's secretary………
Salary of plant manager……….
Feedback
The correct answer is:
Depreciation on the laptop used by the managing director's secretary → Period cost,
Salary of plant manager. → Product cost

Question 6

Complete the following statements by choosing the correct answer:

…………………. remain unchanged regardless of the number of units produced

………………….is an inventory that was purchased with the intention to sell it again in

unaltered form.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer:

[Fixed costs] remain unchanged regardless of the number of units produced.

[Merchandise] is an inventory that was purchased with the intention to sell it again in
unaltered form.

Question 7

Spotless (Pty) Ltd provides cleaning services. In determining the cost of providing a
cleaning service to a particular client. Classify the following costs as direct or indirect:
Rent of the premises where Spotless (Pty)Ltd stores its cleaning materials and equipment.
The salary paid to the cleaner who is sent to the clients’ premises.
Feedback
The correct answer is:
Rent of the premises where Spotless (Pty)Ltd stores its cleaning materials and
equipment. → indirect,
The salary paid to the cleaner who is sent to the clients’ premises. → direct

Question 8

Tolitjie manufacturing company makes and sells bookshelves. The director of the

company has provided you with following annual cost information:

R
Direct materials used (wood and glass) 430 000
Sales commission 60 000
Depreciation on factory building 105 000
Depreciation on office equipment 2 000
General office salaries 70 000
Indirect materials, factory 18 000
Factory labour (cutting and assembly) 90 000
Advertising 100 000
Insurance, factory 6 000
Property taxes, factory 20 000
Utilities, factory 45 000

Required:

Calculate the following and select the correct answer from the options provided:
Fixed selling and administrative costs…………

Variable selling and administrative costs …………….

Feedback
Fixed selling and administrative costs
R
General office salaries 70 000
Depreciation on office equipment 2 000
Total 72 000

Variable selling and administrative costs

R
Sales commission 60 000
Advertising 100 000
Total R160 000

The correct answer is:

Tolitjie manufacturing company makes and sells bookshelves. The director of the
company has provided you with following annual cost information:
R
Direct materials used (wood and glass) 430 000
Sales commission 60 000
Depreciation on factory building 105 000
Depreciation on office equipment 2 000
General office salaries 70 000
Indirect materials, factory 18 000
Factory labour (cutting and assembly) 90 000
Advertising 100 000
Insurance, factory 6 000
Property taxes, factory 20 000
Utilities, factory 45 000
Question 9

Tshisaulu (Pty) Limited incurred the following costs in January 2023:

Direct materials............................................... R29 000

Direct labour.................................................... R24 000

Manufacturing overhead...............................R14 000

Selling and administrative expenses..........R36 000

Distribution costs...............................................R24 000

Required:

Calculate the following and select the correct answer from the options provided:

• Period costs ………….

• Total manufacturing costs …………….

Feedback
Period costs
Selling and administrative expenses R36 000
Distribution costs R24 000
Total R60 000
Total manufacturing costs
Direct materials R29 000
Direct labour R24 000
Manufacturing overhead R14 000
Total manufacturing costs R67 000

The correct answer is:

Tshisaulu (Pty) Limited incurred the following costs in January 2023:
Direct materials............................................... R29 000
Direct labour.................................................... R24 000
Manufacturing overhead...............................R14 000
Selling and administrative expenses..........R36 000
Distribution costs...............................................R24 000
Required:
Calculate the following and select the correct answer from the options provided:
• Period costs [R60 000]
• Total manufacturing costs [R67 000]

Question 10

Hluhluwe (Pty) Ltd uses the perpetual inventory system. The company applies a mark-up

of 15% of cost on all goods sold.

On 10 February 2023, a credit customer returned goods for a refund of R2 185.

Required:
Complete the journal entry for the above-mentioned transaction by selecting the
appropriate accounts and related amounts.
Debit Credit
Blank 1 Blank 2
Bank 3 Blank 4
Recording the goods returned by a credit customer

Feedback
Debit Credit
Sales returns R2 185
Trade debtors R2 185
Recording the goods returned by a credit customer

The correct answer is:

Hluhluwe (Pty) Ltd uses the perpetual inventory system. The company applies a mark-up
of 15% of cost on all goods sold.
On 10 February 2023, a credit customer returned goods for a refund of R2 185.
Required:
Complete the journal entry for the above-mentioned transaction by selecting the
appropriate accounts and related amounts.
Debit Credit
[Sales returns] [R2 185]
[Trade debtors] [R2 185]
Recording the goods returned by a credit customer

Question 11

Hluhluwe (Pty) Ltd uses the perpetual inventory system. The company applies a mark-up

of 15% of cost on all goods sold.

On 08 February 2023, merchandise was sold to the customer for R9 775 on credit.

Required:

Complete the journal entry for the above-mentioned transaction by selecting the

appropriate accounts and related amounts.

Debit Credit
Blank 1 Blank 2
Blank 3 Blank 4
Recording the cost of goods sold

Feedback
Feedback
Debit Credit
Cost of sales R8 500
Inventory of merchandise control account R8 500
Recording the cost of goods sold (R9 775 x 100/115)

The correct answer is:

Hluhluwe (Pty) Ltd uses the perpetual inventory system. The company applies a mark-up
of 15% of cost on all goods sold.
On 08 February 2023, merchandise was sold to the customer for R9 775 on credit.
Required:
Complete the journal entry for the above-mentioned transaction by selecting the
appropriate accounts and related amounts.
Debit Credit
[Cost of sales] [R8 500]
[Inventory of merchandise control account] [R8 500]
Recording the cost of goods sold

Question 1

Modise manufactures plastic toys. In determining the cost of making a toy, classify the
following costs as manufacturing overheads or non-manufacturing overheads.

Factory water and electricity bills. Answer 1Choose...Non-manufacturing

overheadManufacturing overhead
Ink for the printer that used to print Answer 2Choose...Non-manufacturing
monthly salary slips. overheadManufacturing overhead
Feedback
The correct answer is:
Factory water and electricity bills. → Manufacturing overhead,
Ink for the printer that used to print monthly salary slips. → Non-manufacturing overhead

Question 2
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Question text
Consider the following statements and state whether they are true or false.
According to the perpetual inventory system, freight charges on
merchandise purchased are considered a cost of purchase and are Answer
debited to the inventory of merchandise control account. 1Choose...FalseTrue

Consumables are those supplies that form an integral part of finished Answer
goods. 2Choose...FalseTrue
Feedback
The correct answer is:
According to the perpetual inventory system, freight charges on merchandise purchased are
considered a cost of purchase and are debited to the inventory of merchandise control
account. → True, Consumables are those supplies that form an integral part of finished
goods. → False

Question 3
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Question text

Complete the following statement by choosing the correct answer:

• Prime costs and conversion costs both share Blank 1 direct

labourdirect materialsvariable overheadfixed overhead as a

common element of the total manufacturing costs.

• Blank 2 The cost of bringing the materials to the premises of the

companyVAT charged on the purchase of materialsImport duties

paid on purchasing the materialsThe cost of conversion of direct

materials is not considered as part of the total cost of inventory

of a VAT-registered manufacturing company.

Feedback
The correct answer is:
Complete the following statement by choosing the correct answer:

• Prime costs and conversion costs both share [direct labour] as a

common element of the total manufacturing costs.
• [VAT charged on the purchase of materials] is not considered as
part of the total cost of inventory of a VAT-registered
manufacturing company.

Question 4
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Complete the following statements by choosing the correct answer from the options provided:

[[1]] is used for planning, control and Answer 1Choose...Management

decision-making purposes. accountingFinancial accounting
Answer 2Choose...Management
[[5]] reports to shareholders and other
accountingFinancial accounting
interested parties.
Feedback
The correct answer is:
[[1]] is used for planning, control and decision-making purposes. → Management accounting,

[[5]] reports to shareholders and other interested parties. → Financial accounting

Question 5
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Consider the following statements and state whether they are true or false.
Job costing system is most appropriate where identical goods are Answer
mass produced on a continuous basis for a long time. 1Choose...TrueFalse
Management accounting does not concern itself with monitoring and Answer
control in the organisation. 2Choose...TrueFalse
Feedback
A job costing system is most appropriate where different goods are manufactured according to
the customer’s specifications.
The correct answer is:
Job costing system is most appropriate where identical goods are mass produced on a continuous
basis for a long time. → False,
Management accounting does not concern itself with monitoring and control in the
organisation. → False

Question 6
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Question text
Pretty Company manufactures laptop computers. Classify the following costs as period costs
or manufacturing overhead:
Sales commission paid to workers who sell Answer 1Choose...Period
laptop computers. costsManufacturing overhead
Property taxes on the factory building. Answer 2Choose...Period
costsManufacturing overhead
Feedback
The correct answer is:
Sales commission paid to workers who sell laptop computers. → Period costs,
Property taxes on the factory building. → Manufacturing overhead

Question 7
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Consider the following statements and state whether they are true or false:
Under normal costing, the total amount charged for factory
overheads is determined by multiplying the predetermined rate by a Answer
budgeted activity level. 1Choose...TrueFalse

The glazing used in the manufacture of pottery would be considered Answer

a direct material. 2Choose...TrueFalse
Feedback

• It would be impractical, if not impossible, to trace the cost of the

glazing to the completed products. Therefore, glazing is
classified as indirect material.
• Under normal costing, the total amount charged for factory
overheads is determined by multiplying the predetermined rate
by the actual activity level.

The correct answer is:

Under normal costing, the total amount charged for factory overheads is determined by
multiplying the predetermined rate by a budgeted activity level. → False,
The glazing used in the manufacture of pottery would be considered a direct material. →
False

Question 8
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Question text

During the financial year ended 30 June 2022, Naledi Limited had sales to the value of

R1 598 500, inclusive of VAT at 15%. The company applies a mark-up of 25% on the cost of

inventory to establish the selling price. The accountant is concerned that the sales for the year

ended 30 June 2023 dropped by 40%.

Required:

Calculate the following items and choose the correct answer from the list of options provided:
• Selling price before VAT for the financial year ended 30 June

2023Blank 1 R834 000R815 235R1 358 725R1 278 800

• Cost of sales for the financial year ended 30 June 2023 Blank

2 R652 188R1 278 800R667 200R1 086 980

Feedback

• The selling price before VAT (2022): R1 598 500 x 100/115

= R1 390 000

The selling price before VAT (2023): R1 390 000 x 60% = R834 000

• The cost of sales: R834 000 x 100/125

= R667 200

The correct answer is:

During the financial year ended 30 June 2022, Naledi Limited had sales to the value of
R1 598 500, inclusive of VAT at 15%. The company applies a mark-up of 25% on the cost of
inventory to establish the selling price. The accountant is concerned that the sales for the year
ended 30 June 2023 dropped by 40%.
Required:
Calculate the following items and choose the correct answer from the list of options provided:

• Selling price before VAT for the financial year ended 30 June
2023[R834 000]
• Cost of sales for the financial year ended 30 June 2023 [R667
200]

Question 9
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Question text
Didimalang (Pty) Limited uses a periodic inventory system. At the beginning of the year the

company had inventory of merchandise on hand to the value of R50 000. During the year, the

company purchased inventory for the value of R300 000. The cost of goods sold amounted to

R290 000.

Required:

Calculate the following and choose the correct answer from the options provided:

• the value of inventory available for sale Blank 1 R50 000R290

000R350 000R340 000

• the value of inventory on hand at the end of the year Blank

2 R50 000R40 000R10 000R60 000 .

Feedback
Inventory on hand at the beginning of the year........ R50 000
Plus: inventory purchased during the year................. R300 000
Inventory available for sale................................................. R350 000
Less: cost of goods sold .................................................... R290 000
Equals: inventory on hand at the end of the year.............R60 000

The correct answer is:

Didimalang (Pty) Limited uses a periodic inventory system. At the beginning of the year the
company had inventory of merchandise on hand to the value of R50 000. During the year, the
company purchased inventory for the value of R300 000. The cost of goods sold amounted to
R290 000.
Required:
Calculate the following and choose the correct answer from the options provided:

• the value of inventory available for sale [R350 000]

• the value of inventory on hand at the end of the year [R60 000].

Question 10
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Question text

Ithendele (Pty) Ltd uses periodic inventory system. The following information relates to the

year ended 28 February 2023:

R
Sales 1 747 200
Opening inventory of merchandise 200 000
Closing inventory of merchandise 280 000

A mark-up of 12% on cost is applied consistently to establish the selling price.

Required

Calculate the following items and choose the correct answer from the list of options provided:

• Cost of sales for the year ended 28 February 2023 Blank 1 R1

560 000R1 537 536R1 267 200R1 667 200

• Purchases for the year ended 28 February 2023 Blank 2 R1 467

480R1 640 000R1 347 200R2 120 000

Feedback
Feedback:
R Workings
Opening inventory (given) 200 000
Plus: Purchases 1 640 000 = 1 840 000 – 200 000
Equals: Available for sale 1 840 000 = 1 560 000 + 280 000
Minus:– Closing inventory (given) 280 000
Equals: Cost of sales 1 560 000 = 1 747 200 / 112 x 100

The correct answer is:

Ithendele (Pty) Ltd uses periodic inventory system. The following information relates to the
year ended 28 February 2023:
R
Sales 1 747 200
Opening inventory of merchandise 200 000
Closing inventory of merchandise 280 000
A mark-up of 12% on cost is applied consistently to establish the selling price.
Required
Calculate the following items and choose the correct answer from the list of options provided:

• Cost of sales for the year ended 28 February 2023 [R1 560 000]
• Purchases for the year ended 28 February 2023 [R1 640 000]

Question 11
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Question text

Mmalekunutu (Pty) Limited incurred the following costs in January 2023:

Direct materials................................ R29 000

Direct labour ................................... R24 000

Manufacturing overhead.................... R14 000

Selling and administrative expenses .......R36 000

Distribution costs.......................................... R11 000

REQUIRED:

Calculate the following and choose the correct answer from the options provided:

• Prime costs Blank 1 R53 000R103 000R57 000R43 000

• Conversion costs Blank 2 R38 000R84 000R74 000R60 000

Feedback
Feedback
Prime costs
R
Direct materials 29 000
Direct labour 24 000
Total 53 000

Conversion costs
R
Direct labour 24 000
Manufacturing overhead 14 000
Total 38 000

The correct answer is:

Mmalekunutu (Pty) Limited incurred the following costs in January 2023:
Direct materials................................ R29 000
Direct labour ................................... R24 000
Manufacturing overhead.................... R14 000
Selling and administrative expenses .......R36 000
Distribution costs.......................................... R11 000
REQUIRED:
Calculate the following and choose the correct answer from the options provided:

• Prime costs [R53 000]

• Conversion costs [R38 000]

Productive time refers to the time an employee spends at work.

True
False
Feedback
Productive time refers only to the time spent directly on the production of units of
output. It excludes time that employees spend on tea breaks, at work, for example.
The correct answer is 'False'.
Question 2
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Direct method apportions the costs of service departments on a one-by-one basis to
production and other service departments.
True
False
Feedback
Direct method apportions the costs of service departments directly to production
departments; however, it ignores the fact the service departments also render services
to other service departments.
The correct answer is 'False'.

Question 3
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In time wage systems, the remuneration paid to an employee is based on the number of
hours the employee worked.
True
False
Feedback
The gross wages (i.e. wages before any deductions) paid to the employee will be the
number of hours worked for the period (e.g. week) multiplied by an hourly rate.
The correct answer is 'True'.

Question 4
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Glue, staples, and varnish would be considered as direct material cost in a furniture
manufacturing company.
True
False
Feedback
Glue, staples, and varnish form an integral part of the materials’ costs in a furniture
manufacturing company, as we can see them in the finished products. However, their
cost would be considered as indirect material cost because it would be impractical to
trace their cost to the manufactured product.
The correct answer is 'False'.

Question 5
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The current UIF contribution is 1% of the gross remuneration of the employee paid by the
employee, plus 1% of the gross remuneration of the employee paid by the employer.
True
False
Feedback
The correct answer is 'True'.

Question 6
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In terms of the Basic Conditions of Employment Act, all employees are entitled to 31
consecutive (calendar) days paid leave per year.
True
False
Feedback
In terms of the Basic Conditions of Employment Act, all employees are entitled to 21
consecutive (calendar) days paid leave per year.
The correct answer is 'False'.

Question 7
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Question text

Complete the following statements by choosing the correct answer from the options

provided.

• Blank 1 MerchandiseFinished goodsSuppliesWork-in-

process are assets manufactured and held for sale in the

ordinary course of business.

• A temporary account where costs are held until they can be

transferred to another account is known as Blank 2 creditors

control accountclearance accountwork-in-process

accountdebtors control account

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided.

• [Finished goods] are assets manufactured and held for sale

in the ordinary course of business.
• A temporary account where costs are held until they can be
transferred to another account is known as [clearance
account]

Question 8
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Complete the following statements by choosing the correct answer:

• Blank 1 Job costingPeriodic inventory systemAbsorption

costingPerpetual inventory system involves counting and

checking several inventory items on a regular basis so that

each item is checked at least once a year.

• Factory’s capacity where the anticipated use of available

capacity is based on the planned production levels in the

budget of the company is referred to as Blank 2 budgeted

capacitynormal capacitypractical capacity.theoretical

capacity .

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer:
• [Perpetual inventory system] involves counting and checking
several inventory items on a regular basis so that each item
is checked at least once a year.
• Factory’s capacity where the anticipated use of available
capacity is based on the planned production levels in the
budget of the company is referred to as [budgeted capacity].

Question 9
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Complete the following statement by choosing the correct answer from the options

provided:

The higher the number of orders placed, the Blank 1 higherlower the ordering cost, but

the Blank 2 higherlower the holding cost.

Feedback
The correct answer is:
Complete the following statement by choosing the correct answer from the options
provided:
The higher the number of orders placed, the [higher] the ordering cost, but the [lower] the
holding cost.

Question 10
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Choose the correct word(s) from the list to match the description.
The time it takes from placing the order until the Answer 1Choose...Production overheads
goods are delivered when ordering inventory from clearance accountLead timeWages
a supplier. clearance accountOvertime
The temporary account where actual costs
incurred for overheads are debited and held until Answer 2Choose...Production overheads
the overheads are assigned and transferred to the clearance accountLead timeWages
work-in-progress account. clearance accountOvertime

Feedback
The correct answer is:
The time it takes from placing the order until the goods are delivered when ordering
inventory from a supplier. → Lead time,
The temporary account where actual costs incurred for overheads are debited and held
until the overheads are assigned and transferred to the work-in-progress account. →
Production overheads clearance account

Question 11
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Complete the following statements by choosing the correct answer from the options

provided:

• The Blank 1 High-low methodLeast squares methodDirect

methodStep method uses the highest and lowest

observations in terms of activity levels (volumes) in the

relevant range, and the corresponding costs.

• Blank 2 Labour stabilityLabour instabilityIndirect

labourLabour turnover refers to the employees leaving the

company and having to be replaced.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• The [High-low method] uses the highest and lowest

observations in terms of activity levels (volumes) in the
relevant range, and the corresponding costs.
• [Labour turnover] refers to the employees leaving the
company and having to be replaced.

Question 12
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Question text
Motloung works as a machine operator and is paid R200 per hour. The normal working
hours per week is 40 hours. In week 2, Motloung worked 45 hours. Overtime is paid at
the basic rate plus 50%. His overtime premium during week 2 amounted to:
Select one:
A.
R 1 500
B.
R500
C.
R1 200
D.
R1 000
Feedback
Feedback
Hours worked 45
Less: normal hours worked 40
Difference 5
Rate: R200 x 50% R100
Overtime premium R500

The correct answer is:

R500

Question 13
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Mutungamiri (Pty) Ltd uses a periodic inventory system. The following information
relates to the year ended 31 August 2023:
R
Sales 1 507 200
Opening inventory of merchandise 250 000
Purchases 1 690 000
A mark-up of 20% on cost is applied consistently to establish the selling price.
The value of closing inventory for the year ended 31 August 2023 amounts to ______.

A.
R281 667
B.
R281 667
C.
R684 000
D.
R432 800
Feedback
R Workings
Opening inventory (given) 250 000
Plus: Purchases (given) 1 690 000
Equals: Available for sale 1 940 000
Less: Cost of sales 1 256 000 = 1 507 200 / 120 x 100
Closing inventory 684 000

The correct answer is:

R684 000

Question 14
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Incema (Pty) Ltd budgeted for production overheads of R1 540 000. The plant-wide
overhead recovery rate is R40 per machine hour. Production overheads of R60 is
apportioned to each unit manufactured.
What were the total budgeted machine hours?
A.
1 026 667 hours
B.
25 667 hours
C.
57 750 hours
D.
38 500 hours
Feedback
The budgeted machine hours were R1 540 000 / R40 = 38 500 hours
The correct answer is:
38 500 hours

Question 15
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Question text
A company incurs the following costs at various activity levels:
Total costs Activity level
R Units
625 000 15 000
780 000 17 500
1 000 000 20 000

Using the high-low method, what is the variable cost per unit?
A.
R62
B.
R75
C.
R88
D.
R55
Feedback
Variable cost per unit = (R1 000 000 – R625 000)/(20 000 units – 15 000 units)
= R75 per unit
The correct answer is:
R75

Question 16
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Question text

Mkhulu Company absorbs overhead on machine hours. Data for the last month are as

follows:
Budgeted machine hours 48 500
Actual hours 52 000
Budgeted overheads R970 000
Actual overheads R1 000 000

Required:

Calculate the following and choose the correct answer from the options provided:
• Predetermined overhead rate Blank

1 R20,00R25,00R19,23R18,65

• Over-or-under applied manufacturing overhead Blank 2 R30

000 over appliedR40 000 under appliedR40 000 over

appliedR32 000 under applied

Feedback
Predetermined overhead rate
Budgeted overheads/ budgeted machine hours
R970 000/ 48 500 hrs
R20
Over applied overhead
Applied overhead (52 000 x R20) = R1 040 000
Actual overhead = R1 000 000
Over-applied overhead R40 000

The correct answer is:

Mkhulu Company absorbs overhead on machine hours. Data for the last month are as
follows:
Budgeted machine hours 48 500
Actual hours 52 000
Budgeted overheads R970 000
Actual overheads R1 000 000
Required:
Calculate the following and choose the correct answer from the options provided:

• Predetermined overhead rate [R20,00]

• Over-or-under applied manufacturing overhead [R40 000 over
applied]

Question 17
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Question text

Khathu Company has two (2) production departments. The predetermined overhead rate

is based on labour cost in Department A and on machine hours in Department B. At the

beginning of the year, the company made the following estimates:

Department A Department B
Direct labour cost R65 000 R42 000
Manufacturing overheads R91 000 R48 000
Direct labour hours 8 000 10 000
Machine hours 3 000 12 000

Required:

Calculate the predetermined overhead rates for Departments A and B by choosing the

correct answer from the options provided:

• Department A Blank 1 140%R21.6771%350%

• Department B Blank 2 87.5%R4.8085%R4.00

Feedback
Feedback
Department A
Budgeted manufacturing overhead
Direct labour cost
R91 000
R65 000
140%

Department B
Budgeted manufacturing overhead
Machine hours
R48 000
12 000 hours
R4.00

The correct answer is:

Khathu Company has two (2) production departments. The predetermined overhead rate
is based on labour cost in Department A and on machine hours in Department B. At the
beginning of the year, the company made the following estimates:
Department A Department B
Direct labour cost R65 000 R42 000
Manufacturing overheads R91 000 R48 000
Direct labour hours 8 000 10 000
Machine hours 3 000 12 000
Required:
Calculate the predetermined overhead rates for Departments A and B by choosing the
correct answer from the options provided:

• Department A [140%]
• Department B [R4.00]

Question 18
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Manzini Wholesale had an opening inventory of 250 units of product Zet valued at R345

per unit at the beginning of July 2023. Manzini Wholesale uses a perpetual inventory

system. The following purchases and sales were recorded during July.
Date 2 July 13 July 23 July 30 July
Purchases/receipts (units) - 380 - -
Sales (units) 190 - 210 80

The purchase cost of all receipts for the month of July was R359,50 per unit. A mark-up

of 40% on cost is applied consistently to establish the selling price.

Required

Using a FIFO method of valuation, calculate the following items and choose the correct

answer from the list of options provided:

• Cost of sales for the month of July 2023 Blank 1 R168

935R169 805R165 600R172 560

• Gross profit for the month of July 2023 Blank 2 R69 024R67

574R66 240R67 922

Feedback
Feedback:
Units Unit cost Total cost
(R) (R)
Balance of inventory on 01 July 250 345,00 86 250
Sales - 2 Jul (190) 345,00 (65 550)
Balance 60 345,00 20 700
Purchases - 13 Jul 380 359,50 136 610
Sales - 23 Jul (60) 345,00 (20 700)
(150) 359,50 (53 925)
Balance 230 359,50 82 685
Sales - 30 Jul (80) 359,50 (28 760)
Balance of inventory on 31 July 150 359,50 53 925

Cost of sales is therefore = (R65 550 + R20 700 +R53 925 + R28 760)
= R168 935

Gross profit = Sales – CoS

= (R168 935/100 x 140) – R168 935
= R67 574
Or R168 935 x 40%
= R67 574

The correct answer is:

Manzini Wholesale had an opening inventory of 250 units of product Zet valued at R345
per unit at the beginning of July 2023. Manzini Wholesale uses a perpetual inventory
system. The following purchases and sales were recorded during July.
Date 2 July 13 July 23 July 30 July
Purchases/receipts (units) - 380 - -
Sales (units) 190 - 210 80

The purchase cost of all receipts for the month of July was R359,50 per unit. A mark-up
of 40% on cost is applied consistently to establish the selling price.
Required
Using a FIFO method of valuation, calculate the following items and choose the correct
answer from the list of options provided:

• Cost of sales for the month of July 2023 [R168 935]

• Gross profit for the month of July 2023 [R67 574]

Question 19
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Tolitjie Majozi is employed by JD Company. The company is open for business for fifty

(50) weeks a year. Tolitjie works eight (8) hours a day, six (6) days a week at the rate of

R2 500 per week. Each employee receives two (2) weeks annual leave and there are

twenty (20) public holidays a year. Idle time is estimated at 5% available.

Required:

Calculate the following by choose the correct answer from the options provided:

• Available productive hours Blank 1 2 144 hours2 304 hours2

240 hours2 400 hours

• Idle time Blank 2 112 hours120 hours115.2 hours107.2

hours

Feedback
Feedback
Productive hours
Total number of hours per year 2 400
(50 weeks x 48 hours)
Less: annual leave (12 days x 8 hours) (96)
Less: public holidays (20 days x 8 hours) (160)
Available productive hours 2 144

Idle time
Available productive hours x estimated idle time
2 144 x 5% = 107.2 hours

The correct answer is:

Tolitjie Majozi is employed by JD Company. The company is open for business for fifty
(50) weeks a year. Tolitjie works eight (8) hours a day, six (6) days a week at the rate of
R2 500 per week. Each employee receives two (2) weeks annual leave and there are
twenty (20) public holidays a year. Idle time is estimated at 5% available.
Required:
Calculate the following by choose the correct answer from the options provided:

• Available productive hours [2 144 hours]

• Idle time [107.2 hours]

Question 1
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The predetermined absorption rate is used to assign overheads to the units of
production.
True
False
Feedback
The correct answer is 'True'.

Question 2
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In building a cost accounting system, management must select a cost-flow
assumption from those prescribed by IFRS.
True
False
Feedback
IAS 2 states the following in section IAS 2.25 regarding the cost-flow assumptions,
amongst others:
The cost of inventories… shall be assigned by using the first-in, first-out (FIFO) or weighted
average method.
The correct answer is 'True'.

Question 3
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Cost drivers are those activities for which an increase in the level of activity will lead to a
decrease in the total of that variable cost.
True
False
Feedback
Cost drivers are those activities for which an increase in the level of activity will lead to
an increase in the total of that variable cost.
The correct answer is 'False'.

Question 4
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Asset accounts such as inventories have credit balances.
True
False
Feedback
Asset accounts such as inventories have debit balances.
The correct answer is 'False'.

Question 5
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The first-in-first-out (FIFO) and weighted average inventory valuation methods can be
applied to finished goods only.
True
False
Feedback
FIFO and weighted average inventory valuation methods can be applied to finished
goods as well as to raw materials held in stores for use in production.
The correct answer is 'False'.

Question 6
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In determining the overheads absorption rate, the total overheads cost is used as the
denominator, while the total selected activity is used as the numerator.
True
False
Feedback
In determining the overheads absorption rate, the total overheads cost is used as the
numerator, while the total selected activity is used as the denominator.
The correct answer is 'False'.

Question 7
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Complete the following statements by choosing the correct answer:

• The Blank 1 direct allocationhigh-lowsequential

allocationreciprocal allocation method does not recognise

the cost of interdepartmental services provided among

service departments and apportions the costs of service

departments directly to production departments.

• Under the Blank 2 marginal costingperiodic inventory

systemstandard costingperpetual inventory system , stock

taking is usually carried out annually, when all items of

inventory are counted on a specific date.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer:

• The [direct allocation] method does not recognise the cost of

interdepartmental services provided among service
departments and apportions the costs of service
departments directly to production departments.
• Under the [periodic inventory system], stock taking is usually
carried out annually, when all items of inventory are counted
on a specific date.

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Complete the following statements by choosing the correct answer:

• A manufacturing firm is very busy trying to meet the deadline

for a specific customer, and overtime is being worked. The

amount of overtime premium contained in direct wages

would normally be classified as Blank 1 period costdirect

labour costadministrative costfactory overhead

• The procedure whereby indirect costs (overheads) are spread

fairly between cost centres/departments is known as Blank

2 allocationrecoveryabsorptionapportionment

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer:
• A manufacturing firm is very busy trying to meet the deadline
for a specific customer, and overtime is being worked. The
amount of overtime premium contained in direct wages
would normally be classified as [direct labour cost]
• The procedure whereby indirect costs (overheads) are spread
fairly between cost centres/departments is known as
[apportionment]

Question 9
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Complete the following statements by choosing the correct answer from the options

provided.

• Blank 1 CoefficientCorrelationRelevant range expresses the

interdependence or relationship between two variables.

• Blank 2 Materials requirements planningJust in timeLead

time refers to the time required from the initiation of a

process to its completion.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided.

• [Correlation] expresses the interdependence or relationship

between two variables.
• [Lead time] refers to the time required from the initiation of a
process to its completion.

Question 10
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Question text

Complete the following statements by choosing the correct answer from the options

provided.
• The method that apportions the costs of service departments

directly to production departments but ignores the fact that

the service departments also render services to the other

service departments is known as Blank 1 step

methodreciprocal methoddirect method

• Blank 2 First-in-first-out methodWeighted average

methodLast-in-first-out method assumes that the items of

inventory that were purchased or produced first are sold or

issued first.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided.

• The method that apportions the costs of service departments

directly to production departments but ignores the fact that
the service departments also render services to the other
service departments is known as [direct method]
• [First-in-first-out method] assumes that the items of inventory
that were purchased or produced first are sold or issued first.

Question 11
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Complete the following statement by choosing the correct answer:

FIFO prices materials issues at the prices of the Blank 1 oldestnewest items in

inventory, and values closing inventory at the value of the most Blank

2 oldestrecent items in inventory.

Feedback
The correct answer is:
Complete the following statement by choosing the correct answer:
FIFO prices materials issues at the prices of the [oldest] items in inventory, and values
closing inventory at the value of the most [recent] items in inventory.

Question 12
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Question text
Ms Anaishe Mujuru is employed by Mbombela (Pty) Ltd. She is contracted to work nine
(9) hours per day, for five days per week (Mondays to Fridays). Her normal hourly rate is
R28 per hour. Anaishe is entitled to two (2) weeks' paid leave per annum as well as 10
paid public holidays. She is also entitled to a year-end bonus equal to four (4) weeks'
wages.
The cost of Ms Mujuru's compensated absences and bonus would amount to _____.
A.
R5 040
B.
R4 480
C.
R10 080
D.
R8 960
Feedback

R
Cost of annual leave (2 weeks x R1 260*) 2 520
Cost of paid holidays (R28 x 9hrs x 10 days) 2 520
Holiday bonus (4 weeks x R1 260) 5 040
The costs of Anaishe's compensated absences and bonus 10 080

*Weekly wage = (R28 x 9hrs x 5 days)

The correct answer is:

R10 080

Question 13
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Manzini Wholesale had an opening inventory of 250 units of product Zet valued at R320
per unit at the beginning of July 2023. Manzini Wholesale uses a periodic inventory
system. The following purchases and sales were recorded during July.
Date 2 Jul 13 Jul 23 Jul 30 Jul
Purchases/receipts (units) - 380 - -
Sales (units) 190 - 210 80

The purchase cost of all receipts for the month of July was R325 per unit.
Using a weighted average method of valuation, the value of closing inventory at the end
of July would amount to ______. (Round off your answers to the nearest R1, where
applicable)

A.
R48 750
B.
R42 250
C.
R48 450
D.
R41 990
Feedback
Units Unit cost Total cost
(R) (R)
Balance of inventory on 01 July 250 320,00 80 000
Purchases 380 325,00 123 500
Totals in the weighted average 630 323,00* 203 500
Sales (480)
Balance of inventory on 31 July 150 323,00 48 450

The correct answer is:

R48 450

Question 14
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The budgeted fixed overhead absorption rate for August was R5 per machine hour.

Other information for the month is as follows:

Actual fixed overhead cost R234 500
Actual machine hours 51 300
Budgeted fixed overhead cost R212 900

The number of machine hours budgeted to be worked was Blank 1 47 500 hours51 300

hours42 580 hours50 000 hours :

Feedback
Feedback
R212 900/ R5
= 42 580 hours

The correct answer is:

The budgeted fixed overhead absorption rate for August was R5 per machine hour.
Other information for the month is as follows:
Actual fixed overhead cost R234 500
Actual machine hours 51 300
Budgeted fixed overhead cost R212 900
The number of machine hours budgeted to be worked was [42 580 hours]:

Question 15
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Question text
Lehlohonolo works in the assembly department of a computer manufacturer. The
following is his pay slip for the week:
Employer contribution
R
R
Normal wages 6 500
Pension fund contribution (455) 520
PAYE (1 090)
Medical aid contribution (220) 380
UIF (65) 65
Net wages 4 670

If we assume that the employer contributions for benefits and overtime premiums are
regarded as indirect labour, what will the amount debited to the production overheads
clearance account as indirect wages be?

A.
R1 830
B.
R6 500
C.
R965
D.
R740
Feedback
(520+380+65)
The correct answer is:
R965

Question 16
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Overheads in a factory are apportioned to four production departments (A, B, C, and D).

Direct labour hours (DLH) are used to absorb overheads in A and C and machine hours

(MH) are used in B and D. The following budgeted information is available:

Production departments
A B C D
Overhead costs R376 250 R568 750 R920 275 R846 000
Direct labour hours 3 010 3 670 6 550 2 980
Machine hours 550 3 250 1 360 2 500
Required:

Calculate the following items and choose the correct answer from the list of options

provided:

• Overheard absorption rate for departments A Blank

1 R140,50 per DLHR125 per MHR125 per DLHR140,50 per

MH and B Blank 2 R338 per DLHR338,40 per MHR175 per

MHR175 per DLH , respectively

• Overheard absorption rate for departments C Blank

3 R140,50 per DLHR140,50 per MHR125 per MHR125 per

DLH and D Blank 4 R175 per DLHR338,40 per MHR338,40

per DLHR175 per MH , respectively

Feedback
Feedback:
Production departments
A B
Overhead absorption rate R376 250/3 010 DLH = R125 R568 750/3 250 MH = R175
per DLH per MH

Production departments
C D
Overhead absorption rate R920 275/6 550 DLH = R846 000/2 500 MH =
R140,50 per DLH R338,40 per MH

The correct answer is:

Overheads in a factory are apportioned to four production departments (A, B, C, and D).
Direct labour hours (DLH) are used to absorb overheads in A and C and machine hours
(MH) are used in B and D. The following budgeted information is available:
Production departments
A B C D
Overhead costs R376 250 R568 750 R920 275 R846 000
Direct labour hours 3 010 3 670 6 550 2 980
Machine hours 550 3 250 1 360 2 500

Required:
Calculate the following items and choose the correct answer from the list of options
provided:

• Overheard absorption rate for departments A [R125 per DLH]

and B [R175 per MH], respectively
• Overheard absorption rate for departments C [R140,50 per
DLH] and D [R338,40 per MH], respectively

Question 17
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Cutting Edge (Pty) LTD provides personal development seminars. The number of

seminars offered over the last five months along with the total costs of offering these

seminars are as follows:

Month Seminars offered Cost incurred
April 8 R15 200
May 10 R17 000
June 13 R19 400
July 16 R21 800
August 14 R20 000
September 11 R18 200

Required:

Using the high-low method calculate the following and choose the correct answer from

the options provided:

• Variable cost per seminar Blank 1 R825R1 700R102R1

362.50

• Total fixed cost per month Blank 2 R21 800R15 200R20

000R8 600

Feedback
Feedback
Cost Activity
Highest level of activity R21 800 16 seminars
Lowest level of activity R15 200 8 seminars
Difference R6 600 8 seminars

Variable cost = R6 600/ 8 seminars = R825 per seminar

Y = a + bx
Fixed cost element = Total cost – variable cost
R21 800 – (R825 x 16 seminars)
R8 600

The correct answer is:

Cutting Edge (Pty) LTD provides personal development seminars. The number of
seminars offered over the last five months along with the total costs of offering these
seminars are as follows:
Month Seminars offered Cost incurred
April 8 R15 200
May 10 R17 000
June 13 R19 400
July 16 R21 800
August 14 R20 000
September 11 R18 200
Required:
Using the high-low method calculate the following and choose the correct answer from
the options provided:
• Variable cost per seminar [R825]
• Total fixed cost per month [R8 600]

Question 18
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Tete Traders sells pullover jerseys. Tete uses the weighted average method and a

periodic inventory system. The following information was taken from the company's

records for June 2023:

Units Unit cost
(R)
Balance of inventory on 01 June 150 220
First batch of purchases 280 250
Second batch of purchases 170 270
First batch of sales 220
Second batch of sales 210
Balance of physical inventory on 30 June 130

Required

Calculate the following items and choose the correct answer from the list of options

provided (Round off to the nearest R1, where applicable):

• Value of closing inventory on 30 June 2023 Blank 1 R32

240R50 700R44 980R42 160

• Cost of sales for the month of June Blank 2 R98 200R116

660R106 740R103 920

Feedback
Value of closing inventory
(R33 000 + R70 000 + R45 900)/(150 + 280 + 170 units) = R148 900/600
=R248 x 130 units
= R32 240

Cost of sales
Total cost (R)
Opening inventory 33 000
Plus: Purchases (R70 000 + R45 900) 115 900
Available for sale 148 900
Less: Closing inventory 32 240
Cost of sales 116 660

The correct answer is:

Tete Traders sells pullover jerseys. Tete uses the weighted average method and a
periodic inventory system. The following information was taken from the company's
records for June 2023:
Units Unit cost
(R)
Balance of inventory on 01 June 150 220
First batch of purchases 280 250
Second batch of purchases 170 270
First batch of sales 220
Second batch of sales 210
Balance of physical inventory on 30 June 130

Required
Calculate the following items and choose the correct answer from the list of options
provided (Round off to the nearest R1, where applicable):

• Value of closing inventory on 30 June 2023 [R32 240]

• Cost of sales for the month of June [R116 660]

Question 19
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Javadi Company manufactures aluminium windows. During the first quarter, the

company budgeted to produce 200 windows. The estimated manufacturing costs are as

follows:
R
Direct materials 80 000
Direct labour 60 000
Manufacturing overhead 40 000

The company applies a mark-up of 25% on cost to determine the selling price per

window.

Calculate the following and select the correct answer from the options provided:

· Cost per unit of each window produced Blank 1 R200R900R700

· Selling price per window Blank 2 R1 125R125R875

Feedback
Cost per unit of each window
Total manufacturing cost/ number of windows produced
R180 000/ 200
R900
Selling price per window
R
Cost per unit 900
Add: mark-up (R900 x 25%) 225
1 125

The correct answer is:

Javadi Company manufactures aluminium windows. During the first quarter, the
company budgeted to produce 200 windows. The estimated manufacturing costs are as
follows:
R
Direct materials 80 000
Direct labour 60 000
Manufacturing overhead 40 000
The company applies a mark-up of 25% on cost to determine the selling price per
window.
Calculate the following and select the correct answer from the options provided:
· Cost per unit of each window produced [R900]
· Selling price per window [R1 125]

Question 1
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Process costing accumulates and assign costs to jobs or customers.
True
False
Feedback
Process costing accumulates and assign costs to the departments.
The correct answer is 'False'.

Question 2
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It is very important for the financial manager to evaluate the cost of raising finance
when considering an investment in expensive new equipment.
True
False
Feedback
The cost of the different financing options is taken into consideration only after the
decision to invest had already been taken, i.e., when the decision of how to finance the
investment is being considered. The investment decision involves consideration of risk,
future cash flows and other qualitative factors.
The correct answer is 'False'.

Question 3
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PAYE deducted from the remuneration of employees must be paid to SARS by the 7th of
the month following the month for which the payroll was prepared
True
False
Feedback
The correct answer is 'True'.

Question 4
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Inventory management is an important component of working capital management.
True
False
Feedback
The correct answer is 'True'.

Question 5
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Leave pay and holiday pay are additional monetary entitlement of employees.
True
False
Feedback
Leave pay and holiday pay are not additional monetary entitlement of employees.
The correct answer is 'False'.

Question 6
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The following journal entry would be made to apply overhead cost to jobs in a job
costing system:
Dr Cr
Manufacturing overhead xx
Work-in-process xx

True
False
Feedback
The correct answer is 'False'.

Question 7
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Question text

Several functions in the organisation play a role in the control of labour cost, amongst

others, human resources, time keeping, payroll and cost accounting. For the activities

listed below indicate whether each is likely to form part of the duties of the following

roles: human resources; time keeping; payroll and cost accounting.

• Computes wages and salaries by determining the gross

amount due to each employee and the total deductions to be

made from the gross amount. Blank 1 time keepingcost

accountinghuman resourcespayroll

• Responsible for maintaining records of attendance and time

spent on production. Blank 2 time keepingcost

accountinghuman resourcespayroll

Feedback
The correct answer is:
Several functions in the organisation play a role in the control of labour cost, amongst
others, human resources, time keeping, payroll and cost accounting. For the activities
listed below indicate whether each is likely to form part of the duties of the following
roles: human resources; time keeping; payroll and cost accounting.

• Computes wages and salaries by determining the gross

amount due to each employee and the total deductions to be
made from the gross amount. [payroll]
• Responsible for maintaining records of attendance and time
spent on production. [time keeping]

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Question text

Complete the following statements by choosing the correct answer from the options

provided:

• Blank 1 Cash equivalentsCash inflowsCash

managementCash budgets refer to highly liquidity

investments that can be turned into cash in a short period of

time, and with a minimum if any, change in value.

• Blank 2 LendersShareholdersInvestors Public are interested

in the financial statements of the company to assess the

ability of the company to pay interest on loans and to repay

loans.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• [Cash equivalents] refer to highly liquidity investments that

can be turned into cash in a short period of time, and with a
minimum if any, change in value.
• [Lenders] are interested in the financial statements of the
company to assess the ability of the company to pay interest
on loans and to repay loans.

Question 9
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Complete the following statements by choosing the correct answer from the options

provided:
• The Blank 1 normal hourly ratelabour recovery rateovertime

rateoverhead absorption rate is a rate that aims to recover

all the cost of labour from the cost of production.

• We use the basic Blank 2 days' sales held in inventorycash

conversion cycleinventory turnover ratioEOQ model to

determine the number of units of inventory that we should

order at a time to ensure that holding and ordering costs are

minimised.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• The [labour recovery rate] is a rate that aims to recover all the
cost of labour from the cost of production.
• We use the basic [EOQ model] to determine the number of
units of inventory that we should order at a time to ensure
that holding and ordering costs are minimised.

Question 10
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Complete the following statements by dragging and dropping the correct answer from
the options provided:

• Total ordering costs is determined

as number of orders placed x fixed cost per order
• Total holding cost is determined
as average number of units in inventory x holding cost per u
nit

average number of units in inventory holding cost per unit

average number of units in inventory holding cost per unit
number of orders placed fixed cost per order
fixed cost per order number of orders placed
Feedback
The correct answer is:
Complete the following statements by dragging and dropping the correct answer from
the options provided:

• Total ordering costs is determined as [number of orders

placed] x [fixed cost per order]
• Total holding cost is determined as [average number of units
in inventory] x [holding cost per unit]

Question 11
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Question text

Complete the following statements by choosing the correct answer from the options

provided.

• Blank 1 Direct labour budgetProduction budgetCash

budgetSales budget is a detailed schedule showing the

expected sales for the budget period; typically, it is expressed

in both rands and unit of product.

• Blank 2 Financial managementWealth maximisationProfit

maximisationFinancial planning involves an analysis of the

current financial health of the company and using analysis

techniques and other information to predict the future cash

flows, asset acquisition and disposals.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided.

• [Sales budget] is a detailed schedule showing the expected

sales for the budget period; typically, it is expressed in both
rands and unit of product.
• [Financial planning] involves an analysis of the current
financial health of the company and using analysis
techniques and other information to predict the future cash
flows, asset acquisition and disposals.
Question 12
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N'wavutshila (Pty) Ltd plans to sell 9 000 units of Product B in the next quarter. The

opening inventory of Product B is expected to be 1 300 units and the company plans to

keep closing inventory at 110% of the expected opening inventory.

Required:

Calculate the following item and choose the correct answer from the options provided:

• The budgeted production units of Product B for the next

quarter Blank 1 10 170 units9 130 units8 870 units7 830

units

Feedback
Feedback:
Units
Expected sales 9 000
Add: closing planned closing inventory (1 300 x 1,1) 1 430
Available for sale 10 430
Less: opening inventory (1 300)
Expected production 9 130

The correct answer is:

N'wavutshila (Pty) Ltd plans to sell 9 000 units of Product B in the next quarter. The
opening inventory of Product B is expected to be 1 300 units and the company plans to
keep closing inventory at 110% of the expected opening inventory.
Required:
Calculate the following item and choose the correct answer from the options provided:

• The budgeted production units of Product B for the next

quarter [9 130 units]

Question 13
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Question text

Goitsemang Company uses a job costing system. The following information was

recorded in February:
1 February
Work in process
inventory
Job number Direct materials Direct labour
1 R1 500 R400 R300
2 R2 000 R600 R750
3 R500 R1 000 R1 500
4 R250 R1 300 R2 400

Overheads are absorbed to jobs at the rate of 140% of direct labour cost. Jobs 1, 2 and 3

were completed during February and transferred to finished goods. Job 3 has been

delivered to the customer.

Required

Calculate the following and choose the correct answer from the options provided:

• the cost of goods sold in February Blank 1 R8 120R12 120R3

000R5 100 .

Feedback
The cost of goods sold in February
R
WIP: 1 February 500
Direct materials 500
Direct labour 1 000
Absorbed overheads (R1 500 x 140%) 2 100
Total 5 100

The correct answer is:

Goitsemang Company uses a job costing system. The following information was
recorded in February:
1 February
Work in process
inventory
Job number Direct materials Direct labour
1 R1 500 R400 R300
2 R2 000 R600 R750
3 R500 R1 000 R1 500
4 R250 R1 300 R2 400
Overheads are absorbed to jobs at the rate of 140% of direct labour cost. Jobs 1, 2 and 3
were completed during February and transferred to finished goods. Job 3 has been
delivered to the customer.
Required
Calculate the following and choose the correct answer from the options provided:

• the cost of goods sold in February [R5 100].

Question 14
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Question text

Answer the following question by choosing the correct answer from the options

provided.

Tshimangazo Company’s working capital is R65 000, and its current liabilities amounted

to R270 000. The company’s current ratio is closest to Blank 1 1.24 to 15.50 to 10.24 to

14.15 to 1 :
Feedback
R65 000 + R270 000 = R335 000
= R335 000/ R270 000
= 1.24 to 1

The correct answer is:

Answer the following question by choosing the correct answer from the options
provided.
Tshimangazo Company’s working capital is R65 000, and its current liabilities amounted
to R270 000. The company’s current ratio is closest to [1.24 to 1]:

Question 15
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Thandabantu Company makes and sells a single product, Product J. Each unit of

Product J requires 1,2 hours of labour at a labour rate of R8,40 per hour. Joel company

needs to prepare a direct labour budget for the third quarter. If the budgeted direct

labour for the third quarter is R161 280, then the budgeted production of Product J

would be: Blank 1 23 000 units19 200 units16 800 units16 000 units
Feedback
Feedback
R161 280/ R8,40 = 19 200 hours
19 200 hours /1,2hrs = 16 000 units

The correct answer is:

Thandabantu Company makes and sells a single product, Product J. Each unit of
Product J requires 1,2 hours of labour at a labour rate of R8,40 per hour. Joel company
needs to prepare a direct labour budget for the third quarter. If the budgeted direct
labour for the third quarter is R161 280, then the budgeted production of Product J
would be: [16 000 units]

Question 16
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The following extract of information is available concerning the four departments of

Makhosini Limited.
Production departments Service department
Assembly Finishing Stores
Number of employees 22 18 12
Floor space (square metres) 845 455 390
Direct overhead costs R697 520 R460 680 R215 600

The overhead cost of the maintenance is to be re-apportioned to the production

departments on the basis of the floor space in each production department.

Required:

Calculate the following items and choose the correct answer from the list of options

provided:

• After the re-apportionment, the total overhead cost of the

assembly department Blank 1 R769 640R837 660R794

540R805 320

• After the re-apportionment, the total overhead cost of the

finishing department Blank 2 R579 260R569 500R518

726R536 140

Feedback
Feedback:
Floor space for all production departments = 1 300 (845 + 455)
Assembly department overhead:
R
Maintenance cost apportioned to finishing department: (R215 600/1 300) x 845 140 140
Add: Original overhead allocated and apportioned 697 520
Total overhead after apportionment of maintenance costs 837 660
Finishing department overhead:
R
Maintenance cost apportioned to finishing department: (R215 600/1 300) x 455 75 460
Add: Original overhead allocated and apportioned 460 680
Total overhead after apportionment of maintenance costs 536 140

The correct answer is:

The following extract of information is available concerning the four departments of
Makhosini Limited.

Production departments Service department

Assembly Finishing Stores
Number of employees 22 18 12
Floor space (square metres) 845 455 390
Direct overhead costs R697 520 R460 680 R215 600

The overhead cost of the maintenance is to be re-apportioned to the production

departments on the basis of the floor space in each production department.
Required:
Calculate the following items and choose the correct answer from the list of options
provided:

• After the re-apportionment, the total overhead cost of the

assembly department [R837 660]
• After the re-apportionment, the total overhead cost of the
finishing department [R536 140]

Question 17
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Makhulu Company sales budget shows quarterly sales values for the next year as

follows:
Quarter R
1 R2 500 000
2 R2 000 000
3 R3 000 000
4 R3 500 000

Company policy is to maintain inventory of finished goods at the end of each quarter to

be 20% of the next quarter’s sales. The budgeted selling price per unit is R250.

Required:

Calculate the following and choose the correct answer from the options provided.

• Units to be produced in quarter 2 Blank 1 8 800 unitsR2 000

0008 000 units10 000 units

• Closing inventory of finished goods for quarter 1 Blank 2 2

500 units2 000 units 10 000 units1 600 units

Feedback
Feedback
Budgeted sales (R2 500 000/ R250) C1 8 000
Add: closing inventory C2 2 400
Total available 10 400
Less: opening inventory (8 000 x 20%) C3 1 600
Units to be produced 8 800

C1: Quarter 2: R2 000 000 / R250 = 8 000 units

C2: Quarter 3: R3 000 000/ R250 = 12 000 units

12 000 units x 20% = 2 400
Quarter 4: R3 500 000/ R250 = 14 000 units

Closing inventory for quarter 1

8 000 units x 20% = 1 600 units
The correct answer is:
Makhulu Company sales budget shows quarterly sales values for the next year as
follows:
Quarter R
1 R2 500 000
2 R2 000 000
3 R3 000 000
4 R3 500 000
Company policy is to maintain inventory of finished goods at the end of each quarter to
be 20% of the next quarter’s sales. The budgeted selling price per unit is R250.
Required:
Calculate the following and choose the correct answer from the options provided.

• Units to be produced in quarter 2 [8 800 units]

• Closing inventory of finished goods for quarter 1 [1 600 units]

Question 18
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Jocobeth Hospital records show that the cost carrying out heath checks in the last five

accounting periods have been as follows:

Period Number of patients Total cost
1 650 17 125
2 940 17 800
3 1 260 18 650
4 990 17 980
5 1 150 18 360

The company uses the high-low method to determine fixed and variable costs of

carrying out health checks.

Required:
Calculate the following and choose the correct answer from the options provided.

The variable cost per unit Blank 1 R10,00R14,00R2,50R3,20 .

The estimated cost of carrying out heath checks on 900 patients in period 6 Blank 2 R90

000R17 750R1 800R17 625 .

Feedback
Feedback
Variable cost per unit
Highest cost minus lowest cost
Highest activity minus lowest activity
= R18 650 – R17 125
1 260 – 650
= R1 525
610
= R2,50
Y= a = bx
R18 650 = a + bx
R18 650 = a + (R2,50 x 1 260)
a= R18 650 -R 3150
R15 500

Calculation of the estimated cost of carrying health checks on 900 patients in period 6
R
Fixed costs 15 500
Variable cost (900 x R2,50) 2 250
Total cost 17 750

The correct answer is:

Jocobeth Hospital records show that the cost carrying out heath checks in the last five
accounting periods have been as follows:
Period Number of patients Total cost
1 650 17 125
2 940 17 800
3 1 260 18 650
4 990 17 980
5 1 150 18 360
The company uses the high-low method to determine fixed and variable costs of
carrying out health checks.
Required:
Calculate the following and choose the correct answer from the options provided.
The variable cost per unit [R2,50].
The estimated cost of carrying out heath checks on 900 patients in period 6 [R17 750].

Question 19
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Mokete Company uses a job costing system. The following information was recorded in

March:
1 March
Work in process
inventory
Job number Direct materials Direct labour
100 R1 500 R500 R300
101 R1 000 R700 R900
102 R900 R1 000 R1 500
103 R700 R1 200 R2 000

Overheads are absorbed to jobs at the rate of 80% of direct material cost. Jobs 100, 102

and 103 were completed during March and transferred to finished goods. Jobs 100 and

103 have been delivered to the customers.

Required:

Calculate the following and choose the correct answer from the options provided:
• Mokete’s work-in-process inventory on 31 March Blank 1 R3

320R2 600R7 280R3 160 .

• total amount of overhead absorbed in March Blank 2 R3

400R700R560R2 720 .

Feedback
Work in process_ Job 101
R
WIP: 1 March 1 000
Direct materials 700
Direct labour 900
Absorbed manufacturing overhead (700 x 80%) 560
Total 3 160
Total amount of overhead absorbed
R
Job 100: (R500 x 80%) 400
Job 101: (R700 x 80%) 560
Job 102: (R1 000 x 80%) 800
Job 103: (R1 200 x 80%) 960
Total 2 720

The correct answer is:

Mokete Company uses a job costing system. The following information was recorded in
March:
1 March
Work in process
inventory
Job number Direct materials Direct labour
100 R1 500 R500 R300
101 R1 000 R700 R900
102 R900 R1 000 R1 500
103 R700 R1 200 R2 000
Overheads are absorbed to jobs at the rate of 80% of direct material cost. Jobs 100, 102
and 103 were completed during March and transferred to finished goods. Jobs 100 and
103 have been delivered to the customers.
Required:
Calculate the following and choose the correct answer from the options provided:

• Mokete’s work-in-process inventory on 31 March [R3 160].

• total amount of overhead absorbed in March [R2 720].

Question 1
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The cost of wages paid to factory employees on leave or on holiday is considered as
direct labour cost.
True
False
Feedback
The cost of wages paid to factory employees on leave or on holiday is considered as
indirect labour cost.
The correct answer is 'False'.

Question 2
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Budgeted capacity is the anticipated use of available capacity based on planned
production levels.
True
False
Feedback
The correct answer is 'True'.

Question 3
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For external financial reporting purposes, production overheads must be assigned to
inventory of finished goods as well as work-in-progress.
True
False
Feedback
The correct answer is 'True'.

Question 4
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Relevant range refers to the activity level at which our assumption about the behaviour
of costs remains valid.
True
False
Feedback
The correct answer is 'True'.

Question 5
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The costs of purchase inventories comprise the purchasing price, transport and handling
costs and other costs directly related to the acquisition of finished goods.
True
False
Feedback
The correct answer is 'True'.

Question 6
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Manufacturers, wholesalers, and distributors are all purchasers of merchandise.
True
False
Feedback
Retailers, wholesalers, and distributors are all purchasers of merchandise. Manufactures
are purchasers of raw material for conversion into finished goods for sale to
wholesalers and distributors.
The correct answer is 'False'.
Question 7
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Several functions in the organisation play a role in the control of labour cost, amongst
others, human resources, time keeping, payroll and cost accounting. For the activities
listed below indicate whether each is likely to form part of the duties of the following
roles: human resources; time keeping; payroll and cost accounting.

Classifying labour cost as either direct labour or indirect Answer 1Choose...cost

labour as well as assigning the labour cost to jobs or accountingtime keepinghuman
production departments or processes. resourcespayroll
Advises and assists other departments in respect of the Answer 2Choose...cost
employment, remuneration, training and workplace safety accountingtime keepinghuman
of employees as well as on matters of labour relations. resourcespayroll
Feedback
The correct answer is: Classifying labour cost as either direct labour or indirect labour as
well as assigning the labour cost to jobs or production departments or processes. →
cost accounting,
Advises and assists other departments in respect of the employment, remuneration,
training and workplace safety of employees as well as on matters of labour relations. →
human resources

Question 8
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Choose the correct word(s) from the list to match the description.
The inventory valuation method that is Answer 1Choose...Weighted averagePerpetual
based on the assumption that the oldest inventory systemFIFOTime wage systemPeriodic
inventory is always sold first. inventory systemPiece wage system
The remuneration system whereby an Answer 2Choose...Weighted averagePerpetual
employee is paid based on the number inventory systemFIFOTime wage systemPeriodic
of hours the employee worked inventory systemPiece wage system
Feedback
The correct answer is:
The inventory valuation method that is based on the assumption that the oldest
inventory is always sold first. → FIFO,
The remuneration system whereby an employee is paid based on the number of hours
the employee worked → Time wage system
Question 9
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Complete the following statements by choosing the correct answer from the options

provided:

• Blank 1 Actual overheadsAbsorbed overheadsBudgeted

overheadsOver absorbed overheads are total overheads

allocated to the cost of products based on a predetermined

overhead rate.

• The time an employee spends at work but not actively

working or productive but still gets remunerated for those

hours is known as Blank 2 overtime premiumidle

timebonusovertime

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• [Absorbed overheads] are total overheads allocated to the

cost of products based on a predetermined overhead rate.
• The time an employee spends at work but not actively
working or productive but still gets remunerated for those
hours is known as [idle time]

Question 10
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Complete the following statements by choosing the correct answer from the options

provided:

• Blank 1 Cost classificationVariable costCost behaviourCost

object refers to how a costs will react or respond to changes

in the level of business activity.

• Blank 2 Budgeted capacityTheoretical capacityPractical

capacityNormal capacity is the factory’s average level of

capacity for meeting the company’s production demands,

taking into account the expected interruptions and seasonal

fluctuations.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• [Cost behaviour] refers to how a costs will react or respond

to changes in the level of business activity.
• [Normal capacity] is the factory’s average level of capacity
for meeting the company’s production demands, taking into
account the expected interruptions and seasonal
fluctuations.

Question 11
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Classify the following costs as manufacturing overhead cost or non-manufacturing
overhead cost.

Depreciation of secretary’s laptop. Answer 1Choose...Non-manufacturing overhead

costManufacturing overhead cost
The City of Tshwane water bill for factory Answer 2Choose...Non-manufacturing overhead
where Product A is manufactured. costManufacturing overhead cost
Feedback
The correct answer is:
Depreciation of secretary’s laptop. → Non-manufacturing overhead cost,
The City of Tshwane water bill for factory where Product A is manufactured. →
Manufacturing overhead cost

Question 12
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Azwindini Manufacturing Company has developed the following overhead cost formulas:
Overhead Cost formulas
Insurance R800
Depreciation R1 800
Maintenance R1,20 per machine hour
Utilities R1 200 plus R1,00 per machine hour
Based on these cost formulas, the total overhead cost expected for Azwindini
Manufacturing Company if 1 500 hours are worked is:

Select one:
A.
R1 500
B.
R7 100
C.
R3 300
D.
R3 800
Feedback
R
Insurance 800
Depreciation 1 800
Maintenance (1 500 x R1,20) 1 800
Utilities [[R1 200 + (R1,00 x 1 500)] 2 700
Total 7 100
The correct answer is:
R7 100

Question 13
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Given the formula, Y= R9 000 + R2,50X, total cost for an activity level of 3 000 units
would be:
Select one:
A.
R7 500
B.
R16 500
C.
R9 750
D.
R12 000
Feedback
Y = R9 000 + (R2,50 x 3 000 units)
Y = R16 500

The correct answer is:

R16 500

Question 14
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Question text
Tete Traders sells pullover jerseys. Tete uses the weighted average method and a
periodic inventory system. The following information was taken from the company's
records for June 2023:
Units Unit cost
(R)
Balance of inventory on 01 June 150 220
First batch of purchases 280 250
Second batch of purchases 170 270
First batch of sales 220
Second batch of sales 210
Balance of physical inventory on 30 June 130
Tete is concerned that despite placing a security guard at the door, jerseys are still going
missing.
The number of jerseys that went missing amounts to _______.

A.
150
B.
60
C.
40
D.
20
Feedback
Units
Opening inventory 150
Plus: Purchases (280 + 170) 450
Available for sale 600
Less: Sales (220 + 210) 430
Closing inventory 170
Therefore, the number of missing jerseys is (170 -130) = 40 jerseys

The correct answer is:

40

Question 15
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Moloantoa Limited absorbs overhead on the basis of direct labour hours. The

predetermined overhead rate during period has been based on the budgeted overhead of

R150 000 and 50 000 direct labour hours. During the period, overheads of R170 000

were incurred and 60 000 direct labour hours were used.

Calculate the over or under absorbed Blank 1 R10 000 over-absorbedR20 000 over-

absorbedR10 000 under-absorbedR20 000 under-absorbed by choosing the correct

answer from the options provided:

Feedback
Feedback
Predetermined overhead rate
Budgeted overheads/ direct labour hours
R150 000/ 50 000 = R3.00

Over-absorbed overhead
Absorbed overheads (60 000 x R3) 180 000
Actual overheads 170 000
Over-absorbed overheads 10 000

The correct answer is:

Moloantoa Limited absorbs overhead on the basis of direct labour hours. The
predetermined overhead rate during period has been based on the budgeted overhead of
R150 000 and 50 000 direct labour hours. During the period, overheads of R170 000
were incurred and 60 000 direct labour hours were used.
Calculate the over or under absorbed [R10 000 over-absorbed] by choosing the correct
answer from the options provided:

Question 16
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Mr Mutamwa Mataka works as a member of the team in the assembly department of

Gomo (Pty) Ltd. From Monday to Friday, Mutamwa works normal working hours of 40

hours per week. Normal overtime extends to Saturday and is remunerated at 1,5 times
the normal rate, whereas the overtime on Sunday is remunerated two times the normal

rate. During the week ending 12 August 2023, Mutamwa earned a total gross wage of R5

018. During the week under review, Mutamwa worked 4 hours of normal overtime and 3

hours of overtime on Sunday.

Required

Calculate the following items and choose the correct answer from the list of options

provided:

• The basic wage rate per hour Blank

1 R96,50R106,77R100,36R125,45

• The total overtime premium for the week under review Blank

2 R627,25R482,50R250,90R376,35

Feedback
Feedback:
The total gross wage of R5 018 comprises:
40 hrs (normal hours) + [4 hrs x 1,5] + [3 hrs x 2] (overtime) = 52 hours
The basic wage rate per hour is therefore: (R5 018/52 hrs) = R96,50 per hour

Therefore:
Normal overtime premium (R96,50 x 0,5) x 4 = R 193,00
Sunday overtime premium (R96,50 x 1) x 3 = R 289,50
= R 482,50

The correct answer is:

Mr Mutamwa Mataka works as a member of the team in the assembly department of
Gomo (Pty) Ltd. From Monday to Friday, Mutamwa works normal working hours of 40
hours per week. Normal overtime extends to Saturday and is remunerated at 1,5 times
the normal rate, whereas the overtime on Sunday is remunerated two times the normal
rate. During the week ending 12 August 2023, Mutamwa earned a total gross wage of R5
018. During the week under review, Mutamwa worked 4 hours of normal overtime and 3
hours of overtime on Sunday.
Required
Calculate the following items and choose the correct answer from the list of options
provided:

• The basic wage rate per hour [R96,50]

• The total overtime premium for the week under review
[R482,50]

Question 17
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Bezile Shongwe, a general employee at KaBhokweni (Pty) Ltd, has an employment

contract that contains the following conditions of service:

• A normal day is 9 hours, including the idle time of (45) minutes for tea and lunch

breaks; and a normal week is 5 days, Monday to Friday.

• The basic wage rate is R25 per hour.

• Public holidays are fully paid and are equivalent to 2 weeks.

• Leave entitlement is 3 weeks and is also fully paid.

• Overtime is compensated at 1,5 times the normal rate.

Actual information for the week ended 31 March 2023:

• Ms Shongwe worked 50 hours for the week under review.

Required

Calculate the following items for Ms Shongwe and choose the correct answer from the

list of options provided:

• Annual productive hours Blank 1 1 938,75 hours2009,25

hours2 115,00 hours2 052,00 hours

• Gross wage for the week under review Blank 2 R2 250,00R1

143,75R1 125,00R1 312,50

Feedback
Feedback:
Number of hours in a year (52 weeks x *41,25 hours) 2 145,00
Less vacation (3 weeks x 41,25 hours) 123,75
Less: public holidays (2 weeks x 41,25 hours) 82,50
Annual productive hours 1 938,75
* [9 hours – 0,75hrs (for breaks)]x 5 = 41,25

R
Normal wage (45 hours x R25) 1 125,00
Overtime [5 hours x (R25x 1,5 )] 187,50
Total gross wage 1 312,50

The correct answer is:

Bezile Shongwe, a general employee at KaBhokweni (Pty) Ltd, has an employment
contract that contains the following conditions of service:
• A normal day is 9 hours, including the idle time of (45) minutes for tea and lunch
breaks; and a normal week is 5 days, Monday to Friday.
• The basic wage rate is R25 per hour.
• Public holidays are fully paid and are equivalent to 2 weeks.
• Leave entitlement is 3 weeks and is also fully paid.
• Overtime is compensated at 1,5 times the normal rate.
Actual information for the week ended 31 March 2023:
• Ms Shongwe worked 50 hours for the week under review.
Required
Calculate the following items for Ms Shongwe and choose the correct answer from the
list of options provided:

• Annual productive hours [1 938,75 hours]

• Gross wage for the week under review [R1 312,50]

Question 18
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Maintenance costs are to be apportioned to production departments on the basis of the

following number of maintenance hours worked in each department. The total

maintenance cost to be apportioned to the other departments amounted to R380 000.

Maintenance hours worked were as follows:

Maintenance hours Machining Assembly Finishing
worked
1 000 700 300

Calculate the maintenance cost to be apportioned to the following departments:

• Machining Blank 1 R120 000R80 000R190 000R380 000

• Assembly Blank 2 R85 000R65 000R40 000R133 000

Feedback
Machining = R380 000 x 1 000/2 000 = R190 000
Assembly = R380 000 x 700/2 000 = R133 000

The correct answer is:

Maintenance costs are to be apportioned to production departments on the basis of the
following number of maintenance hours worked in each department. The total
maintenance cost to be apportioned to the other departments amounted to R380 000.
Maintenance hours worked were as follows:
Maintenance hours Machining Assembly Finishing
worked
1 000 700 300
Calculate the maintenance cost to be apportioned to the following departments:

• Machining [R190 000]

• Assembly [R133 000]
Question 19
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Sefate (Pty) Ltd planned to produce 150 000 components that are used in the

construction industry. Production overheads are budgeted at R1 200 000 for the year.

The standard time to produce one component is 2,5 direct labour hours. Production

overheads are apportioned to production based on direct labour hours (DLH). The actual

results of Sefate for the year revealed that the company produced 157 000 components

and that total production overheads were R1 320 000. The total actual direct labour

hours (DLH) recorded were 445 000.

Required:

Calculate the following items and choose the correct answer from the list of options

provided

• Predetermined absorption rate Blank 1 R2,50 per DLHR8,80

per DLHR3,20 per DLHR8,00 per DLHR3,52 per DLH

• Over/under-absorbed overheads Blank 2 R104 000 under-

absorbedR1 434 400 over-absorbedR120 000 under-

absorbedR104 000 over-absorbedR1 434 400 under-

absorbed

Feedback
It takes 2,5 direct labour hours (DLH) to produce one component; therefore, 150 000 components
will take (150 000 x 2,5) = 375 000 hours. The predetermined absorption rate is thus R1 200 000 /
375 000 = R3,20 per DLH.
Total overheads absorbed during the year was R1 424 000 (445 000 hours x R3,20), and actual
overheads were R1 320 000. More overheads were absorbed; therefore, there was an over
absorption of R104 000.
The correct answer is:
Sefate (Pty) Ltd planned to produce 150 000 components that are used in the
construction industry. Production overheads are budgeted at R1 200 000 for the year.
The standard time to produce one component is 2,5 direct labour hours. Production
overheads are apportioned to production based on direct labour hours (DLH). The actual
results of Sefate for the year revealed that the company produced 157 000 components
and that total production overheads were R1 320 000. The total actual direct labour
hours (DLH) recorded were 445 000.
Required:
Calculate the following items and choose the correct answer from the list of options
provided

• Predetermined absorption rate [R3,20 per DLH]

• Over/under-absorbed overheads [R104 000 over-absorbed]

Question 1
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There can be an amount for cost of goods manufactured in a month with zero sales.
True
False
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The correct answer is 'True'.

Question 2
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Production budget is typically prepared prior to the sales budget.
True
False
Feedback
The correct answer is 'False'.

Question 3
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A company that produces sugar will use a job costing system to track production costs.
True
False
Feedback
The correct answer is 'False'.

Question 4
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Financial management entails the planning, monitoring and control of the physical
resources of the entity.
True
False
Feedback
Financial management entails the planning, monitoring and control of the financial
resources of the entity.
The correct answer is 'False'.

Question 5
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Advertising costs should be charged to the manufacturing overhead account.
True
False
Feedback
The correct answer is 'False'.

Question 6
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Question text
Efficiency ratios measure how efficiently the working company is used to generate cash
flow.
True
False
Feedback
The correct answer is 'True'.

Question 7
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Choose the correct word(s) from the list to match the description.
A loan with the bank for which the Answer 1Choose...Cost of goods
company does not have to open a separate manufacturedMortgage loanTrade payablesBank
loan account. overdraftInput costsTotal manufacturing costs
The total costs that must be accounted for,
i.e. the cost of work-in-progress at the Answer 2Choose...Cost of goods
beginning of the period, plus the costs manufacturedMortgage loanTrade payablesBank
added during the period. overdraftInput costsTotal manufacturing costs

Feedback
The correct answer is:
A loan with the bank for which the company does not have to open a separate loan
account. → Bank overdraft,
The total costs that must be accounted for, i.e. the cost of work-in-progress at the
beginning of the period, plus the costs added during the period. → Total manufacturing
costs

Question 8
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Question text

Complete the following statements by choosing the correct answer from the options

provided:

• Mkhulu Company purchased inventory for the value of R500

000 from TK Suppliers on credit. The company’s quick ratio

would Blank 1 impossible to determine from the given

information.increasedecreaseremain unchanged.

• The process of reapportioning the costs of service

departments to production departments is known as Blank

2 secondary apportionmentoverhead absorptionover/under

overhead absorptionprimary apportionment

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• Mkhulu Company purchased inventory for the value of R500

000 from TK Suppliers on credit. The company’s quick ratio
would [remain unchanged.]
• The process of reapportioning the costs of service
departments to production departments is known as
[secondary apportionment]

Question 9
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Question text

Complete the following statements by choosing the correct answer from the options

provided:

• The balance of asset accounts is Blank

1 decreasedincreased by debit entries and Blank

2 increaseddecreased by credit entries.

• The balance of liabilities accounts is increased by Blank

3 debitcredit entries and decreased by Blank

4 creditdebit entries

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• The balance of asset accounts is [increased] by debit entries

and [decreased] by credit entries.
• The balance of liabilities accounts is increased by [credit]
entries and decreased by [debit] entries

Question 10
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Question text

Complete the following statements by choosing the correct answer from the options

provided:

• The Blank 1 Working capitalCurrent ratioDebt ratioQuick

ratio measures the company’s ability to pay off its current

liabilities with current assets.

• Blank 2 Creditors collection periodDebtors collection

periodCredit worthinessCredit period refers to the length of

time that customers will be allowed to pay their accounts.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• The [Working capital] measures the company’s ability to pay

off its current liabilities with current assets.
• [Credit period] refers to the length of time that customers will
be allowed to pay their accounts.

Question 11
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Complete the following statements by choosing the correct answer from the options

provided:

• Blank 1 Over- or-under-applied overheadUnder-applied

overheadOverhead appliedOver-applied overhead is a debit

balance in the Manufacturing overhead account that occurs

when the amount of overhead cost actually incurred is

greater than the amount of overhead cost applied to work-in-

process during a period.

• Blank 2 Cash budgetFixed budgetRolling budgetFlexible

budget is an estimation of cash inflows and outflows of the

company over a specified period of time.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• [Under-applied overhead] is a debit balance in the

Manufacturing overhead account that occurs when the
amount of overhead cost actually incurred is greater than the
amount of overhead cost applied to work-in-process during a
period.
• [Cash budget] is an estimation of cash inflows and outflows
of the company over a specified period of time.

Question 12
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Matome Company has provided you with the following inventory balances:
Inventory 1 January 31 January
Raw materials R5 000 R3 000
Work in process R13 000 R16 000
Finished goods R25 000 R27 000

Raw materials issued to production during the month of January amounted to R27 000.

Required:

Calculate the raw materials purchased during the month Blank 1 R25 000R16 000R27

000R19 000 .
Feedback
Feedback
Raw materials purchased
R
Raw materials issued to production 27 000
Add: closing inventory 3 000
Total 30 000
Less: opening inventory 5 000
Raw materials purchased 25 000

The correct answer is:

Matome Company has provided you with the following inventory balances:
Inventory 1 January 31 January
Raw materials R5 000 R3 000
Work in process R13 000 R16 000
Finished goods R25 000 R27 000
Raw materials issued to production during the month of January amounted to R27 000.
Required:
Calculate the raw materials purchased during the month [R25 000].

Question 13
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A company has over-absorbed production overheads for the period by R180 000. The

production overhead absorption rate was R160 per unit and is based on the budgeted

level of activity of 7 100 units. Actual production was 6 750 units.

Required

Calculate the following item and choose the correct answer from the options provided:
• Actual production overheads incurred for the period Blank

1 R900 000R1 200 000R1 020 000R1 080 000

Feedback
Feedback:
Actual overheads = absorbed overheads – over-absorbed overhead
= (R160 x 6 750 units) – R180 000
= R900 000

The correct answer is:

A company has over-absorbed production overheads for the period by R180 000. The
production overhead absorption rate was R160 per unit and is based on the budgeted
level of activity of 7 100 units. Actual production was 6 750 units.
Required
Calculate the following item and choose the correct answer from the options provided:

• Actual production overheads incurred for the period [R900

000]

Question 14
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Blender Limited absorbed overheads based on units produced. In March, 100 000 units

were produced, and the actual overheads were R500 000. Overheads were R50 000

under-absorbed during the month.

Required:

Calculate the absorption overhead rate per unit Blank 1 R5,00R4,00R4,50R5,50 .

Feedback
Feedback
R
Actual overheads 500 000
Less: under-absorbed overhead 50 000
450 000
R450 000/ 100 000 = R4,50

The correct answer is:

Blender Limited absorbed overheads based on units produced. In March, 100 000 units
were produced, and the actual overheads were R500 000. Overheads were R50 000
under-absorbed during the month.
Required:
Calculate the absorption overhead rate per unit [R4,50].

Question 15
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Question text

The following data relates to component G22Z:

Annual demand 1 225 units
Ordering costs R1 250
The variable holding cost per unit of inventory for one year R100

Required

Calculate the following item and choose the correct answer from the options provided:

• The economic order quantity (to the nearest whole

unit) Blank 1 750 units175 units495 units196 units

Feedback
Feedback:
EOQ = √(2 x 1 225) x R1 250 ÷ R100
= 175 units
The correct answer is:
The following data relates to component G22Z:
Annual demand 1 225 units
Ordering costs R1 250
The variable holding cost per unit of inventory for one year R100

Required
Calculate the following item and choose the correct answer from the options provided:

• The economic order quantity (to the nearest whole unit) [175
units]

Question 16
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The following information is provided for material item EK242:

Weekly usage 960 litres
…………………………………..................
Cost of placing an order R8,64
………………………..........
Holding costs per unit per year R14,40
……………........
Normal working weeks per annum …………..... 50 weeks

Required:

Calculate the following items and choose the correct answer from the list of options

provided:

• Economic order quantity (to the nearest whole unit) Blank

1 303 units400 units298 units240 units

• Number of orders to be placed in a year (to the nearest whole

order) Blank 2 161 orders120 orders158 orders200 orders

Feedback
Feedback:
EOQ = √(2 x R8,64 x (960 x 50) ÷ R14,40
= 240 units

• Orders per year = Annual demand

EOQ
= 48 000 units
240
= 200 orders

The correct answer is:

The following information is provided for material item EK242:
Weekly usage 960 litres
…………………………………..................
Cost of placing an order R8,64
………………………..........
Holding costs per unit per year R14,40
……………........
Normal working weeks per annum …………..... 50 weeks
Required:
Calculate the following items and choose the correct answer from the list of options
provided:

• Economic order quantity (to the nearest whole unit) [240

units]
• Number of orders to be placed in a year (to the nearest whole
order) [200 orders]
Question 17
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Wareng Company has provided you with the following selected financial data for the

year ended 31 December 2022:

Statement of financial data

R
Trade receivables 450 000
Inventory 540 000
Property, plant and equipment 900 000
Trade payables 300 000
Cash and cash equivalents 200 000
Issued capital 1 000 000
Accumulated profit 200 000
Long-term interest-bearing borrowing 1 200 000
Current liabilities 350 000
Short-term (interest-bearing borrowing) 250 000

Net credit sales for the year amounted to R3 000 000.

Required:

Calculate the following and choose the correct answer from the options provided:

• Net working capital Blank 1 R350 000R300 000R390

000R380 000 .

• Debtors collection period Blank 2 24,65 days365 days15

days54,75 days .

Feedback
Feedback
Net working capital
R
Current assets
Trade receivables 450 000
Inventory 540 000
Cash and cash equivalents 300 000
Total current assets 1 290 000
Current liabilities
Trade payables 300 000
Short-term interest-bearing borrowing 250 000
Current liabilities 350 000
Total current liabilities 900 000
Net working capital = Current assets minus current liabilities
= R1 290 000 - R900 000 = R390 000
Debtors collection period
Trade payables x 365 days
Sales
= R450 000 x 365 days
R3 000 000
= 54 ,75 days

The correct answer is:

Wareng Company has provided you with the following selected financial data for the
year ended 31 December 2022:
Statement of financial data
R
Trade receivables 450 000
Inventory 540 000
Property, plant and equipment 900 000
Trade payables 300 000
Cash and cash equivalents 200 000
Issued capital 1 000 000
Accumulated profit 200 000
Long-term interest-bearing borrowing 1 200 000
Current liabilities 350 000
Short-term (interest-bearing borrowing) 250 000
Net credit sales for the year amounted to R3 000 000.
Required:
Calculate the following and choose the correct answer from the options provided:

• Net working capital [R390 000].

• Debtors collection period [54,75 days].

Question 18
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Bambino Company makes and sells a single product called Bibo. The company’s

budgeted production in units for the next year are as follows:

Quarter Budgeted production
1 60 000 units
2 80 000 units
3 90 000 units
4 70 000 units

Each unit of finished product requires two (2) kilograms of direct material B. The

company’s policy is to maintain its inventory of material B on hand at end each quarter

equal to 25% of the next quarter’s production needs for material B.

Required:

Calculate the following and choose the correct answer from the options provided:

• Material B to be purchased in Quarter 2 Blank 1 165 000

kilograms205 000 kilograms200 000 kilograms82 500

kilograms .
• Closing inventory of material B in Quarter 3 Blank 2 70 000

kilograms40 000 kilograms17 500 kilograms35 000

kilograms .

Feedback
Feedback- Quarter 2
Budgeted production 80 000
X 2kg 2kg
Production requirements 160 000
Add: closing inventory (180 000 x 25%) 45 000
Total needs 205 000
Less: opening inventory (160 000 x 25%) 40 000
Material purchases (kg) 165 000

Closing inventory of material B in quarter 3

Budgeted production 70 000
X 2kg 2
Production requirements 140 000
140 000 x 25% = 35 000

The correct answer is:

Bambino Company makes and sells a single product called Bibo. The company’s
budgeted production in units for the next year are as follows:
Quarter Budgeted production
1 60 000 units
2 80 000 units
3 90 000 units
4 70 000 units
Each unit of finished product requires two (2) kilograms of direct material B. The
company’s policy is to maintain its inventory of material B on hand at end each quarter
equal to 25% of the next quarter’s production needs for material B.
Required:
Calculate the following and choose the correct answer from the options provided:

• Material B to be purchased in Quarter 2 [165 000 kilograms].

• Closing inventory of material B in Quarter 3 [35 000
kilograms].

Question 19
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Question text

The following is an extract from the trial balance of Azania Limited:

R
Trade receivables 360 400
Trade payables 711 760
Property, plant and equipment 1 440 600
Long-term loans 4 830 000
Investments 1 968 000
Inventory 929 500
Cash 198 000
Accrued expenses 159 250

Required:

Calculate the following items and choose the correct answer from the list of options

provided:

• Calculate the gross working capital Blank 1 R871 010R1 487

900R2 928 500R616 890

• Calculate the net working capital Blank 2 R616 890R2 057

490R776 140R871 010

Feedback
Feedback:
Gross working capital
R
Inventory 929 500
Trade receivables 360 400
Cash 198 000
Gross working capital 1 487 900

Net working capital

R
Gross working capital 1 487 900
Less: Current liabilities (871 010)
Accrued expenses 159 250
Trade payables 711 760
Net working capital 616 890

The correct answer is:

The following is an extract from the trial balance of Azania Limited:
R
Trade receivables 360 400
Trade payables 711 760
Property, plant and equipment 1 440 600
Long-term loans 4 830 000
Investments 1 968 000
Inventory 929 500
Cash 198 000
Accrued expenses 159 250

Required:
Calculate the following items and choose the correct answer from the list of options
provided:

• Calculate the gross working capital [R1 487 900]

• Calculate the net working capital [R616 890]

Question 1
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The statement of financial position contains the balances of assets and liabilities only.
True
False
Feedback
The statement of financial position contains the balances of the assets, liabilities and
owners' equity as well as the profit for the year as reported in the statement of profit or
loss.
The correct answer is 'False'.

Question 2
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The allocation of fixed production overheads is based on the theoretical capacity of the
production capacity.
True
False
Feedback
The allocation of fixed production overheads is based on the normal capacity of the
production capacity.
The correct answer is 'False'.

Question 3
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Question text
Total ordering costs are calculated by multiplying the average number of units in
inventory by the fixed cost per order.
True
False
Feedback
Total ordering costs are calculated by multiplying the number of orders paid by the fixed
cost per order.
The correct answer is 'False'.

Question 4
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The balance of the workers’ leave entitlement is called discretionary leave.
True
False
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The correct answer is 'True'.

Question 5
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Question text
The time value of money refers to the principle that an amount of money is worth more
today than the same amount of money will be worth in the future.
True
False
Feedback
The correct answer is 'True'.

Question 6
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All debt is considered in the calculation of quick ratio.
True
False
Feedback
The correct answer is 'False'.

Question 7
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Question text
Complete the following statements by choosing the correct answer from the options

provided:

• We calculate the cost of goods finished/manufactured

during the period as follows Blank 1 The cost of opening

inventory of direct materials, plus purchases of materials

minus the cost of closing inventory of materials.The cost of

opening inventory of direct materials, direct labour and

production overheads put into production during the

period.The cost of opening inventory of work-in-progress,

plus the cost of direct materials, direct labour and production

overheads put into production during the period, minus the

cost of closing inventory of work-in-progress.The cost of

opening inventory of finished goods, plus the cost of direct

materials, direct labour and production overheads put into

production during the period, minus the cost of closing

inventory of finished goods.

• When preparing a production budget, the quantity to be

produced is determined as follows Blank 2 Sales quantity –

opening inventory of finished goods – closing inventory of

finished goodsSales quantity – opening inventory of finished

goods + closing inventory of finished goodsSales quantity +

opening inventory of finished goods + closing inventory of

finished goodsSales quantity + opening inventory of finished

goods – closing inventory of finished goods

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:
• We calculate the cost of goods finished/manufactured
during the period as follows [The cost of opening inventory of
work-in-progress, plus the cost of direct materials, direct
labour and production overheads put into production during
the period, minus the cost of closing inventory of
work-in-progress.]
• When preparing a production budget, the quantity to be
produced is determined as follows [Sales quantity – opening
inventory of finished goods + closing inventory of finished
goods]

Question 8
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Complete the following statements by choosing the correct answer from the options

provided:

• Blank 1 InvestmentReturnProfitRisk is the probability that the

actual outcome of an event will be different from the

expected outcome.

• The inventory management strategy where inventory is

ordered and delivered based on sales or production forecast

is known as Blank 2 Economic Order Quantity (EOQ)Materials

requirement planning (MPR) systemJust-in-time (JIT)

systemSafety stock .

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• [Risk] is the probability that the actual outcome of an event

will be different from the expected outcome.
• The inventory management strategy where inventory is
ordered and delivered based on sales or production forecast
is known as [Materials requirement planning (MPR) system].

Question 9
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Question text

The general ledger accounts can be divided into five classes of accounts: assets,

liabilities, income, expenses and owners' equity. Select the appropriate nature of balance

as well as the statement in which the following accounts are reported:

Type of account Nature of balance Reported in
Assets Blank 1 creditdebit Blank 2 Statement
of financial
positionStatement
of profit or loss
Income Blank 3 creditdebit Blank 4 Statement
of financial
positionStatement
of profit or loss

Feedback
The correct answer is:
The general ledger accounts can be divided into five classes of accounts: assets,
liabilities, income, expenses and owners' equity. Select the appropriate nature of balance
as well as the statement in which the following accounts are reported:
Type of account Nature of balance Reported in
Assets [debit] [Statement of
financial position]
Income [credit] [Statement of
profit or loss]

Question 10
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Complete the following statements by choosing the correct answer from the options

provided:

• A Blank 1 batch costingnormal costingjob costingprocess

costing system is used when different products are

manufactured in an organisation and charged to a specific

job.

• Blank 2 Sales budgetProduction budgetDirect labour

budgetDirect materials budget shows the volume/quantity of

materials required for production in order to produce the

planned units.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• A [job costing] system is used when different products are

manufactured in an organisation and charged to a specific
job.
• [Direct materials budget] shows the volume/quantity of
materials required for production in order to produce the
planned units.

Question 11
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Complete the following statements by choosing the correct answer from the options

provided:

• Blank 1 Debt ratioOperating profit ratioDebt-equity

ratioReturn on assets ratio calculates the percentage of the

company’s financing that comes from creditors and

investors.

• The extra units that should be ordered in case the inventory

used while waiting for delivery was higher than anticipated

are known as Blank 2 Safety stockInventory

turnoverEconomic Order QuantityJust-in-time .

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided:

• [Debt-equity ratio] calculates the percentage of the

company’s financing that comes from creditors and
investors.
• The extra units that should be ordered in case the inventory
used while waiting for delivery was higher than anticipated
are known as [Safety stock].

Question 12
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Question text

Jimmy Company uses a job costing system. The following information was recorded in

February:
1 February
Work in process
inventory
Job number Direct materials Direct labour
1 R1 500 R400 R300
2 R2 000 R600 R750
3 R500 R1 000 R1 500
4 R250 R1 300 R2 400

Overheads are absorbed to jobs at the rate of 140% of direct labour cost. Jobs 1, 2 and 3

were completed during February and transferred to finished goods. Job 3 has been

delivered to the customer.

Required

Calculate the following and choose the correct answer from the options provided:

• The manufacturing costs added to jobs during the

month Blank 1 R11 880R12 500R15 180R8 250 .

Feedback
· The manufacturing costs added to jobs during the month [[1]].
R
Direct materials (R400 + R600 +R 1 000 + R1 300) 3 300
Direct labour (R300 + R750 +R1 500 + R2 400) 4 950
Absorbed overheads 6 930
(R300 x 140% + R750 x140% + R1 500 x 140% + R2 400 x
140%)
Total 15 180

The correct answer is:

Jimmy Company uses a job costing system. The following information was recorded in
February:
1 February
Work in process
inventory
Job number Direct materials Direct labour
1 R1 500 R400 R300
2 R2 000 R600 R750
3 R500 R1 000 R1 500
4 R250 R1 300 R2 400
Overheads are absorbed to jobs at the rate of 140% of direct labour cost. Jobs 1, 2 and 3
were completed during February and transferred to finished goods. Job 3 has been
delivered to the customer.
Required
Calculate the following and choose the correct answer from the options provided:

• The manufacturing costs added to jobs during the month

[R15 180].

Question 13
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Mzinyathi Limited operates a normal costing system.

The costs for one unit of product J are as follows:

Direct labour 6 hours @ R30 per hour

Direct materials 8,5 metres @ R36 per metre

Fixed production overheads for the year are budgeted to be R402 050 and are to be

recovered on the basis of the total of 18 700 direct labour hours for the year. Variable

production overheads are recovered at the rate of R24,75 per direct labour hour. Other

overheads, in relation to selling, distribution and administration amount to R165 per unit.

Required

Calculate the following item and choose the correct answer from the options provided:

• The total manufacturing cost for one unit of product J Blank

1 R615,00 per unitR763,50 per unitR928,50 per unitR780,00

per unit

Feedback
Feedback:
R
Direct materials (8,5 metres x R36) 306,00
Direct labour (6 hrs x R30) 180,00
Variable overhead (6 hrs x R24,75) 148,50
*Fixed overhead (6 hrs x R21,50) 129,00
Total cost for one unit 763,50

*Fixed production overhead absorption rate = R402 050 / 18 700

= R21,50 per direct labour hour
The correct answer is:
Mzinyathi Limited operates a normal costing system.
The costs for one unit of product J are as follows:
Direct labour 6 hours @ R30 per hour
Direct materials 8,5 metres @ R36 per metre
Fixed production overheads for the year are budgeted to be R402 050 and are to be
recovered on the basis of the total of 18 700 direct labour hours for the year. Variable
production overheads are recovered at the rate of R24,75 per direct labour hour. Other
overheads, in relation to selling, distribution and administration amount to R165 per unit.
Required
Calculate the following item and choose the correct answer from the options provided:

• The total manufacturing cost for one unit of product J

[R763,50 per unit]

Question 14
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Penina Company uses a predetermined overhead rate based on direct labour hours to

absorb manufacturing overhead to jobs. Last month the company incurred R250 000 in

actual manufacturing overhead account. The manufacturing overhead account was

over-absorbed by R12 000 for the month.

If the predetermined overhead rate per hour was R8,00 per direct labour hour, how many

hours were worked during the month Blank 1 29 750 hours32 750 hours31 250 hours30

250 hours

Feedback
Feedback:
R
Actual overheads 250 000
Add: over-absorbed overhead 12 000
Total 262 000
Direct labours hours actually worked
R262 000 / R8,00 = 32 750 hours

The correct answer is:

Penina Company uses a predetermined overhead rate based on direct labour hours to
absorb manufacturing overhead to jobs. Last month the company incurred R250 000 in
actual manufacturing overhead account. The manufacturing overhead account was
over-absorbed by R12 000 for the month.
If the predetermined overhead rate per hour was R8,00 per direct labour hour, how many
hours were worked during the month [32 750 hours]

Question 15
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The following data relates to Lepula Limited:

Days’ sales in inventory 73 days
Debtors’ collection period 31 days
Creditors payment period 36 days

Required

Calculate the following item and choose the correct answer from the options provided:

• Cash collection cycle Blank 1 37 days68 days78 days140

days

Feedback
Feedback:
The cash collection cycle:
= days' sales in inventory + debtors collection period (in days) – creditors payment
period (in days)
= 73 +31 – 36 = 68 days

The correct answer is:

The following data relates to Lepula Limited:
Days’ sales in inventory 73 days
Debtors’ collection period 31 days
Creditors payment period 36 days

Required
Calculate the following item and choose the correct answer from the options provided:

• Cash collection cycle [68 days]

Question 16
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Question text

The following is an extract from the financial statements of Feshene (Pty) Ltd for the

year ended 31 March 2023.

2023
R
Cost of sales 1 155 245
Gross profit 495 105
Inventories 742 960
Trade receivables 907 780

Required:

Complete the table below to calculate the following ratios and choose the correct

answer from the list of options provided:

Ratio 2023
Gross profit margin Blank
1 43%35%30%67%
Inventory turnover ratio Blank 2 1,22
times0,82 times0,64
times1,55 times

Feedback
Feedback:
Gross profit margin = Gross profit/ revenue
= R495 105
R1 650 350 (495 105 + 1 155 245)
= 30%

Inventory turnover ratio = Cost of sales

Inventories
= R1 155 245
R742 960
= 1,55 times

The correct answer is:

The following is an extract from the financial statements of Feshene (Pty) Ltd for the
year ended 31 March 2023.
2023
R
Cost of sales 1 155 245
Gross profit 495 105
Inventories 742 960
Trade receivables 907 780

Required:
Complete the table below to calculate the following ratios and choose the correct
answer from the list of options provided:
Ratio 2023
Gross profit margin [30%]
Inventory turnover ratio [1,55 times]

Question 17
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Question text

Phalazo (Pty) Ltd has recorded the following wage costs for direct production workers

for August 2023.

R
Normal wages 849 600
Overtime premium 25 000
Holiday pay 6 250
Total gross wages 880 850

The overtime is not a regular occurrence but is worked to catch up on a backlog in

production.

Required:

Complete the journal entry for the assignment of gross wages and benefits to

production by selecting the appropriate accounts and related amounts.

Debit Credit
R R
Blank 1 Work-in-progressWages payableWages Blank
clearance accountProduction overheads 2 R25
clearanceBank 000R880
850R31
250R6
250R849
600
Blank 3 Work-in-progressWages payableWages Blank
clearance accountProduction overheads 4 R25
clearanceBank 000R880
850R31
250R6
250R849
600
Blank 5 Work-in-progressWages payableWages Blank
clearance accountProduction overheads 6 R25
clearanceBank 000R880
850R31
250R6
250R849
600

Feedback
Feedback:
Debit Credit
R R
Work-in-progress 849 600
Production overheads clearance (R25 000 + R6 250) 31 250
Wages clearance account 880 850

The overtime is not a regular occurrence but is worked to catch up on a backlog in

production and therefore the overtime premium is an indirect labour cost to be 'charged'
to the production overheads clearance account. Similarly, the holiday pay is an indirect
labour cost, therefore the total debit to the production overheads clearance account is
R31 250. The direct wages of R849 600 is debited to the work in progress account and
the total gross wages is credited to the wages clearance account.

The correct answer is:

Phalazo (Pty) Ltd has recorded the following wage costs for direct production workers
for August 2023.
R
Normal wages 849 600
Overtime premium 25 000
Holiday pay 6 250
Total gross wages 880 850
The overtime is not a regular occurrence but is worked to catch up on a backlog in
production.
Required:
Complete the journal entry for the assignment of gross wages and benefits to
production by selecting the appropriate accounts and related amounts.

Debit Credit
R R
[Work-in-progress] [R849
600]
[Production overheads clearance] [R31 250]
[Wages clearance account] [R880
850]

Question 18
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Question text

Ndlunkulu (Pty) Ltd makes a component Tee which uses 4,5 kg of raw material Y.

The opening inventory at the start of next year is expected to be as follows:

Opening inventory of raw material Y, 4 750 kg @ R75

Opening inventory of component Tee, 3 000 units

Budgeted sales:

Sales of component Tee for the year are budgeted at 58 200 units. Production and sales

are budgeted to occur evenly throughout the year.

Budgeted closing inventories:

Closing inventory of raw material Y is budgeted at one month's worth of production.

Closing inventory of component Tee is budgeted at two months' worth of sales.

Required:
Calculate the following items and choose the correct answer from the list of options

provided:

• Number of units of component Tee are to be produced in the

year Blank 1 60 050 units56 350 units64 900 units51 500

units

• Quantity of material Y required to meet production for the

year Blank 2 253 575 kg231 750 kg292 050 kg270 225 kg

Feedback
Feedback:
Number of units of component Tee are to be produced in the year:
Monthly sales = 58 200 / 12 = 4850 units per month (closing inv = 9 700 units)
Production = Sales + closing inventory – opening inventory
= 58 200 + 9 700 – 3 000
= 64 900 units of Tee to be produced
Quantity of material Y required to meet production for the year:
= Production units of Tee × 4,5 kg
= 64 900 x 4,5 kg
= 292 050 kg

The correct answer is:

Ndlunkulu (Pty) Ltd makes a component Tee which uses 4,5 kg of raw material Y.
The opening inventory at the start of next year is expected to be as follows:
Opening inventory of raw material Y, 4 750 kg @ R75
Opening inventory of component Tee, 3 000 units
Budgeted sales:
Sales of component Tee for the year are budgeted at 58 200 units. Production and sales
are budgeted to occur evenly throughout the year.
Budgeted closing inventories:
Closing inventory of raw material Y is budgeted at one month's worth of production.
Closing inventory of component Tee is budgeted at two months' worth of sales.
Required:
Calculate the following items and choose the correct answer from the list of options
provided:

• Number of units of component Tee are to be produced in the

year [64 900 units]
• Quantity of material Y required to meet production for the
year [292 050 kg]

Question 19
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Question text

Cobra Company provided you with the following sales forecast for the first four months

of the coming year:

January February March April
Sales value R300 000 R360 000 R280 000 R240 000

Additional information:

80% of sales are on credit.

50% of credit sales are paid in the month of sale.

30% of credit sales are collected in the month following the month of sale, and the

remainder is collected in the second month following the month of sale. There are no

bad debts.

Required:

Calculate the following and choose the correct answer from the options provided:

• total cash receipts for March Blank 1 R280 000R224

000R302 400R246 400 .

• total collection from customers for April Blank 2 R192

000R220 800R224 000R96 000 .

Feedback
R
Cash sales (R280 000 x 20%) 56 000
Collection from customers 246 400
March: (R224 000 x 50%) 112 000
February: (R288 000 x 30%) 86 400
January: (R240 000 x 20%) 48 000
Total cash receipts 302 400
Collection from customers for April
R
April: (R192 000 x 50%) 96 000
March: (R224 000 x 30%) 67 200
February: (R288 000 x 20%) 57 600
Total 220 800

The correct answer is:

Cobra Company provided you with the following sales forecast for the first four months
of the coming year:
January February March April
Sales value R300 000 R360 000 R280 000 R240 000
Additional information:
80% of sales are on credit.
50% of credit sales are paid in the month of sale.
30% of credit sales are collected in the month following the month of sale, and the
remainder is collected in the second month following the month of sale. There are no
bad debts.
Required:
Calculate the following and choose the correct answer from the options provided:

• total cash receipts for March [R302 400].

• total collection from customers for April [R220 800].

Question 1
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Question text
Merchandise consists of goods manufactured by the company with the intention of
reselling it.
True
False
Feedback
Merchandise consists of goods purchased by the company with the intention of
reselling it.
The correct answer is 'False'.

Question 2
Correct
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Question text
Under a periodic inventory system, the cost of sales is higher than under a perpetual
inventory system.
True
False
Feedback
Periodic and perpetual inventory systems merely determine how often the quantities of
inventories on hand will be updated. It has nothing to do with the cost at which
inventories are carried.
The correct answer is 'False'.

Question 3
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Question text
The absorption costing method treats only variable costs as product costs.
True
False
Feedback
The absorption costing method treats fixed and variable manufacturing costs as
product costs.

The correct answer is 'False'.

Question 4
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Question text
Financial management entails the planning, monitoring and control of the physical
resources of the entity.
True
False
Feedback
Financial management entails the planning, monitoring and control of the financial
resources of the entity.
The correct answer is 'False'.

Question 5
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Question text
The information contained in financial statements are used by the external parties only.
True
False
Feedback
The information contained in financial statements are used by the internal and external
parties.
The correct answer is 'False'.

Question 6
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Question text
The two most widely used methods of cost accumulation are job costing and process
costing.
True
False
Feedback
The correct answer is 'True'.

Question 7
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Question text
Complete the following statements by choosing the correct answer from the options

provided.

• Inadequate levels of working capital, uncertain market and

inexperienced managers are factors that belong to which

category of the Strengths, Weaknesses, Opportunities and

Threats (SWOT) analysis Blank

1 Strengths.Weaknesses.Opportunities.Threats.

• A manufacturing company is very busy, and overtime is being

worked. The amount of overtime premium contained in direct

wages would normally be classified as Blank 2 administrative

overheaddirect labour costpart of prime costproduction

overhead

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided.

• Inadequate levels of working capital, uncertain market and

inexperienced managers are factors that belong to which
category of the Strengths, Weaknesses, Opportunities and
Threats (SWOT) analysis [Weaknesses.]
• A manufacturing company is very busy, and overtime is being
worked. The amount of overtime premium contained in direct
wages would normally be classified as [production overhead]

Question 8
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Question text
Complete the following statements by choosing the correct answer from the options

provided.

• An increase in production within the relevant range will Blank

1 cause variable production costs to increase in total.cause

variable production costs to increase on a per unit basis.have

no effect on either fixed or variable production costs.cause

fixed production costs to increase in total.

• A management accountant who prepares a useful report

after analysing data is exhibiting Blank

2 competenceobjectivityneutralityconfidentiality

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided.

• An increase in production within the relevant range will

[cause variable production costs to increase in total.]
• A management accountant who prepares a useful report
after analysing data is exhibiting [competence]

Question 9
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Question text

Complete the following by choosing the correct answer from the options provided.

• The area of accounting that provides economic and financial

information for investors, creditors and other external users

is Blank 1 Forensic accountingCost accountingFinancial

accountingManagement accounting
• A wholesaler who supplies goods to a retailer on credit would

be most interested in the organisation’s Blank 2 current

ratioasset turnoverdebt ratioprofit margin .

Feedback
The correct answer is:
Complete the following by choosing the correct answer from the options provided.

• The area of accounting that provides economic and financial

information for investors, creditors and other external users
is [Financial accounting]
• A wholesaler who supplies goods to a retailer on credit would
be most interested in the organisation’s [current ratio].

Question 10
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Question text

Complete the following statements by choosing the correct answer from the options

provided.

• The ratios which reveal the result of the managerial policies

and performance are known as Blank 1 Long-term solvency

ratiosShort-term solvency ratiosProfitability ratiosEfficiency

ratios .

• Financial and management accounting are similar in that

both Blank 2 are mandatoryinvolve summarizing financial

dataemphasize the organisation as a wholeemphasize the

relevance and flexibility of data .

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided.
• The ratios which reveal the result of the managerial policies
and performance are known as [Profitability ratios].
• Financial and management accounting are similar in that
both [involve summarizing financial data].

Question 11
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Question text

Complete the following statements by choosing the correct answer from the options

provided.

• Conversion costs refer to the costs incurred to convert Blank

1 direct materials into finished goods inventory.finished

goods into sales.direct materials into work-in-progress

inventory.work-in-progress into finished goods inventory.

• The cost of depreciation Blank 2 variesdo not vary with the

volume of production.

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options
provided.

• Conversion costs refer to the costs incurred to convert [direct

materials into finished goods inventory.]
• The cost of depreciation [do not vary] with the volume of
production.

Question 12
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Question text

Modise Company pays its production workers a bonus of 20% of the standard hours at

the normal wage rate of R10,00 per hour. Each worker is expected to produce 25 units

per hour. Last month 16 500 hours were worked, and 450 000 units were produced.
Required:

The total amount of the group bonus amounted to Blank 1 R16 500R15 000R3 000R1

500 :

Feedback
Feedback
Standard hours (450 000 hrs / 25 units) 18 000 hrs
Actual hours 16 500 hrs
Hours saved 1 500 hrs
Bonus = 1 500 hrs x 20% x R10,00 = R3 000

The correct answer is:

Modise Company pays its production workers a bonus of 20% of the standard hours at
the normal wage rate of R10,00 per hour. Each worker is expected to produce 25 units
per hour. Last month 16 500 hours were worked, and 450 000 units were produced.
Required:
The total amount of the group bonus amounted to [R3 000]:

Question 13
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Question text

The variable cost per unit is R12 and the total fixed costs are R330 000.

If the total cost is R690 000, Blank 1 57 50030 00027 50085 000 units have been

produced.
Feedback
Feedback:
(R690 000 – R330 000) / R12
= R30 000 units
The correct answer is:
The variable cost per unit is R12 and the total fixed costs are R330 000.
If the total cost is R690 000, [30 000] units have been produced.

Question 14
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Question text

Mfundisi Company budgeted to produce 1 000 chairs. The budgeted production costs

for 1 000 chairs are as follows:

R
Direct materials 5 000
Direct labour 8 000
Fixed overhead 5 000

Required:

The production costs if 1 750 chairs are produced amount to Blank 1 R27 750R21

750R24 000R31 500 .

Feedback
Feedback
Direct materials = R5 000/ 1 000 chairs = R5.00 per chair
Direct labour = R8 000 / 1 000 chairs = R8.00 per chair
Fixed overheads remain unchanged.
R5.00 + R8.00 = R13.00
Variable cost= 1 750 x R13.00 = R22 750
Total cost= Variable cost + fixed cost =R22 750 + R5 000 = R27 750

The correct answer is:

Mfundisi Company budgeted to produce 1 000 chairs. The budgeted production costs
for 1 000 chairs are as follows:
R
Direct materials 5 000
Direct labour 8 000
Fixed overhead 5 000
Required:
The production costs if 1 750 chairs are produced amount to [R27 750].

Question 15
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Question text

Lucy is employed in the assembly section of a factory. She is entitled to four weeks' paid

leave per annum and a bonus equal to two weeks' normal wage. She is also entitled to 9

paid public holidays per year. A normal day is 8 hours, which include 42 minutes for tea

and lunch breaks; and a normal week is 5 days – Monday to Friday. Normal wage per

hour is R98 for Lucy. The company contributes 7,5% of normal wages on behalf of

employees towards the pension fund. Normal idle time is considered as 6% of available

hours.

Required:

Calculate the following item and choose the correct answer from the options provided:

• Lucy’s annual productive hours that the factory will use for

budgeting purposes (rounded to the nearest one

decimal) Blank 1 1 848 hours1 737,1 hours1 827,8 hours1

585,1 hours

Feedback
Feedback:
Number of hours in a year (52 weeks x *36,5 hours) 1 898
Less vacation (4 weeks x 36,5 hours) 146
Less: public holidays (9 x 7,3 hours) 65,7
Annual available hours 1 686,3
Less: Idle time (1 686,3 x 6%) 101,2
Annual productive hours 1 585,1
* [8 hours – 0,7 hrs (for breaks)]x 5 = 36,5

The correct answer is:

Lucy is employed in the assembly section of a factory. She is entitled to four weeks' paid
leave per annum and a bonus equal to two weeks' normal wage. She is also entitled to 9
paid public holidays per year. A normal day is 8 hours, which include 42 minutes for tea
and lunch breaks; and a normal week is 5 days – Monday to Friday. Normal wage per
hour is R98 for Lucy. The company contributes 7,5% of normal wages on behalf of
employees towards the pension fund. Normal idle time is considered as 6% of available
hours.
Required:
Calculate the following item and choose the correct answer from the options provided:

• Lucy’s annual productive hours that the factory will use for
budgeting purposes (rounded to the nearest one decimal) [1
585,1 hours]

Question 16
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Question text

Mokotjo Company has total cost of R434 000 which includes variable cost per unit of

R2,80. If the company produces 140 000 units, how much is the total variable element

of R434 000 and how much of it is fixed cost Blank 1 variable element is R392 000; Fixed

element is R42 000variable element is R42 000; Fixed element is R392 000variable

element is R279 000; Fixed element is R155 000variable element is R155 000; Fixed

element is R279 000 .

Feedback
Feedback:
Variable element =140 000 units x R2.80 = R392 000
Fixed element = (R434 000 – R392 000)
= R42 000

The correct answer is:

Mokotjo Company has total cost of R434 000 which includes variable cost per unit of
R2,80. If the company produces 140 000 units, how much is the total variable element
of R434 000 and how much of it is fixed cost [variable element is R392 000; Fixed
element is R42 000].

Question 17
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Question text

Bluey Company had the following operating results for the month ended 30 April:
Finished goods inventory: 1 April R86 000
Finished goods inventory: 30 April R60 000
Sales R500 000
Gross profit R72 000

Required:

Calculate the amount of cost of goods manufactured for the month of April Blank

1 R474 000R402 000R428 000R454 000 .

Feedback
Feedback:
R
Sales 500 000
Less: gross profit 72 000
Cost of sales 428 000
Add: Finished goods: 30 April 60 000
Total available 488 000
Less: finished goods: 1 April 86 000
Cost of goods sold 402 000

The correct answer is:

Bluey Company had the following operating results for the month ended 30 April:
Finished goods inventory: 1 April R86 000
Finished goods inventory: 30 April R60 000
Sales R500 000
Gross profit R72 000
Required:
Calculate the amount of cost of goods manufactured for the month of April [R402 000].

Question 18
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Question text

Goitsemang Company uses a job costing system and overheads are absorbed on direct

labour costs. The following information relates to the three jobs that were worked during

the period:
Job 1 Job 2 Job 3
Opening WIP 8 500 0 46 000
Materials 17 150 29 025 0
Labour 12 500 23 000 4 500

The amount of the budgeted overhead for the period was R140 000.

Job 3 was completed during the period and consisted of 2 400 units. The company

adds 50% to the total production costs to arrive at the selling price per unit.

Required:

Calculate the following and choose the correct answer from the options provided:

• Predetermined overhead rate Blank 1 50%350%28.6%35%

• Selling price per unit for Job 3 Blank

2 R27.10R58.33R31.56R41.41

Feedback
Feedback:
Budgeted overheads/ total direct labour cost
= R140 000/ (R12 500 + 23 000 + 4 500)
= R140 000/ R40 000
= 350%
The selling price per unit
R
Opening WIP 46 000
Materials 0
Labour 4 500
Overheads (R4 500 x 350%) 15 750
Production costs 66 250
Mark-up% (R66 250 x 50%) 33 125
Total sales value 99 375
Selling price per unit= Total sales value/ units produced
R99 375/ 2 400 = R41.41

The correct answer is:

Goitsemang Company uses a job costing system and overheads are absorbed on direct
labour costs. The following information relates to the three jobs that were worked during
the period:
Job 1 Job 2 Job 3
Opening WIP 8 500 0 46 000
Materials 17 150 29 025 0
Labour 12 500 23 000 4 500
The amount of the budgeted overhead for the period was R140 000.
Job 3 was completed during the period and consisted of 2 400 units. The company
adds 50% to the total production costs to arrive at the selling price per unit.
Required:
Calculate the following and choose the correct answer from the options provided:

• Predetermined overhead rate [350%]

• Selling price per unit for Job 3 [R41.41]

Question 19
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Question text

Sakhisizwe (Pty) Ltd operates a normal costing system. One (1) unit of Product B

requires R765 of direct materials and R480 of direct labour. Direct labour is paid at the

rate of R120 per hour. Variable production overheads are absorbed at a rate of R185 per

direct labour hour and fixed production overheads are absorbed at a rate of 60% of

prime cost.

Required:

Calculate the following items and choose the correct answer from the list of options

provided:

• The prime cost of one unit of Product B Blank 1 R1 245R1

155R600R1 365

• Total input costs of one unit of Product B Blank 2 R2 924R2

177R2 033R2 732

Feedback
Feedback:
R
Direct materials 765
Direct labour 480
Prime costs 1 245
Variable production overheads (R480/R120) x R185 740
Fixed overheads (R1 245 x 60%) 747
Total input costs R2 732

The correct answer is:

Sakhisizwe (Pty) Ltd operates a normal costing system. One (1) unit of Product B
requires R765 of direct materials and R480 of direct labour. Direct labour is paid at the
rate of R120 per hour. Variable production overheads are absorbed at a rate of R185 per
direct labour hour and fixed production overheads are absorbed at a rate of 60% of
prime cost.
Required:
Calculate the following items and choose the correct answer from the list of options
provided:

• The prime cost of one unit of Product B [R1 245]

• Total input costs of one unit of Product B [R2 732]

Question 20
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Question text

The following information was obtained from the books of Kusile Limited, regarding

material ESK for the year ended 31 August 2023:

Average inventory...................................................................... 50 units
Annual 3 000 units
demand………………………………………………….........................
Orders per year.......................................................................... 30 orders
Annual holding costs................................................................ R1 500

The above quantities and costs are optimal according to the Economic Order Quantity

formula approach.

Required:

Calculate the following item and choose the correct answer from the list of options

provided:

• Annual holding cost per unit Blank 1 R15 per unitR30 per

unitR50 per unitNone of the mentioned options

• The economic order quantity Blank 2 600 units100 unitsNone

of the mentioned options60 units

Feedback
Feedback
· Annual holding cost per unit = Annual holding costs / average inventory
= R1 500 / 50 units
= R30 per unit
· EOQ = average inventory x 2
= 50 units x 2
= 100 units
or = annual demand/number of orders
= 3 000 units/30
= 100 units

The correct answer is:

The following information was obtained from the books of Kusile Limited, regarding
material ESK for the year ended 31 August 2023:
Average inventory...................................................................... 50 units
Annual 3 000 units
demand………………………………………………….........................
Orders per year.......................................................................... 30 orders
Annual holding costs................................................................ R1 500
The above quantities and costs are optimal according to the Economic Order Quantity
formula approach.
Required:
Calculate the following item and choose the correct answer from the list of options
provided:

• Annual holding cost per unit [R30 per unit]

• The economic order quantity [100 units]

Question 21
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Question text

An extract from a company's 2024 sales budget is as follows:

R
January 672 000
February 890 000
March 705 000
April 846 000

Ten percent (10%) of sales are paid for immediately in cash. Of the credit customers, 30

percent (30%) pay in the month following the sale and are entitled to a one percent (1%)

discount. The remaining customers pay two months after the sale is made.

Required:

Calculate the following items and choose the correct answer from the list of options

provided:

• The value of sales receipts shown in the company's cash

budget for March (rounded) Blank 1 R673 486R734 160R731

757R70 500

• The value of sales receipts shown in the company's cash

budget for April (rounded) Blank 2 R84 600R673 486R833

747R835 650

Feedback
Feedback:

R
Cash sales in March (R705 000 x 10%) 70 500
Receipts from February (R890 000 x 90% x 30% x 99%) 237 897
Receipts from January (R672 000 x 90% x 70%) 423 360
Total receipts in March 731 757

R
Cash sales in April (R846 000 x 10%) 84 600
Receipts from March (R705 000 x 90% x 30% x 99%) 188 447
Receipts from February (R890 000 x 90% x 70%) 560 700
Total receipts in April 833 747

The correct answer is:

An extract from a company's 2024 sales budget is as follows:
R
January 672 000
February 890 000
March 705 000
April 846 000

Ten percent (10%) of sales are paid for immediately in cash. Of the credit customers, 30
percent (30%) pay in the month following the sale and are entitled to a one percent (1%)
discount. The remaining customers pay two months after the sale is made.
Required:
Calculate the following items and choose the correct answer from the list of options
provided:

• The value of sales receipts shown in the company's cash

budget for March (rounded) [R731 757]
• The value of sales receipts shown in the company's cash
budget for April (rounded) [R833 747]

Question 1
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Question text
Total ordering costs are calculated by multiplying the average number of units in inventory
by the fixed cost per order.
True
False
Feedback
Total ordering costs are calculated by multiplying the number of orders paid by the fixed
cost per order.
The correct answer is 'False'.

Question 2
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Question text
Depreciation on manufacturing equipment is not a product cost.
True
False
Feedback
Depreciation on manufacturing equipment is a product cost.
The correct answer is 'False'.

Question 3
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Question text
Step variable costs are predominately fixed in nature.
True
False
Feedback
Step variable costs are predominately variable in nature.
The correct answer is 'False'.

Question 4
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Question text
There can be an amount for cost of goods manufactured in a month with zero sales.
True
False
Feedback
The correct answer is 'True'.

Question 5
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Question text
In a manufacturing enterprise, both work-in-progress and finished goods inventories are
purchased.

True
False
Feedback
Neither work-in-progress nor finished goods are purchased; they are manufactured.
The correct answer is 'False'.

Question 6
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Question text
The higher the ordering costs of a company, the lower the holding costs will be; and the
higher the holding costs, the lower the ordering costs will be.
True
False
Feedback
The correct answer is 'True'.

Question 7
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Question text

Complete the following statements by choosing the correct answer from the options provided:

• Risk evaluation attempts to assess each risk according to Blank

1 probability and likelihoodprobability and

availabilityprobability and mitigationprobability and impact

• A budget that is prepared for a single level of activity that is

expected to occur in the future, is referred to as Blank 2 financial

budgetflexible budgetcash budgetstatic budget

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options provided:

• Risk evaluation attempts to assess each risk according to

[probability and impact]
• A budget that is prepared for a single level of activity that is
expected to occur in the future, is referred to as [static budget]

Question 8
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Question text

Complete the following statements by choosing the correct answer from the options provided:

• Blank 1 Inventory levelsProduction supervisor

salariesDistribution costsManufacturing costs is not considered

part of the production budget.

• The focal point of financial management in a company is Blank

2 the number and types of products and services provided by the

company.the creation of value for the shareholders of the

company.minimising the amount of taxes the company has to

pay.maximising profits of the company

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options provided:

• [Distribution costs] is not considered part of the production

budget.
• The focal point of financial management in a company is [the
creation of value for the shareholders of the company.]

Question 9
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Complete the following statements by choosing the correct answer from the options provided.
• The Blank 1 assessment rates relating to the factory

buildingsalary of the factory managerdepreciation of

manufacturing plantcost of indirect materials issued to

production would not be considered as a fixed production cost.

• The process of comparing actual costs to budgeted costs and

taking corrective action is called Blank

2 monitoringcontrollingplanningimplementing .

Feedback
The correct answer is:
Complete the following statements by choosing the correct answer from the options provided.

• The [cost of indirect materials issued to production] would not

be considered as a fixed production cost.
• The process of comparing actual costs to budgeted costs and
taking corrective action is called [controlling].

Question 10
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Question text

Complete the following statements by choosing the correct answer from the options provided.

• The risk that the company’s cash flows will not be sufficient to

cover its financial obligations is known as Blank 1 operational

riskfinancial riskreputational riskcompliance risk .

• Amanzi Clearwater Limited manufactures one and two litre

bottles of sparking mineral water. Depreciation of the bottling

equipment is charged as a manufacturing expense and is

calculated on the straight-line method of depreciation. Assuming

that the cost object is the product (bottles of mineral water), the

depreciation cost would be classified as Blank 2 fixed and

indirectfixed and directvariable and indirectvariable and direct .

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The correct answer is:
Complete the following statements by choosing the correct answer from the options provided.

• The risk that the company’s cash flows will not be sufficient to
cover its financial obligations is known as [financial risk].
• Amanzi Clearwater Limited manufactures one and two litre
bottles of sparking mineral water. Depreciation of the bottling
equipment is charged as a manufacturing expense and is
calculated on the straight-line method of depreciation. Assuming
that the cost object is the product (bottles of mineral water), the
depreciation cost would be classified as [fixed and indirect].

Question 11
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Complete the following statements by choosing the correct answer from the options provided.

• Management accounting information is cost effective

when Blank 1 the information is based on historical cost, rather

than replacement values.the value of the information exceeds the

cost of producing it.the information is generated by computer

software.the information assists management in controlling

costs. .

• The quick ratio excludes Blank 2 trade payablestrade

receivablesinventorycash and cash equivalents .

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The correct answer is:
Complete the following statements by choosing the correct answer from the options provided.

• Management accounting information is cost effective when [the

value of the information exceeds the cost of producing it.].
• The quick ratio excludes [inventory].

Question 12
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Question text

Uncedo (Pty) Ltd budgeted for production overheads of R1 925 000. The plant-wide

overhead recovery rate is R50 per labour hour. Production overheads of R75 is apportioned to

each unit manufactured.

Required:

Calculate the following item and choose the correct answer from the options provided:

• Labour hours spent on the production of one unit Blank 1 1 hour

30 minutes1 hour1 hour 40 minutes67 minutes

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Feedback:
R75 / R50 = 1,5. Thus 1,5 labour hours are spent on the production of one unit.

The correct answer is:

Uncedo (Pty) Ltd budgeted for production overheads of R1 925 000. The plant-wide
overhead recovery rate is R50 per labour hour. Production overheads of R75 is apportioned to
each unit manufactured.
Required:
Calculate the following item and choose the correct answer from the options provided:

• Labour hours spent on the production of one unit [1 hour 30

minutes]

Question 13
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During the month of March, Mash and Bear manufacturers incurred R30 000, R40 000 and

R20 000 of direct material, direct labour and manufacturing overhead costs respectively. If

the cost of goods manufactured was R95 000 and the closing work in process inventory was

R15 000, the beginning inventory of work in process must have been Blank 1 R20 000R110

000R5 000R10 000 .

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Feedback:
R
Direct material 30 000
Direct labour 40 000
Manufacturing overhead 20 000
Total manufacturing overhead 90 000
Add: opening WIP ?
Total
Less: Closing WIP 15 000
Cost of goods manufactured 95 000

R95 000 + R15 000 = R110 000

R110 000 – R90 000 = R20 000
Therefore: opening WIP = R20 000

The correct answer is:

During the month of March, Mash and Bear manufacturers incurred R30 000, R40 000 and
R20 000 of direct material, direct labour and manufacturing overhead costs respectively. If
the cost of goods manufactured was R95 000 and the closing work in process inventory was
R15 000, the beginning inventory of work in process must have been [R20 000].

Question 14
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RJ Company’s manufacturing overhead is 60% of its total conversion costs. If direct labour

is R52 000 and direct materials cost is R28 000, the manufacturing overhead is Blank 1 R34
667R78 000R120 000R42 000 .
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Feedback:
R52 000/40% = R130 000
R130 000 x 60% = R78 000

The correct answer is:

RJ Company’s manufacturing overhead is 60% of its total conversion costs. If direct labour
is R52 000 and direct materials cost is R28 000, the manufacturing overhead is [R78 000].

Question 15
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Question text
You received the following information from Ithonya (Pty) Ltd, regarding Nkateko. Nkateko
works on an hourly basis. The clock card revealed the following hours worked by Nkateko in
the week ending 10 September 2023:
Mon Tue Wed Thur Fri Sat Sun
Hours worked 9 8 8 8 9 4 2

· The normal working week extends from Monday to Friday at 8 hours per day.
· Normal overtime applies to Saturday.
· Hourly rates:
R38 normal rate per hour
1,5 times the normal rate for normal overtime
2 times normal rate for other overtime
· The policy of the company is to charge the cost of overtime to indirect labour.

Required:
Calculate the missing items then drag and drop the correct answer from the options provided.
R
Direct wage/labour R1 824
Add: Overtime premium R190
Gross wage R2 014

R1 710 R1 748 R1 520

R342 R494 R456
R2 204 R2 242 R2 318
Feedback
Direct wage (R38 x 48 hours) 1 824
Overtime premium (R38 x 0,5 x 6 hours) + (R38 x 1 x 2) 190
Gross wage 2 014

The correct answer is:

You received the following information from Ithonya (Pty) Ltd, regarding Nkateko. Nkateko
works on an hourly basis. The clock card revealed the following hours worked by Nkateko in
the week ending 10 September 2023:
Mon Tue Wed Thur Fri Sat Sun
Hours worked 9 8 8 8 9 4 2

· The normal working week extends from Monday to Friday at 8 hours per day.
· Normal overtime applies to Saturday.
· Hourly rates:
R38 normal rate per hour
1,5 times the normal rate for normal overtime
2 times normal rate for other overtime
· The policy of the company is to charge the cost of overtime to indirect labour.

Required:
Calculate the missing items then drag and drop the correct answer from the options provided.
R
Direct wage/labour [R1 824]
Add: Overtime premium [R190]
Gross wage [R2 014]

Question 16
Correct
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Question text
Nkwezela Wholesale had an opening inventory of 250 units of product M valued at R320 per

unit at the beginning of August 2023. Nkwezela Wholesale uses a perpetual inventory

system. The following purchases and sales were recorded during August.
Date 2 Aug 13 Aug 23 Aug 26 Aug 30 Aug
Purchases/receipts 220 units @ 160 units @R325
R323 per unit per unit
Sales (units) 190 210 80

Required:

Calculate the following item and choose the correct answer from the list of options provided:

The cost of sales on 23 August, using a FIFO method of valuation Blank 1 R67 650R67

830R67 200R67 950

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Feedback:
Date Activity Units Unit cost Total value
(R) (R)
1 Aug Opening bal 250 units 320 80 000
2 Aug Sales (190 units) 320 60 800
Balance 60 units 320 19 200
13 Aug Purchases 220 units 323 71 060
23 Aug Sales (60 units) 320 (19 200)
(150 units) 323 (48 450)
Balance 70 units 323 22 610

The correct answer is:

Nkwezela Wholesale had an opening inventory of 250 units of product M valued at R320 per
unit at the beginning of August 2023. Nkwezela Wholesale uses a perpetual inventory
system. The following purchases and sales were recorded during August.
Date 2 Aug 13 Aug 23 Aug 26 Aug 30 Aug
Purchases/receipts 220 units @ 160 units @R325
R323 per unit per unit
Sales (units) 190 210 80

Required:
Calculate the following item and choose the correct answer from the list of options provided:
The cost of sales on 23 August, using a FIFO method of valuation [R67 650]

Question 17
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In January, direct labour was 60% of conversion costs. If the manufacturing overhead cost for

the month was R36 000 and the direct labour cost was R22 000, the direct labour cost

was Blank 1 R54 000R30 000R14 000R24 000 .

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Feedback
R36 000/40% = R90 000
R90 000 x 60% = R54 000

The correct answer is:

In January, direct labour was 60% of conversion costs. If the manufacturing overhead cost for
the month was R36 000 and the direct labour cost was R22 000, the direct labour cost was
[R54 000].

Question 18
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Question text

Last month a manufacturing company had the following operating results:

R
Sales 505 000
Gross margin 63 000
Finished goods: 1 September 2023 84 000
Finished goods: 30 September 2023 71 000

Required:

Calculate the following and choose the correct answer from the options provided:

• Cost of sales for the month Blank 1 R442 000R492 000R455

000R429 000

• Cost of goods manufactured for the month would be Blank

2 R429 000R442 000R492 000R450 000 .

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Feedback
R
Sales 505 000
Less: gross margin 63 000
Cost of sales 442 000
Add: finished goods- 30 September 71 000
513 000
Less: finished goods- 1 September 84 000
Cost of goods manufactured 429 000

The correct answer is:

Last month a manufacturing company had the following operating results:
R
Sales 505 000
Gross margin 63 000
Finished goods: 1 September 2023 84 000
Finished goods: 30 September 2023 71 000
Required:
Calculate the following and choose the correct answer from the options provided:

• Cost of sales for the month [R442 000]

• Cost of goods manufactured for the month would be [R429
000].

Question 19
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Moloantwa Company has provided you with the following selected financial data for the

years ended 31 December 2022 and 2021:

2022 2021
Revenue from sales 2 500 000 2 000 000
Cost of sales 1 200 000 1 000 000
Trade receivables 450 000 400 000
Distribution costs 500 000 450 000
Non-current liabilities 1 000 000 950 000
Trade payables 700 000 800 000
Inventories 540 000 500 000
Short-term borrowings 240 000 250 000
Cash and cash equivalents 300 000 350 000

Calculate the following and choose the correct answer from the options provided.

• Operating profit margin for the year ended 2022 Blank

1 32%52%40%50%

• Debt ratio for the year ended 2021 Blank

2 84%100%64%62.5%

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Feedback
R
Revenue from sales 2 500 000
Less: cost of sales 1 200 000
Gross profit 1 300 000
Less: distribution costs 500 000
Operating profit 800 000
Operating profit margin = operating profit/ Sales
R800 000/ R2 500 000 = 32%
Debt ratio = Total liabilities/ total assets
R1 050 000/ R1 250 000 = 84%
Total assets Total liabilities
Trade receivables 400 000
Inventory 500 000
Cash and cash equivalents 350 000
Total current assets 1 250 000
Trade payables 800 000
Short-term borrowings 250 000
Total current liabilities 1 050 000

The correct answer is:

Moloantwa Company has provided you with the following selected financial data for the
years ended 31 December 2022 and 2021:
2022 2021
Revenue from sales 2 500 000 2 000 000
Cost of sales 1 200 000 1 000 000
Trade receivables 450 000 400 000
Distribution costs 500 000 450 000
Non-current liabilities 1 000 000 950 000
Trade payables 700 000 800 000
Inventories 540 000 500 000
Short-term borrowings 240 000 250 000
Cash and cash equivalents 300 000 350 000
Calculate the following and choose the correct answer from the options provided.

• Operating profit margin for the year ended 2022 [32%]

• Debt ratio for the year ended 2021 [84%]
Question 20
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Jagger Company budgeted to sell 200 000 units of finished product in July and anticipate a

growth rate in sales of 5% per month. The desired monthly closing inventory in units of

finished product is 80% of the following month’s budgeted sales. There are 150 000 finished

units on 30 June.

Required:

Calculate the following and choose the correct answer from the options provided:

• the number of units to be produced in August Blank 1 200 000

units228 000 units210 000 units218 400 units .

• the closing inventory in units for September Blank 2 176 400

units168 000 units150 000 units185 220 units .

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July August September October
Budgeted sales 200 000 210 000 220 500 231 525
Add: closing inventory 210 000 x 80% 220 500 x 231 525 x
80% 80%
168 000
176 400 185 220
Total available 368 000 386 400
Less: closing inventory 150 000 168 000 176 400
Number of units to be 218 000 218 400
produced
The correct answer is:
Jagger Company budgeted to sell 200 000 units of finished product in July and anticipate a
growth rate in sales of 5% per month. The desired monthly closing inventory in units of
finished product is 80% of the following month’s budgeted sales. There are 150 000 finished
units on 30 June.
Required:
Calculate the following and choose the correct answer from the options provided:

• the number of units to be produced in August [218 400 units].

• the closing inventory in units for September [185 220 units].

Question 21
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Question text

The following is an extract from the financial statements of Azania Limited for the year

ended 28 February 2023:

R
Trade receivables 360 400
Trade payables 711 760
Property, plant and equipment 1 440 600
Long-term loans 2 830 000
Investments 1 968 000
Inventory 929 500
Cash 198 000
Accrued expenses 159 250

Required:

Complete the table below to calculate the following ratios and choose the nearest correct

answer from the options provided:

Ratio 2023
Quick ratio Blank
1 0,64:11,71:10,78:10,58:1
Debt ratio Blank
2 75,58%64%132,3%83,03%

Feedback
Feedback:
Quick ratio of Azania Limited = (R360 400 + 198 000) / (R711 760 + 159 250)
= 558 400 / 871 010
= 0,64:1

Debt ratio of Azania Limited:

= (R711 760 + 159 250 + 2 830 000) / (R360 400 + 198 000 + 1 440 600 + 1 968 000 +
929 500)
= 3 701 010 / R4 896 500
= 75,58%

The correct answer is:

The following is an extract from the financial statements of Azania Limited for the year
ended 28 February 2023:
R
Trade receivables 360 400
Trade payables 711 760
Property, plant and equipment 1 440 600
Long-term loans 2 830 000
Investments 1 968 000
Inventory 929 500
Cash 198 000
Accrued expenses 159 250

Required:
Complete the table below to calculate the following ratios and choose the nearest correct
answer from the options provided:
Ratio 2023
Quick ratio [0,64:1]
Debt ratio [75,58%]