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MAC2601 Test

Principles of management accounting (University of South Africa)

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UNIVERSITY ASSESSMENT

May 2023

MAC2601

Principles of Management Accounting

100 Marks
Duration: 2 Hours
30 minutes for uploading to myUnisa
30 minutes for reading the instructions

Use of a non-programable pocket calculator is permissible

Close book assessment
The question paper remains the property of the University of South Africa and may not be
distributed beyond its intended use
THIS PAPER CONSISTS OF ELEVEN (11) PAGES IN TOTAL.
THIS IS NOT AN OPEN BOOK ASSESSMENT! YOU ARE NOT ALLOWED TO COPY FROM
ANY SOURCES INCLUDING YOUR LEARNING UNITS OR TUTORIAL LETTERS.

QUESTION PAPER - INSTRUCTIONS:

Please note:
1. This paper consists of six (6) questions
2. You are strongly advised to carefully read the required before attempting the questions
concerned.
3. All questions must be answered.
4. All calculations must be shown.
5. Each question attempted, must commence on a new (separate) page.
6. Include (write/type) your student number in the document/answer file.

PROPOSED TIMETABLE FOR THIS ASSESSMENT:

CONTENTS
TIME
QUESTION TOPIC MARKS
Minutes
1 Multiple-Choice Questions (MCQ) (various topics) 20 24
2 Fill-in one-word questions (various topics) 10 12
3 Budgeting and budgetary control 23 28
4 Activity Based Costing 22 26
5 Direct and Absorption Costing 13 16
6 Standard Costing 12 14
TOTAL 100 120

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MAC2601

Date: 08 May 2023

Duration: 180 Minutes

Please take note that The Invigilator App will

request you take a picture of every page of your
answer sheet at the end of the assessment.

Please take note that this does not replace your

formal scan and upload to your Learning
Management System (MyExams).

YOUR EXAM QR CODE & QR ACCESS CODE

INSTRUCTIONS ON THE DAY OF ASSESSMENT:

• Please log into The Invigilator App. You need to be connected to the internet in order to log in and scan the
QR code.
• Scan the QR code above once the examination formally commences. If you encounter difficulty with
scanning of the QR code you can also enter the QR access code at the bottom of the QR code in order to
start the assessment.
• Once the QR code is scanned, you can place your smartphone next to you. The Invigilator App will notify
you when an action is required. Ensure your media volume Is turned up.
• You may access your MyExams in the application if you only have one device by pressing the ‘access LMS’
button.
• Please remember to keep your smartphone on charge for the duration of the assessment.
• Keep The Invigilator app open on your cell phone during the assessment. You are not allowed to leave or
minimise the application.
• When an action is required, a notification beep will be heard. Action the request.
• Please ensure you are connected to the internet in order to commence the examination as well as at the
end of the examination. No internet connection is needed during the assessment.
• It is important to first upload your script to the MyExams. Uploading of app data is not time sensitive and
you can do it after you have uploaded your script to the MyExams.
• It is important to note that you have to adhere to the time limit in your MyExams assessment as the
invigilation time in the app could exceed the time allocated to complete your assessment.
• You can click the "Finish Assessment" button in the app if you finish early.
• Should you encounter any technical difficulty, please WhatsApp The Invigilator Helpdesk on 073 505 8273.

SCAN & UPLOAD ASSESSMENT INSTRUCTIONS & QR CODE FOR THE INVIGILATOR APP

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MAC2601
MAY 2023

Follow the steps below to complete and submit a Take home assessment 5:
1. Download the question paper and note any additional information provided, such as the
proctoring tool to be used.
Please take note that the use of The Invigilator App is compulsory for this assessment.
Failure to use the application will result in your assessment mark being retained.
2. Complete the Take-Home assessment in MS Word or on paper.
Note: MS Word documents need to be saved as PDF documents, and paper-based answers
must be scanned into a combined PDF document.
Note: Students must upload their answer scripts in a single PDF file.
3. When ready to submit, open the Take-Home assessment 5 again and click on the Add
Submission button.
Note: You only get 30 minutes after finish of writing to submit your script on the myUnisa
portal.
4. Note the file requirements such as:
a. File size limit.
b. Number of files that can be submitted.
c. File formats allowed.
5. Review your submission information regarding the status and click on your submission file
link to check if it's correct.
6. If you need to resubmit a file, you can click on the Edit Submission button. Note: You will
need to delete any existing files.

NOTE: You must successfully submit your single PDF file before the submission cut-off time.
Please do not wait until the last minute to submit, instead, submit your file as soon as the two (2)
hours duration of the assessment has passed. If you do not successfully submit before the cut-off
time you will be marked as absent from the assessment.

May 2023 online assessment rules

Assessment sessions commence at the time indicated on the study programme. You are required
to adhere strictly to the specified times.
For file upload/take-home assessment:
1. Students must upload their answer scripts in a single PDF file on the official myUnisa platform
(answer scripts must not be password protected or uploaded as “read-only” files).
2. NO e-mailed scripts will be accepted.
3. Students are advised to preview submissions (answer scripts) to ensure legibility and that the
correct answer script file has been uploaded.
4. Students are permitted to resubmit their answer scripts should their initial submission be
unsatisfactory.
5. Incorrect file format and uncollated answer scripts will not be considered.
6. Incorrect answer scripts and/or submissions made on unofficial platforms will not be marked.
7. A mark awarded for an incomplete submission will be the student’s final mark.
8. A mark awarded for illegible scanned submission will be the student’s final mark. No
opportunity for resubmission will be granted.
9. Only the last file uploaded and submitted will be marked.

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MAC2601
MAY 2023
10. Submissions will only be accepted from registered student accounts.
11. Students who have not utilised invigilation or proctoring tools will be deemed to have
transgressed Unisa’s assessment rules and will have their marks withheld.
12. Non-adherence to the processes for uploading assessment responses will not qualify the
student for any special concessions or future assessments.
13. Queries that are beyond Unisa’s control include the following:
a. Personal network or service provider issues
b. Load shedding/limited space on personal computer
c. Crashed computer
d. Using work computers that block access to myUnisa site (work firewall challenges)
e. Unlicensed software (eg license expires during myUnisa)

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MAC2601
MAY 2023
PLAGIARISM

We do not allow any group work in this module. Students may not work together on their
assessment at all and no-one may assist you with any of your MAC2601 assessment. If the
lecturers find that your assessment is similar to the assessment of another student, you will
get 0% for your assessment. It is unacceptable that anyone, including an external institution,
helps you with the assessment.

By submitting any MAC2601 assessment, you automatically declare (see Plagiarism Declaration
below) that you have done and submitted your own work and that you are aware of the potential
consequences of plagiarism.

Plagiarism is the act of taking the words, ideas and thoughts of others and passing them off as your
own. It is a form of theft and involves a number of dishonest academic activities. All students receive
access to the Disciplinary code for students (latest version) at registration. Please study the code.
You must read Unisa's Policy on copyright infringement and plagiarism.

Plagiarism declaration for all MAC2601 assessment

PLAGIARISM DECLARATION

I declare that this assessment is my own work.

By submitting any MAC2601 assessment, I also declare that:

I have read the Unisa Students' Disciplinary Code.

I know what plagiarism is, that plagiarism is wrong and that disciplinary steps can be taken
against me if it appears that I plagiarised.
I have not allowed any other student to copy my work and have not copied from the work of
anyone else (including, but not limited to, other students and institutions).
I have not received any assistance with the assessment. I have not worked on the assessment
in a group.
For written assessment, I have referenced all the sources that I have used.
I know that if I am deemed to be in violation of this declaration, I will receive 0% for the
assessment involved.

Please note: You do not have to submit the declaration. By submitting a MAC2601
assessment, you automatically declare that you adhere to all the above with regard
to the assessment.

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MAC2601
MAY 2023
QUESTION 1 (20 marks) (24 minutes)

THIS QUESTION CONSISTS OF TEN (10) MULTIPLE-CHOICE QUESTIONS OF TWO (2) MARKS
PER QUESTION. FOR EACH QUESTION, SIMPLY WRITE DOWN THE NUMBER OF THE
QUESTION TOGETHER WITH THE CORRECT OPTION (a, b, c OR d) IN YOUR ANSWER
SCRIPT.

(1) One of the categories of inventory for a manufacturer is ________.

(a) storage cost
(b) work-in-progress
(c) administrative overheads
(d) selling costs

(2) Which one of the following cost formulas or methods assumes that the balance of inventory
on hand will always reflect the most recent cost prices?
(a) First-in-first-out
(b) High-low
(c) Weighted average cost
(d) Activity-based costing

(3) Which of the following are amongst others fundamental principles that are applicable to
professional accountants?
(i) Integrity
(ii) Familiarity
(iii) Objectivity
(iv) Advocacy

Select a correct combination

(a) (i) & (ii)
(b) (i) & (iii)
(c) (ii) &(iii)
(d) (iii) & (iv)

(4) In a process costing system, the quantity statement is the summary of the flow of physical
units, and it includes information about the _______________.
(a) cost structure and the rand values
(b) rand value of the normal loss
(c) rand value of the abnormal loss
(d) number of units placed in production

(5) Maralla (Pty) Ltd made the following total production cost predictions for the month
ending 31 July 2023 at different possible levels of production:

Total production cost Production units

in rand
50 000 20 000
112 500 70 000
150 000 100 000

The variable cost per unit is __________.

(a) R1,25
(b) R0,80
(c) R1,40
(d) R1,00

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MAC2601
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(6) Which one of the following statements is not true about total product costs in an absorption
costing system?
(a) Prime costs + Conversion costs - Direct labour costs = Product cost
(b) Direct material costs + Direct labour costs + Production overheads costs = Product cost
(c) Prime costs + Production overheads costs = Product cost
(d) Direct material costs + Direct labour costs + Period costs = Product cost

(7) __________ is a written instruction to a supplier for the delivery of specified goods at an
agreed upon price.
(a) Material requisition
(b) Receiving report
(c) Purchase requisition
(d) Purchase order .

(8) Qetello (Pty) Ltd (“Qello”) uses perpetual inventory system. Qello record its purchased of
raw materials in the_________ account.
(a) material inventory
(b) cost of goods sold
(c) work-in-progress inventory
(d) purchase of raw materials

(9) An increase in production levels within the relevant range will result in _________.
(a) an increase in total variable costs
(b) an increase in both total variable and total fixed costs
(c) an increase in variable costs per unit
(d) an increase in total fixed costs

(10) What will be the effect of an increase in production volume on a mixed cost?
(a) It will remain constant.
(b) It will increase in total and increase per unit.
(c) It will increase in total and decrease per unit.
(d) It will increase in total but remain constant per unit.

QUESTION 2 (10 marks) (12 minutes)

THIS QUESTION CONSISTS OF TEN (10) FILL-IN ONE-WORD QUESTIONS OF ONE (1) MARK
PER QUESTION. FOR EACH QUESTION, SIMPLY WRITE DOWN THE NUMBER OF THE
QUESTION TOGETHER WITH THE CORRECT WORD IN YOUR ANSWER SCRIPT.

1. The weighted average method assumes costs flow at _____ unit costs, which are updated after
every receipt of goods or materials into the stores.

2. The purpose of the production units statement in process costing is to determine the total
_____ number of units that must be accounted for (step 1) and the equivalent number of units
that must share in the costs for the period (step 2).
3. Decisions that are taken by management for the future will inevitably carry uncertainty and
some _____

4. Teki-teki (Pty) Ltd is a manufacturer of shoes. The management accountant has calculated
budgeted contribution for the quarter as R36 000. Planned production and sales units are 900
pairs. If the budgeted variable cost per pair is R350, the budgeted selling price of a pair Teki-
teki shoes is _____

5. Overheads costs are not incurred _____ throughout the year.

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MAC2601
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6. When actual production overhead costs for the month were less than the applied overheads,
the accurate treatment of the over/under-recovery of overheads is to debit the _____ account.

7. Decision-making involves making a choice between _____

8. The money that has already been spent as a result of past decision is a _____

9. _____ capacity refers to a factory’s average level of output for meeting the entity’s production
demands over a long-term period, considering expected interruptions and seasonal
fluctuations.

10. ______ capacity refers to the anticipated use of available capacity, based on planned
(budgeted) production levels.

QUESTION 3 (23 marks) (28 minutes)

Cake of South Africa (Pty) Ltd (“Cake SA”) is a local company that specialises in baking of wedding
and birthday cakes. The company operates in all nine provinces of South Africa, its head office is in
Kimberley, Northern Cape Province. The company has a December year-end. As a junior
management accountant, you have been requested to prepare cash budgets for the company. You
have been provided with the draft budgeted contribution statement for the month of June 2023 and
you may use this contribution statement to help you prepare the cash budget. The closing bank
balance of Cake SA bank account on 31 May 2023 was R125 000 (Positive).

Budgeted contribution statement for the month of June 2023

Notes R
Sales 1 1 125 000

Less: Variable cost of sales 648 750

Opening inventory 93 750

Purchases 2 ?
Baking flour 235 000
Icing sugar 375 000
Leaveners 102 500
Closing inventory (157 500)

Contribution 476 250

Less: Fixed costs 128 750

Manufacturing overheads 3 102 500
Selling expense 4 26 250

Net profit before tax 347 500

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MAC2601
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Additional information:

1. Total budgeted sales for July 2023 are R820 000 and R956 250 for August 2023.

20% of all sales are on credit, except for during April and May 2023 during which only cash sales
took place. Cash collections from credit sales occur as follows:
o 70% in the month of sale
o 20% one month after the month of sale
o 10% two months after the month of sale

2. All purchases are on a cash basis. The company estimates monthly purchases for each month as
10% higher than that of the previous month.

3. Included in manufacturing overheads is an amount of R40 000 that relates to monthly depreciation.
Cake SA has estimated manufacturing overheads (excluding depreciation) of R112 750 for the
month of July and R124 025 for August.

4. Expected selling expenses for July and August 2023 are R28 875 and R31 763, respectively. All
selling expenses are incurred on a cash basis.

5. Cake SA has an old, fully depreciated cake mixer machine that it expects to be selling to another
baking company during the month of June for cash at a selling price of R35 000.

6. Cake SA is liable to settle its tax liability amounting to R78 000 at the end of August 2023.

REQUIRED Marks
(a) Prepare the operating cash budget per individual month for the months of (23)
June, July, and August 2023 for Cake of South Africa (Pty) Ltd.

Note: Each month should be shown in a separate column and no total column
is required.

TOTAL (23)

QUESTION 4 (22 marks) (26 minutes)

StovePower Ltd (“StovePower”) produces two types of stoves, namely “Electro” (powered by
electricity) and “Gastar” (powered by gas). The company uses an absorption costing system and
allocates manufacturing overhead costs to products using activity-based costing (“ABC”).
StovePower has a 30 June year-end.

The schedule below reflects the budgeted fixed manufacturing overheads for the year ended 30
June 2023:

Cost Notes R
Machine 2 480 000
Assembling 3 350 000
Quality inspections 4 400 000
Cleaning 5 175 000

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MAC2601
MAY 2023
Notes:
1. The budgeted production for the year is 400 and 600 for Electro and Gastar respectively.
2. The machine cost is driven by the machine time each stove type takes to manufacture. The Electro
stoves will take a total of 270 machine hours and the Gastar stoves will take a total of 210 machine
hours for the year’s production.
3. The stoves are assembled each time a batch is produced. The production takes place in batches.
The Electro stoves are assembled in batches of 5 stoves while the Gastar stoves are assembled in
batches of 3 stoves.
4. The inspector, Mrs Honest, is paid to inspect every 2nd Electro and every 3rd Gastar produced.
5. The factory needs to be cleaned and cleaning takes place after each batch of stoves are produced.
6. The operating manager is considering paying R1 million once-off to Mr Cheater, a potential
replacement inspector who will reduce the total costs over time. However, the inspection as required
by the industry is to be done in each of the years that production takes place. Mr Cheater will only
come once and not in the future years, to sign that he has inspected the stoves as required by the
industry regulations and get his payment.

Required Marks

(a) Calculate the total allocated budgeted fixed manufacturing overheads for (13)
both Electro and Gastar using an Activity-Based Costing (“ABC) system.

(b) Mention which one between a traditional costing system and an ABC (4)
system will most likely result in more accurate product costing in
organisations facing intense global competition, with pressure on prices
and quality, and briefly motivate your answer.

(c) Identify and explain the ethical concern you have about StovePower Ltd (5)
found in the scenario.

Identification (2 Marks)
Explanation (3 Marks)
Total (22)

QUESTION 5 (13 marks) (16 minutes)

Tau (Pty) Ltd manufactures and sells perfumes to local shops. The selling price per perfume in 2022
was R400 and is expected to increase by 10% per year from 2023. There was no opening inventory
at the beginning of 2022.

You have been supplied with the following further information regarding unit movements
(2022: actual; 2023: budgeted):

Year Manufactured Sold Closing inventory

2022 1 500 units 1 200 units ?
2023 1 400 units 1 500 units ?

Gert van Zyl, the Chief Financial Officer of Tau, presented you with the following cost information.
The company's financial year-end is 31 December.
R R
2022 2023
Variable cost per unit:
Direct material 110,00 100,00
Direct labour 25,00 30,00
Variable manufacturing overheads 20,00 30,00
Variable selling costs 2,00 2,50

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MAC2601
MAY 2023
Fixed costs in total:
Fixed manufacturing overheads 50 000,00 55 000,00
Fixed selling costs 90 000,00 95 000,00
Fixed administrative overheads 40 000,00 44 000,00

Additional information:

Tau (Pty) Ltd uses the weighted average method of inventory valuation.

REQUIRED Marks
(a) Prepare the budgeted statement of comprehensive income for the year ended
31 December 2023 according to the direct costing method.
(13)
Round to two decimals throughout your calculations.

TOTAL (13)

QUESTION 6 (12 marks) (14 minutes)

Nkwe (Pty) Ltd manufactures a single product and uses standard costing. Variable manufacturing
overheads vary with production and no opening or closing inventory is kept.

You have the following information available regarding July 2022:

R
Standard variable manufacturing overheads allowed for actual production 70 000
Actual variable manufacturing overhead rate per unit 9,40
Standard cost of material for actual production of 7 000 units 5 625
Material quantity variance (unfavourable) 500
Actual purchase price of material per metre 1,90
Actual selling price per unit 20,00
Budgeted selling price per unit 18,50

Actual quantity of material per unit of production 0,5 metres

Required Marks

(a) Calculate the following for July 2022:

i. Standard material purchase price per metre (2)

ii. Total material variance (2)
iii. Variable manufacturing overhead rate variance (2)
iv. Variable manufacturing overhead efficiency variance (2)
v. Selling price variance (2)

(b) Give two possible causes of (reasons for) the unfavourable material (2)
quantity variance.
Total (12)
Grand total 100 marks
End of question paper
©
UNISA 2023
All rights reserved. No part of this document may be reproduced or transmitted in any form
or by any means without prior written permission of Unisa

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