MAC3701 May/June 2026
PART A
Part A(a) – Income statement for SPD (direct costing, joint &
by‑product)
Step 1 – Physical quantities
600 tonnes = 600 000 kg wet seaweed.
Yield: Gel 300 000 kg, Powder 240 000 kg, GreenResidue 60 000 kg.
Step 2 – Joint production cost (actual direct costing)
Raw material: 600 000 kg × R25 = R15 000 000
Wind power: (1 200 batches ÷ 2) × R2 000 = R1 200 000
,Direct labour: 1 200 batches × (30 hrs ÷ 0,96) × R156,25 = R5 859 375
Variable MOH: 1 200 × R2 500 = R3 000 000
Total joint variable cost = R25 059 375
Actual fixed MOH = R3 475 000
Total joint production cost = R28 534 375
Step 3 – By‑product NRV deduction
GreenResidue NRV = (R15 – R5) × 60 000 = R600 000
Joint cost to allocate = R28 534 375 – R600 000 = R27 934 375
Step 4 – Allocation (market value at split‑off)
Market values: Gel 300 000×R60 = R18 000 000, Powder 240 000×R50 = R12 000 000,
total R30 000 000.
Gel % = 69,23077% → joint cost = R19 340 142
Powder % = 46,15385% → joint cost = R12 894 233
Step 5 – Further processing
Gel: 300 000×R1,20 = R360 000
, Step 6 – Variable cost of sales (FIFO, no opening inventory)
Gel Powder Total
Joint cost allocated 19 340 142 12 894 233 32 234 375
Further processing 360 000 0 360 000
Total cost available 19 700 142 12 894 233 32 594 375
Units available (kg) 300 000 240 000 540 000
Cost per kg 6,566,714 5,372,597
Units sold 270 000 216 000 486 000
Cost of sales 17 730 127 11 606 850 29 336 977
Closing inventory
30 000 24 000 54 000
(kg)
Inventory value 1 970 014 1 289 423 3 259 437
Step 7 – Distribution cost (R1,75/kg sold × 486 000 kg = R850 500)
Allocated to Gel: 270 000×1,75 = R472 500; Powder: 216 000×1,75 = R378 000.
Step 8 – Income statement (direct costing)
Gel Powder Total
Sales 18 360 000 10 800 000 29 160 000
Variable cost of sales (17 730 127) (11 606 850) (29 336 977)
Contribution before
629 873 (806 850) (176 977)
distribution
PART A
Part A(a) – Income statement for SPD (direct costing, joint &
by‑product)
Step 1 – Physical quantities
600 tonnes = 600 000 kg wet seaweed.
Yield: Gel 300 000 kg, Powder 240 000 kg, GreenResidue 60 000 kg.
Step 2 – Joint production cost (actual direct costing)
Raw material: 600 000 kg × R25 = R15 000 000
Wind power: (1 200 batches ÷ 2) × R2 000 = R1 200 000
,Direct labour: 1 200 batches × (30 hrs ÷ 0,96) × R156,25 = R5 859 375
Variable MOH: 1 200 × R2 500 = R3 000 000
Total joint variable cost = R25 059 375
Actual fixed MOH = R3 475 000
Total joint production cost = R28 534 375
Step 3 – By‑product NRV deduction
GreenResidue NRV = (R15 – R5) × 60 000 = R600 000
Joint cost to allocate = R28 534 375 – R600 000 = R27 934 375
Step 4 – Allocation (market value at split‑off)
Market values: Gel 300 000×R60 = R18 000 000, Powder 240 000×R50 = R12 000 000,
total R30 000 000.
Gel % = 69,23077% → joint cost = R19 340 142
Powder % = 46,15385% → joint cost = R12 894 233
Step 5 – Further processing
Gel: 300 000×R1,20 = R360 000
, Step 6 – Variable cost of sales (FIFO, no opening inventory)
Gel Powder Total
Joint cost allocated 19 340 142 12 894 233 32 234 375
Further processing 360 000 0 360 000
Total cost available 19 700 142 12 894 233 32 594 375
Units available (kg) 300 000 240 000 540 000
Cost per kg 6,566,714 5,372,597
Units sold 270 000 216 000 486 000
Cost of sales 17 730 127 11 606 850 29 336 977
Closing inventory
30 000 24 000 54 000
(kg)
Inventory value 1 970 014 1 289 423 3 259 437
Step 7 – Distribution cost (R1,75/kg sold × 486 000 kg = R850 500)
Allocated to Gel: 270 000×1,75 = R472 500; Powder: 216 000×1,75 = R378 000.
Step 8 – Income statement (direct costing)
Gel Powder Total
Sales 18 360 000 10 800 000 29 160 000
Variable cost of sales (17 730 127) (11 606 850) (29 336 977)
Contribution before
629 873 (806 850) (176 977)
distribution
