MAC3761 Test memo 2021.

SUGGESTED SOLUTION QUESTION 1 (a) Calculate the total overheads attributed to the Masks Division for the 9- month period ending 31 December 2020. [8] Overheads R Marks Depreciation & machine service costs [ ÷ 7 890 000 x 2 827 000] r/w Rent, rates, water and electricity [ ÷ 6 840 m2 x 2 022 m2] 5 547 622 r/w Safety and security costs [(5 037 442 x 30,72 x 12) ÷ 1 247] OR: [(5 037 442 ÷ 1 247 ÷ 12) x 30,72] 1 489 176 Ordering and material handling costs [1 238 546 x 0,23] 284 866 r/w Cafeteria, development and teambuilding costs [(840 750 ÷ (702 ÷ 1,17) x 214] 299 868 Head Office’s allocated overheads 2 128 423 Division’s specific costs (indirect labour costs) 9 470 000 r/w Total overheads  Given (b) Determine whether Baba Ndou and his Masks Division are entitled to bonuses (and how much, if any) for the period ended 31 December 2020. Show all workings. [8] Details R Marks Sales  r/w Variable manufacturing costs () r/w Factory overheads [part a] () © Gross profit Administration and selling costs (1 886 600) r/w Net profit before tax 9 713 756 Gross profit margin 13,93% © Conclusion: The Masks Division’s gross profit margin of 13,93% is more than the 12,75% target while the actual net profit before tax of R9,713m is also more than the R8,5m target. As such, both Baba Ndou and his division are entitled to a total of R2 166 504 in bonuses for the 9-month period ending 31 December 2020 (R166 504 of this goes to Baba Ndou).©  Given   + 4 611 840 + =  ÷  = 13,93%  Baba Ndou’s bonuses: R x 0,2% = R166 504 rw  Division’s bonuses: R2 000 000 rw  Total bonuses payable to Masks Division: R2 166 504 (R166 504 + R2 000 000