ASSIGNMENT LETTER

(Programme(s)
BAcc

2017 SEMESTER (1)

[MANAGEMENT ACCOUNTING 2A]

[AAM3781]
DUE DATES
Assignment 1 13 March 2017 Semester 1 and
Year modules
Assignment 2 10 April 2017 Only Semester 1 modules
Assignments 21 April 2017 All assignments of Semester 1
Resubmissions modules and assignment 1 of
Year modules
Vacation School 22 -24 March 2017 All CODeL Programmes
 2017 Assignments

[Management Accounting 2A AAM3781]

Dear Student,

Welcome to the University of Namibia and to the Centre for Open, Distance and e-Learning (CODeL) in
particular. We hope your studies will be rewarded with success. We kindly advise that you get all the
relevant information and booklets available for distance students from your nearest UNAM centre
(including the 2017 CODeL Letter to Distance Mode Students and the Online Assignment
Submission Guide on Moodle). These documents will provide advice on how to approach your studies
and will guide you through your study materials as well as providing useful administrative information in
submitting assignments.

Study materials
Your study guide is essentially your teacher/lecturer. However, in addition you are required to visit the
library to consult prescribed books and recommended readings that are indicated in the study guide. You
are also responsible to purchase any prescribed textbooks required for your respective courses/modules.
Furthermore, you are strongly advised to follow the guidelines in the Online Assignment Submission
Guide on Moodle.

Submission of assignments
It is very important to complete and submit a clean, clear and well-argued assignment for marking. Make
sure that you have answered the questions correctly. It is the responsibility of you as a student to make
sure that every page of the completed assignment is correctly numbered before submitting your
assignment. From 2017, ALL assignments would be submitted through the Moodle Learning
Management System. This is an online platform where you will access all your modules and related
information such as course outline, course notes and other learning materials that your tutor may choose
to share, as well as communicate with your tutors and with fellow students through forum discussions or
other available communication tools. Moodle is accessible here: http://elearning.unam.edu.na (please
refer to the 2017 CODeL Letter to Distance Mode Students). You should complete and submit all
assignments on or before the given due date in the assignment letter if you wish to be admitted to the next
examination.

Due Dates
All assignment due dates for 2017 are published on the cover of this letter. With the shift from manual to
online assignment submission, due dates would be automated. This means that you would be required
to submit your assignments on the due date set on your assignment before 11h59 PM. After the date has
passed (i.e. 12h00AM the next day) the assignment submission will be disabled and you would no
longer be able to submit your assignment.
Due to challenges with Internet connectivity and speed, large files may take too long to upload, which is a
big risk if you submit a few minutes to the deadline. You are therefore strongly advised not to wait until the
last minute to submit your assignments so that you can report potential challenges and avoid
disappointments. If you were used to submitting late assignments through the portal, you are cordially
cautioned that this would no longer be possible with automated due dates on Moodle.

Timely submission of all assignments on or before the given due date is crucial for the timely calculation of
your CA mark and determining admission to exams. Take note that assignments should never be
submitted directly to individual tutors or any other staff members of the University of Namibia.
Plagiarism Control

It has been observed that some students copy information from the Internet and paste into their
assignments without acknowledging the sources of the information. This is called plagiarism. A copy of the
Policy on Plagiarism and Cheating has been provided to you through the UNAM website. Please note that
plagiarism and copying and pasting would not be tolerated and shall result in your assignments declared
null and void. All assignments submitted through Moodle would be checked for plagiarism using plagiarism
detection software. You will receive a report on the overall overlapping of your assignment with the
sources you have used. You are therefore strongly urged to acknowledge EVERY source that you use for
your assignment by using the appropriate referencing style prescribed by your lecturers (APA Referencing
guides are available freely online). Find one here: http://www.uofa.edu/docs/apa-documentation.pdf

Any assignment found with high overlapping scores or with evidence of clear attempts to cheat such as
submitting an assignment that is not your own would result in serious consequences (please refer to the
Policy on Plagiarism and Cheating provided).

LATE SUBMISSION OF ASSIGNMENTS or WRITING OF TESTS

Late assignment will not be accepted nor marked. If there is a reason why you cannot
meet the due date, please consider cancelling the module within the cancellation
deadlines or contact Student Support Coordinator for advice.

Vacation schools
Attending vacation school is COMPULSORY and the vacation school timetable will be made available at
your nearest UNAM centre and through the UNAM portal.

My UNAM Portal /Moodle

We recommend that you regularly (at least twice a week) access My UNAM Portal (for administrative
information) and Moodle (for learning and assessment information) on the UNAM website for further
information at the following URLs: http://my.unam.edu.na and http://elearning.unam.edu.na

Closing remarks
If you study conscientiously, your efforts will be rewarded. Should you need any assistance or clarification
on the module contents, you can reach the relevant staff members at the contact details as given below:

Tutor: Andrew Simasiku 061-2072931 asimasiku@nust.na

Student Support Coordinator: Charlene Kaereho 061-2063729 ckaereho@unam.na
Distance Education Officer: Lizzy Xoagus 061-2063608 lxoagus@unam.na
Jussy Moyyo jmoyyo@unam.na
Examination Officer 061-2063715
Esther Ipwaakena eipwaakena@unam.na

NOTE: For additional information consult the CODeL Prospectus and UNAM General Information and
Regulations Prospectus.
MANAGEMENT ACCOUNTING 2 A. ASSIGNMENT ONE

QUESTION 1 (20 marks)

(a) Emma Cakes limited bakes and sells a single type of cake. The variable cost of production
is 15 cents and the current sales price is 25 cents. Fixed costs are N$2 600 per month and
the annual profit for the company at current sales volume is N$ 36 000. The volume of
sales demand is constant throughout the year. The sales manager, Mr Kalulu wishes to
raise the sales to 29 cents per cake but considers that a price rise will result in some loss
of sales

Required

Ascertain the minimum volume of sales required each month to raise the price to 29 cents.
(5 marks)

(b) Close Bricket Limited makes a product which has a variable production cost of N$ 8 and a
variable sales cost of N$2 per unit. Fixed costs are N$ 40 000 per annum and the sales
price per unit is N$18, and the current volume of output and sales is 6 000 units. The
company is considering whether to have an improved machine for production. Annual hire
costs would be N$10,000 and it is expected that the variable cost of production would fall
to N$6 per unit

Required

(i) Determine the number of units that must be produced and sold to achieve the same
profit as is currently earned if the machine is hired (7 marks)
(ii) Calculate the annual profit with the machine if output and sales remain at

6 000 units per annum (8 marks)

QUESTION 2 (20 marks)

Chanda limited has developed a new product which is about to be launched on to the market.
The variable cost of selling the product is N$12 per unit. The marketing department has
estimated that at a sales price of N$20, annual demand would be 10000 units.

However if the sales price is set above N$20 , sales demand would fall by 500 units for each 50
cent increase above N$20. Similarly, if the price is set below N$20, demand would increase by
500 units for each 50 cents stepped reduction in price below N$ 20.

Required

Determine the price which would maximise Chanda Limiteds profit in the next year.
(20 marks)

QUESTION 3 (30 marks)

Bingo limited makes four components, W, X, Y and Z, for which costs in the forthcoming year are
expected to be as follows.

W X Y Z
Production (units) 1 000 2 000 4 000 3 000

Unit marginal costs N$ N$ N$ N$

Direct materials 4 5 2 4
Direct labour 8 9 4 6
Variable production overheads 2 3 1 2
Totals 14 17 7 12

Directly attributable fixed costs per annum and committed fixed costs are as follows.

N$

Incurred as a direct consequence of making W 1 000

Incurred as a direct consequence of making X 5 000

Incurred as a direct consequence of making Y 6 000

Incurred as a direct consequence of making Z 8 000

Other fixed costs (committed) 30 000

Total 50 000
A subcontractor has offered to supply units W, X, Y and Z for N$12, N$21, N$10, and N$14
respectively.

Required:

a) Decide whether Bingo Limited should make or buy in the components.

(20 marks)
b) Explain five factors that the company would also consider in the make/buy in problem
(10 marks)

QUESTION 4 (30 marks)

A company uses linear programming to establish an optimal production plan in order to maximise
profit. The company finds that for the next year materials and labour are likely to be in short
supply.

Details of the companys products are as follows

A B
N$ N$
Materials (at N$2 per Kg 6 8
Labour ( at N$6 per hour 30 18
Variable overheads (N$ 1 per hour 5 3
Variable costs 41 29
Selling price 50 52
Contribution 9 23

There are only 30,000 kg of material and 36,000 labour hours available. The company also has an
agreement to supply 1,000 units of product A which must be met.
Required
(a) Formulate the objective function and constraint equations for this problem.
(5 marks)

(b) Plot the constraints on a suitable graph and determine the optimal production plan.
(8 marks)

(c) Explain what is meant by slack and surplus using your answers from parts (a)
and (b) (10 marks)

(d) Explain how this company could use shadow prices. (7 marks)

END OF ASSIGNMENT ONE

MANAGEMENT ACCOUNTING 2 A
ASSIGNMENT 2

QUESTION 1 (25 marks)

Andrew Limited has been approached by a customer who would like a special job
done for him and who is willing to pay N$ 22 000 for it. The job would require the
following materials.
Material Total units Units Book value Realisable Replacement
required already in of units in value cost
Inventory Inventory N$/Unit N$/Unit
N$/Unit
A 1 000 0 - - 6
B 1 000 600 2 2.50 5
C 1 000 700 3 2.50 4
D 200 200 4 6.00 9

Material B is used regularly by Andrew Limited and if units of B are required for this job, they
would need to be replaced to meet other production demand. Materials C and D are in inventory
as the result of previous over-buying and they have a restricted use. No other use could be
found for material C but the units for material D could be used in another job as substitute for
300 units of material E which currently costs N$ 5 per unit (of which the company has no units in
inventory at the moment .

Required:
Calculate the relevant costs of material for deciding whether to accept the contract. Please
explain your justifications (25 marks)
QUESTION 2 (30 marks)

A Research contract which to date has cost the company N$150 000 is under review.
If the contract is allowed to proceed
It will be completed in approximately one year
The results would then be sold to a government agency for N$ 300 000
Shown below are the additional expenses which the managing director estimates will be
necessary to complete the work
1. Materials
The material for the contract has just been purchased as a cost of N$60 000.
It is toxic; if not used in the contract it must be disposed of at a cost of N$ 5 000.
2. Labour
Skilled labour is hard to recruit
The workers concerned were transferred to the contract from a production department
and at a recent meeting, the production manager claimed that if the men were returned to
him they would generate sales of N$150 000 in the next year
The prime cost of these sales would be N$100 000 including N$ 40 000 for the labour cost
itself.
The overhead absorbed into this production would amount to N$ 20 000.
3. Research staff
It has been decided that when work on this contract ceases, the research department will
be closed.
Research wages for the year are N$60 000 and redundancy and severance pay has been
estimated at N$15 000 now or N$ 35 000 in one years time.
4. Equipment
The contract utilises a special microphone which cost N$18 000 three years ago
It has a residual value of N$ 3000 in another two years and a current disposal value of
N$8 000.
If used in the contract, it is estimated that the disposal value in a years time will be N$
6 000.
5. Share of general building services
The contract is charged with N$ 35 000 per annum to cover general building expenses
Immediately the contract is discontinued, the space occupied could be sub-let for an
annual rent of N$ 7 000.
Required:
Advise the managing director as to whether the contract should be allowed to proceed explaining
the reasons for the treatment of each item (30 marks)
Note: Ignore the time value of money.

QUESTION 3 (30 marks)

The management of Fiona Limited is considering the closure of one of its operations and the
Financial accountant has submitted the following report.
.
Department 1 2 3 Total
Sales 5,000 6,000 2,000 13,000
Sales ($) 150,000 240,000 24,000 414,000
Cost of sales
Direct material 75,000 150,000 10,000 235,000
Direct labour 25,000 30,000 8,000 63,000
Production overhead 5,769 6,923 2,308 15,000

Gross profit 44,231 53,077 3,692 101,000
Expenses (15,384) (18,461) (6,155) (40,000)

Net profit (N$) 28,847 34,616 (2,463) 61,000

In addition to the information supplied above, you are told that;

Production overheads of $15,000 have been apportioned to the
three departments on the basis of unit sales volume
Expenses are head office overhead, again apportioned to
departments on sales volume.

As management accountant, you further ascertain that, on a cost driver basis:

50% of the production overheads can be directly traced to departments and so
could be allocated on the basis 2:2:1.

Similarly, 60% of the expenses can be allocated 3:3:2.

In addition:

- 80% of the so-called direct labour is fixed and cannot be readily allocated
The remaining 20% can be better allocated based on sales volume
Required:

Prepare a report for management including a restatement of the financial position in terms of contribution
made by each department and making a clear recommendation.

QUESTION 4 (15 marks)

The following information relates to question 4 a, b, and c.
N$
Material 12
Labour 30
Variable production overhead 13
Distribution cost 5
Total variable cost 60
Selling price 100
Contribution 40

Factory cost 100 000

Admin costs 50 000
Total fixed cost 150 000

(a) What is the breakeven point (BEP) in terms of units?(2 marks)

(b) What is the sales revenue that would yield a net profit of N$ 30 000?
(2 marks)
(c) If the budgeted sales are 5 000 units, what is the margin of safety?(2 marks)
(d) A company manufactures and sells a single product which has a standard variable cost
per unit of N$40 and a standard selling price per unit of N$ 100. At the budgeted output
level of 1000 units per month, the standard fixed cost per unit is N$10. What is the
breakeven point in sales revenue per month (to the nearest thousand)? (5marks)
(e) F Scuttle limited has fixed costs of N$50 000 per annum. The company sells a single
product for N$25 per unit. The contribution to sales ratio is 40%. What is the breakeven
point in revenue? (4 marks)

END OF ASSIGNMENT 2

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