UNIVERSITY OF LIMPOPO
FACULTY OF MANAGEMENT AND LAW
SCHOOL OF ACCOUNTANY
DEPARTMENT OF FINANCIAL MANAGEMENT
ASSESSMENT OPPORTUNITY 2
MODULE:
CBCB011
Date: 24 April 2023
(BUSINESS CALCULATION AND STATISTICS 1A)
TIME:
3 HOURS
MARKS:
FIRST EXAMINER: MS AM SEIMELA
SECOND EXAMINER: MR S MNISI
THIRD EXAMINER: MS S ISMAIL
THIS PAPER CONSISTS OF 1 to 6 PAGES INCLUDING COVER PAGE
INSTRUCTIONS:
•
•
•
•
•
•
All questions are compulsory and MUST be attempted.
Write neatly and legibly.
Silent non-programmable calculators are allowed.
Start every question at the top of a page.
If you use tippex or pencil on your answer sheet, you do not qualify for a remark.
Scratch out open spaces and empty pages.
100
CBCB011 ASSESSMENT OPPORTUNITY TWO
2023
QUESTION ONE
[ 30 MARKS ]
New Gen (Pty) Ltd is a manufacturing company that produces custom-made beds for residential clients.
The company have a factory in Mankweng and sell their products through an online store and retail
partners. New Gen (Pty) Ltd offer a wide range of beds that includes; single, double, queen, and king
size beds.
The beds are produced of high quality materials therefore; this creates a high demand for the product.
Management of the company is currently accessing the cost structure of the beds. The reason for this
is to ensure that prices on beds sold is reasonable and affordable to customers.
The following information includes the cost structure of the beds produced:
Fixed costs
R250 000 per year
Variable costs
60% of the sales price
Sales price
R2000 per bed
Units sold per year
1500
Required
a) Calculate the following for New Gen (Pty) Ltd:
I.
Break - even quantity.
[4]
II.
Break - even value.
[5]
III.
Margin of safety as a percentage.
[4]
IV.
Net profit if 1 500 beds are sold
[3]
b) Sketch a fully labelled break-even chart.
[8]
Communication : Presentation marks
[1]
Calculate the number of beds should the company increase net profit by 25%.
[5]
c)
2|Page
CBCB011 ASSESSMENT OPPORTUNITY TWO
QUESTION TWO
2023
[ 40 MARKS ]
Limpopo Builders (Pty) Ltd is a construction company based in Polokwane, Limpopo Province. On
1 January 2023, the company purchased a new concrete mixer machine for R400 000 and the service
life of this machine is five years.
It is further noted the expected useful life of the machine is 200 000 hours and the anticipated salvage
value is R30 000. After five years of use, the directors of the company decided to sell the mixer machine
and the actual hours used during the five years is as follows:
Year
Hours used
1
50 000
2
40 000
3
35 000
4
45 000
5
30 000
Required
a)
Calculated and prepare a 5-year depreciation schedule for the mixer machine using
the following depreciation methods:
I.
Straight-line.
[7]
II.
Double declining.
[10]
III.
Units of production.
[10]
IV.
Sum of the year’s digits.
[12]
Communication: All calculations should be clearly shown
Communication : Presentation mark
3|Page
[1]
CBCB011 ASSESSMENT OPPORTUNITY TWO
2023
QUESTION THREE
[ 25 MARKS ]
Mashudu (Pty) Ltd, a company located in Turfloop that specialises in the production of headboards.
Prices of raw materials used in the production process of headboards is increasing each month, this
brings about a huge concern for the company.
The production manager is currently accessing the cost structure of headboards produced to determine
new pricing strategy for headboards. He had printed the production report on the total manufacturing
costs and the number of beds produced as from 1 January 2022 to 31 December 2022 presented
below.
Month
January
February
March
April
May
June
July
August
September
October
November
December
Number of Headboards
produced
100
200
300
400
500
600
700
800
900
1000
1100
1200
Total Manufacturing costs
(R)
12 500
23 000
34 500
46 000
57 500
69 000
80 500
92 000
103 500
115 000
126 500
138 000
The above production report will be used to conduct a cost behavior analysis using high-low and least
squares methods. This method is important as it will identify the variable and fixed cost components of
the total production costs. This analysis will help Mashudu (Pty) Ltd with decision making on the pricing
strategy.
4|Page
CBCB011 ASSESSMENT OPPORTUNITY TWO
2023
Required
a) Calculate the following with the information provided above by using the high-low
method for total manufacturing costs:
b)
I.
Variable rate.
[3]
II.
Fixed cost.
[2]
With your results from question ‘a’ write an equation to the directors on the total
[2]
manufacturing costs.
c)
With your results from question ‘b’ what will be the total manufacturing costs if 500 [2]
headboards are produced?
d)
Using the least square method answer the following for the total manufacturing costs:
5|Page
I.
Identify the independent and dependent variable.
[2]
II.
Plot a scatterplot of beds produced and total manufacturing costs.
[5]
III.
Construct the regression equation and plot the regression line on the scatterplot
in b). Comment on the relationship.
[5]
IV.
Calculate the correlation coefficient and interpret your answer.
[2]
V.
Calculate the coefficient of determination and interpret your answer.
[2]
CBCB011 ASSESSMENT OPPORTUNITY TWO
QUESTION FOUR
2023
[ 5 MARKS ]
Mrs. Hendricks invested R6 000 at 7% p.a. for three years in a fixed deposit account with Cape City
Bank of which interest is paid at the end of three years.
Required
a)
I.
Calculate the amount to be paid to Mrs. Hendrick’s on maturity date.
[3]
II.
How much interest was earned over the three years?
[2]
THE END
6|Page