EcoPack Manufacturing (Pty) Ltd operates in the sustainable packaging sector and manufactures two biodegradable packaging products:

·       EcoTray (ET) – compostable food trays.

·       EcoCup (EC) – compostable beverage cups.

EcoPack uses the absorption costing system, and fixed manufacturing overheads (FMO) are allocated based on labour hours Inventory is valued using the FIFO method. The financial year-end is 31 December 2026.

Budget Information for the Year Ending 31 December 2026

Additional Information:

1. Eco Pack budgeted to sell 90% of production unit. The selling price per unit is R21,00 per unit for  EcoTray and R15,50 per unit for EcoCup, respectively.
2. No direct materials or any other losses occur during the manufacturing process. The manufacturing process is mostly automated, with machines doing most of the work. 
3. Direct labour is mainly required to monitor the machines, perform basic quality checks and handle materials. Each EcoTray requires 8 minutes of direct labour, and each EcoCup requires 6 minutes of direct labour. The same direct labour rate per hour applies to both products.
4. The entity does not budget for work-in-progress inventory, as all goods produced are completed and transferred to finished goods.
5. The variable manufacturing overheads are R2,20 per EcoTray and R1,40 per EcoCup.Total Fixed manufacturing overheads (FMO) are R3 000 000 per year. 
6. EcoPack pays sales commission of 3% of selling price

Which one of the following statements is inaccurate?

Lebo Ndlovu (“LN”) is has a small online

fabric shop specialising in dressmaking fabrics. She sells two types of fabric,

measured and sold per metre. She has asked for your assistance with the

management accounting aspects of her business and provided you with the

following budgeted information:

Additional Information:

·      

·      

·      

Assume

the following additional information for this question only:

·       Total annual fixed costs R86 400

·      

Contribution to sales ratio: Cotton 45%

and Premium Linen 55%

·       Expected sales mix is 2:5

Using the weighted average contribution margin method. The break-even

sales value of LN is (rounded to the nearest rand) ____________

Lebo Ndlovu (“LN”) is has a small online

fabric shop specialising in dressmaking fabrics. She sells two types of fabric,

measured and sold per metre. She has asked for your assistance with the

management accounting aspects of her business and provided you with the

following budgeted information:

Additional Information:

·      

·      

·      

Assume the following additional

information for question 3 only:

(i)

    Total annual fixed costs will be R80 000

(ii)

    The contribution for cotton will be R90 per

unit and for Linen will R110 per unit

(iii)     The sales mix is 4:2

(iii)

   All other information remains as given

In

order to achieve the

Lebo Ndlovu (“LN”) is has a small online

fabric shop specialising in dressmaking fabrics. She sells two types of fabric,

measured and sold per metre. She has asked for your assistance with the

management accounting aspects of her business and provided you with the

following budgeted information:

Additional Information:

·       For every 1 metre of premium linen sold, LN expects to sell 3 metres of cotton fabric.

·       Cotton Fabric requires 4 minutes of labour per meter, and Premium Linen Fabric requires 6 minutes of labour per meter.

·       Variable selling cost are 2,5% of the selling price

LN’s

budgeted weighted-average contribution

Lebo Ndlovu (“LN”) is has a small online

fabric shop specialising in dressmaking fabrics. She sells two types of fabric,

measured and sold per metre. She has asked for your assistance with the

management accounting aspects of her business and provided you with the

following budgeted information:

Additional Information:

·      

·      

·      

LN’s budgeted annual

total fixed costs to be used in the calculation of the break-even point are: