Application of Management Accounting Techniques (MAC3701)
Institution
University Of South Africa (Unisa)
MAC3701 Assignment 2 Semester 2 2023 (Answers)
QUESTION 1 (100 Marks)
EnerFizzCo Drinks Ltd (“EnerFizzCo”), situated in Dersley in the Gauteng Province, is one of the leading
energy drink and effervescent tablet manufacturers in the East rand operating in a fiercely competitive
market. ...
Application of Management Accounting Techniques (MAC3701)
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,MAC3701 ASSIGNMENT 2 SOLUTIONS
(a) Calculate DrinkD’s budgeted break-even sales units per product type for the 2023 financial year. Ignore the implications, if any,
of opening- and closing inventory. (12)
To calculate the budgeted break-even sales units per product type for the 2023 financial year, we'll use the break-even formula:
Break-even Units=Fixed CostsSelling Price per Unit−Variable Cost per UnitBreak-
even Units=Selling Price per Unit−Variable Cost per UnitFixed Costs
From the provided budgeted information for DrinkD's 2024 financial year (which we'll use for 2023, assuming no drastic
changes), the following costs are stated:
For Streak:
Selling Price: R18.00
Prime Costs: R6.75
Variable Selling and Distribution Costs: R1.30
Fixed Manufacturing Overheads: R2.50
Variable Manufacturing Overheads: R0.65
For Glitzo:
Selling Price: R25.00
Prime Costs: R17.90
Variable Selling and Distribution Costs: R1.30
Fixed Manufacturing Overheads: R4.00
Variable Manufacturing Overheads: R1.25
Calculating the Variable Costs and Fixed Costs for Each:
For Streak:
Variable Cost per Unit = Prime Costs + Variable Selling and Distribution Costs + Variable Manufacturing Overheads = R6.75 +
R1.30 + R0.65 = R8.70
Fixed Cost per Unit = R2.50
For Glitzo:
Variable Cost per Unit = Prime Costs + Variable Selling and Distribution Costs + Variable Manufacturing Overheads = R17.90 +
R1.30 + R1.25 = R20.45
Fixed Cost per Unit = R4.00
Break-even Units:
For Streak:
Break-even Units for Streak=�2.50�18.00−�8.70=�2.50�9.30=268.82 unitsBreak-
even Units for Streak=R18.00−R8.70R2.50=R9.30R2.50=268.82 units
Rounding, that would be approximately 269 units.
For Glitzo:
Break-even Units for Glitzo=�4.00�25.00−�20.45=�4.00�4.55=879.12 unitsBreak-
even Units for Glitzo=R25.00−R20.45R4.00=R4.55R4.00=879.12 units
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