MAC3701 Assignment 2 Semester 2 2026 – Due 14 September 2026

Description

MAC3701
Assessment 2_S2_2026
QUESTION 1

(100 Marks; 180 Minutes)
The Company information below applies to Parts A, B, C, D, and E of the assessment question
paper. The additional information provided in each Part only applies to that part of the
assessment question paper.
For each Part below, you must:
• Clearly show all your calculations in detail (marks are awarded for calculations);
• Where necessary, indicate irrelevant amounts/adjustments with an R0 (nil-value);
• Round all your workings to two decimals, except where otherwise stated, and
• Ignore the time value of money and all taxation implications.
Company information
VoltAfrica Mobility (Pty) Ltd (VAM) is a South African manufacturer of electric motor vehicles with its
main production facility located in Rosslyn, Pretoria. The company operates through two autonomous
divisions that report directly to a central Head Office (HO). It supplies both local and international markets
n the highly regulated automotive industry.
VAM uses an absorption costing system, applies the first-in-first-out method to inventory and has a
31 December financial year-end.
1. ElectraDrive Vehicles Division (EVD)
The ElectraDrive Vehicles Division (EVD) produces two vehicle models: Urban, a compact city
vehicle, and Explorer, a larger electric sport utility vehicle (SUV).
The manufacturing process involves installing lithium-ion battery packs, electronic control systems, and
other direct materials (tyres, glass and seats) into locally manufactured vehicle bodies. Although other
direct materials, such as tyres, glass, and seats, are purchased locally, battery cells and electronic
components are imported and paid for in US dollars.
2. Precision Bodyworks Division (PBD)
The Precision Bodyworks Division (PBD) specialises in manufacturing premium, custom-designed
vehicle bodies for sedans and SUVs. The division supplies vehicle bodies to EVD through internal
ransfers and sells customised vehicle bodies to external customers, including specialist vehicle
manufacturers and conversion companies.
Components such as automotive-grade aluminium sheets, steel panels and carbon fibre composites are
cut, shaped, welded, bonded and assembled into the custom vehicle body structure. Robotic equipment
assists with precision welding, while skilled artisans complete custom modifications. The body
undergoes sanding, corrosion treatment, priming and painting. Premium finishes may require multiple
coats and specialised detailing.

Page 4 of 8
MAC3701
Assessment 2_S2_2026
PART A

(30 Marks; 54 Minutes)
As part of the budgeting process for the year ending 31 December 2027, EVD’s management is
assessing the impact of increased competition from international electric vehicle manufacturers.

Management would like to establish the extent to which market share for the Urban and Explorer models
can decline before the company’s budgeted financial objectives are adversely affected.

The following budget information is available:

Details per vehicle
Urban
Explorer
Note
Selling price
R450 000
R700 000 1.2
Vehicle body
500 kilograms(kg)
750 kilograms(kg) 1.3
Lithium-ion battery pack
60 kWh
90 kWh 1.4
Electronic control systems
R40 000
R50 000
Other direct materials
1 component set 1,5 component set 1.5
Direct labour clock minutes
2 400 clock minutes 3 600 clock minutes 1.6
Manufacturing overheads
R35 000
R52 000 1.7

1.1 Budgeted production is 300 EVD Urban vehicles and 200 EVD Explorer vehicles. There is no
budgeted opening or closing inventory of raw materials, work in progress or finished vehicles.
1.2 Budgeted sales volumes will equal budgeted production. Each EVD Urban will be sold for
R450 000 and each EVD Explorer for R700 000.
1.3 Urban vehicle bodies are purchased at R250 000 per tonne(t).
1.4
Lithium-ion batteries are budgeted to cost R30 000 per battery pack. Each battery pack
consists of four 5 kWh cells.
1.5 Other direct materials cost R20 000 per component set.
1.6 Direct labour is budgeted at R300 per clock hour.
1.7 Variable manufacturing overheads are budgeted at R20 000 per vehicle. Fixed manufacturing
overheads are budgeted to be absorbed at R125 000 per vehicle.
1.8
Total selling and distribution costs amount to R28,11 million for the year. The variable selling
and distribution costs are budgeted at 4% of sales.