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Management Accounting Ii Question Paper

Management Accounting Ii

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2008

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2007/2008
SPECIAL EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE, BACHELOR OF EDUCATION AND
BACHELOR OF ARTS

BAC 403: MANAGEMENT ACCOUNTING II

DATE: Tuesday 7th October 2008 _______________TIME: 10.00am – 12.00pm
INSTRUCTIONS:
1.
Answer ALL questions.
2.
Marks allocated are shown at the end of each question
3.
Show all your workings

Question One
Gunter Seed Company is considering a project which requires the following activities.
Activity Preceding
Activity
A

-
B

-
C

-
D
A
E

B
F

E
G

E
H

C
I

H
J

D
K

J
L

F
M

G,I
N
K,L,M

Required:
Draw a network diagram for the above
project.
[15
marks]

1
Question Two
A Mwalimu motor car distributor has 57 cars. 34 cars of them are Toyotas, 15 Nissans
and 8 Mazdsa. The distributor at the moment has three garages requiring cars. Garage A
can take 18 cars, garage B 18 cars and garage C 16 cars. The cost of supplying (Ksh)
each car to each garage is as follows:

Garage A
Garage B
Garage C
Kshs
Ksh
Ksh
Toyotas 50 30 40
Nissans 80 40 50
Mazda 100

70

80

(a)
Write out and explain the initial transportation tableau if the problem is to
minimize the cost of transporting the cars from the distributor to the garage.

Question Three
(a)
Briefly explain three methods that can be used to analyze uncertainty in cost-
volume-profit
(c-v-p)
analysis. [6
marks]
(b)
The z division of XYZ Ltd. produces a component which it sells externally and
can also be transferred to other divisions within the organization. The division
has set a performance target for the coming financial year of residual of
Shs.5,000,000. The following budgeted information relating to Z division has
been prepared for the coming financial year.
1.
Maximum production/sales capacity 800,000 units
2.
Sales to external customers: 500,000 units at Sh.37
3.
Variable cost per component Sh.25
4.
Fixed costs directly attributed to the division Sh.1,400,000
5.
Capital employed: Sh.20,000,000 with cost of capital of 13%
The X division of XYZ Ltd., has asked Z division to quote a transfer price for unit of
component.
Required:
(i)
Calculate the transfer price per component which Z division should quote to X
division so that its residual income target is achieved. [10
marks]

2
(ii)
Explain why the transfer price calculate din (i) above may lead to sup-optimal
decision making from the point of view of XYZ Ltd. taken as a whole.

[4 marks]

[Total = 20 marks]
Question Four
(a)
Explain the major characteristics of modern businesses that necessitate the
introduction of a strategic cost management system.
[8 marks]
(b)
“If a manager searches for a system that will provide the ‘true costs’ of each
service produced by his firm he is attempting the impossible”. Discuss.

[7 marks]

[Total = 15 marks]

==========

3

Management Accounting Ii Question Paper

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