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Cost Accounting I Question Paper
Cost Accounting I
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2010
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2010/2011
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
BAC 202: COST ACCOUNTING I
DATE:
Thursday 2nd December 2010
TIME: 4.30p.m -6.30p.m
INSTRUCTIONS:
1.
Answer ALL Questions
2.
Show all your working
3.
Marks Allocated are shown at the end of each question.
Question One
a)
Describe the duties of a cost accountant in an organization.
[4marks]
b)
“In practice there is not cost that can be described as entirely and always variable
or fixed” Comment on the above statement.
[4marks]
c)
Distinguish between cost accounting and financial accounting.
[4marks]
d)
The following information is given for material Z 140.
Consumption:
Annual
360, 000 units
Maximum
1,200 units per day
Minimum
800 units per day
Normal
900 units per day
Re-order period
12 – 24 days
Re-order quantity
32,000 units
Required:
i.
Re-order level
[1mark]
ii)
Minimum stock level
[2marks]
iii)
Maximum stock level
[2marks]
Page 1 of 4
e)
Using a diagram to illustrate your answer, explain the rationale underlying the
economic order quantity model (The mathematic derivation is not required).
[3marks]
[Total: 20 Marks]
Question Two
a)
Alfa Ltd has three production departments and two service departments. The
following is their budgeted factory overheads for the year ended 30 September
2009.
sh
sh
Production departments
A
240,000
B
180,000
C
220,000
640,000
Service departments
X
86,000
Y
44,000
130,000
770000
The service department costs are to be re-appointed as per the following percentages:
A
B
C
X
Y
X
20
30
35
-
15
Y
30
30
30
10
-
Required:
Re-apportion the service department costs to the production departments using
simultaneous equation method.
[7marks]
b)
You are informed that the overheads are absorbed on the basis of the direct labour
hours and the budgeted direct labour hours for the departments are given below:
Department A
1000 hours
B
2500 hours
c)
4000 hours
Page 2 of 4
Required:
Determine the overhead absorption rates per hour for the three production departments.
[6marks]
c)
In multi-departments production situation explain the role of service departments.
[2marks]
[Total: 15marks]
Question Three
a)
Wanjenzi Limited commenced its operations on 1January 2008. The company
was engaged in one contract only, the price of which was sh 100 million. The
trial balance of the company as at 31 December 2008 was as follows:
sh “000?
Sh “000”
Share capital
20,000
Creditors
2,000
Cash received on contract (80% of certified work)
40,000
Land and buildings
8,000
Bank balance
4,800
Material charged on contract
18,000
Plant (original cost 1 January 2008)
5,000
Wages
25,000
Expenses
1,200
_____
62,000
62,000
Additional information
1.
Wages outstanding amounted to sh. 3 million
2.
Expenses outstanding amounted to sh. 200,000
3.
Depreciation on plant was at a rate of 10% per annum on time basis
4.
Material on hand at site as on 31 December 2008 were valued at sh 800,000
5.
A part of plant (original cost sh 1, 0000, 000) was destroyed by fire on 30
September 2008. This was subsequently sold as scrap for sh 200,000 on 31
December 2008.
6.
Plant (original cost sh 1,000,000) was transferred to another contract of 31
December 2008.
7.
Work uncertified as on 31 December 2008 was sh 400,000.
8.
Material costing sh 800,000 was destroyed by fire on 31 December 2008.
Required:
i)
Contract account for the period ended 31 December 2008.
[5marks]
ii)
Profit and loss account for the year ended 31 December 2008.
[4marks]
iii)
Balance sheet as at 31 December 2008.
[5marks]
Page 3 of 4
b)
Explain any three methods of cost prediction.
[6marks]
[Total: 20marks]
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