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Caa 305:Advanced Cost Accounting Question Paper
Caa 305:Advanced Cost Accounting
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2009
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UNIVERSITY EXAMINATIONS: 2009/2010
THIRD YEAR STAGE 2 EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CAA 305:ADVANCED COST ACCOUNTING (EVENING )
DATE: DECEMBER 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer ALL Questions
QUESTION ONE
a) “Absolute accuracy and timeliness cannot co-exist in the discipline of cost accounting.”
Discuss (6 Marks)
b) Compare and contrast Job order and process costing systems? Which of the two systems do
you consider to be a superior costing system? (8 Marks)
c) Why is having a cost accounting system important to a business? (5 Marks)
d) What is the difference in operations between a company that uses Job order cost system
and that of a company that uses a process costing system? (6 Marks)
QUESTION TWO
a) Hill construction company uses a job-order cost system. The company had three jobs in process
at the beginning of June 2009. The beginning balance in the work in process control account
was Ksh. 145,400; made up of Ksh. 42,400, 65,100, and 37,900 shown on the job cost sheets
for jobs 302, 303 and 304, respectively. During the month, hill added the following materials
and labour costs to each job:
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Inventory Materials Labour
Sh Sh
Job 302 10,200 32,000
Job 303 12,400 18,000
Job 304 16,500 10,000
Total 39,100 60,000
Overhead cost is applied in the predetermined rate of Ksh. 0.60 per direct labour shilling.
Actual overhead costs for the month were Ksh. 36,800. Hill completed Job 303 and sold it for
Ksh. 129,000 cash during the month.
Required:
i) Determine the balance in the work in process account at the end of the month (6 Marks)
ii) Explain how the entry to close the manufacturing overhead account would affect the
cost of goods sold account (4 Marks)
iii) Determine the amount of gross margin hill would report on its income statement for
the month (3 Marks)
b) United Technology Manufacturing Company (UTMC) uses a process cost system. Products pass
through two departments. The following information applies to the Assembly department.
Beginning inventory in the department’s work in process (WIP) account was Ksh. 18,400. During
the month UTMC added Ksh. 200,273 of product costs to the WIP account. There were 5,700
units of product at the beginning inventory and 45,300 units started during the month. The ending
inventory consisted of 4,200 units, which were 30% complete.
Required:
Prepare a production report showing:
i) Total input units and equivalent units (4 Marks)
ii) Determination of the cost per unit (4 Marks)
iii) Cost allocation/distribution (4 Marks)
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QUESTION THREE
Abba company ltd is preparing its budget for the year to June 30, 2009, in respect of fuel oil
consumption. It is desired to estimate an equation of the form y = a + bx, where y is the total expense
at any activity level x, a is the fixed expense and b is the rate of variable cost. The following data
relates to the year ending June 30, 2009:
Month Machine hours Fuel oil expense
Ksh
‘000’ ‘000’
July 34 640
Aug 30 620
Sept 34 620
Oct 39 590
Nov 42 500
Dec 32 530
Jan 26 500
Feb 26 500
March 31 530
April 35 550
May 43 580
June 48 680
Total 420 6,840
Monthly averages 35 570
Required:
Determine the cost functions from the above data using:
a) High and low points approach (9 Marks)
b) Least –squares regression analysis (16 Marks)
QUESTION FOUR
Write short notes on the following
a) Learning curves (7 Marks)
b) Normal losses (5 Marks)
c) The relevance of standard costing (clearly arguing a case for and against
Standard costing and suggest any alternative/complimentary methods) (13 Marks)
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