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Ldp 110: Cost And Management Accounting Question Paper
Ldp 110: Cost And Management Accounting
Course:Diploma In Purchase And Supplies Management
Institution: University Of Nairobi question papers
Exam Year:2011
INSTRUCTIONS: Answer questions ONE and any other TWO questions.
QUESTION ONE
a) Explain the following terms used in accounting
i) Financial accounting
ii) Management accounting
iii) Cost accounting (6 marks)
b) The following information relate to the material of Maembe Matamu Enterprises in July 2010.
CONSUMPTION
Annual 360,000 units
Maximum 1,200 units per day
Maximum 800 units per day
Normal 900 units per day
Re-order period 12-24 days
Re-order quantity 32,000 units
Required
i) Reorder level
ii) Maximum stock level
iii) Average stock (6 marks)
c) Explain the following terms used in costing accounting:
i) Cost unit
ii) Cost centre
iii) Work-in-progress (6 marks)
d) From the following information, prepare a cost statement
Raw Materials 150,000
Direct wages 40,000
Direct expenses 10,000
Factory expenses
Rent 20,000
Power 5,000
Indirect wages 4,000
Depreciation of plants 6,000
Administration expenses 15,000
Selling and distribution expenses 17,000
Profit 331/3 % of cost (6 marks)
e) You are required to prepare from the following information:
a) A break-even-chart
b) Contribution/sales graph or profit volume graph.
Selling price per unit sh.10
Variable cost per unit sh.50
Fixed costs sh.600, 000 (6 marks)
QUESTION TWO
a) The following information was extracted from the books of Box Ltd, a company which started trading one year ago.
MONTH SALES PURCHASES
(SHS) (SHS)
April 150,000 100,000
May 160,000 110,000
June 160,000 90,000
July 170,000 90,000
August 200,000 80,000
September 200,000 130,000
October 180,000 140,000
November 180,000 60,000
December 200,000 60,000
The following additional information is available:
i. Cash in hand at the end of May 2007 will be Sh. 180,000.
ii. 60% of the sales proceeds are received in the current month, 30% in the followimg month and the balance is received two months after sale.
iii. Supplies are paid one month after delivery of good
iv. Corporation tax for 2006 amounting to sh. 20,000 will be paid on 30th June, 2007.
v. Contractor’s retention monies amounting sh.50, 000 will be paid on 30th June 2007.
vi. The shareholder at their last extra monies-ordinary general meeting increased the share capital by sh. 70,000 and the first call of Shs. 40,000 will be received on October 2007.
vii. On October 2007, the company is due to receive sh.20, 000 as compensation for a civil suit.
viii. The monthly administration expenses amounting to sh.33, 000 include factor depreciation of 4000 and preliminarry expenses of sh.3, 000
ix. Office equipment worth Sh.13, 000 will be paid for in November, 2007
REQUIRED
Prepare a cash budget for the period 1st June to 31st December, 2007. (12 marks)
b) Explain four benefits of budgeting (8 marks)
QUESTION THREE
a) The following information was extracted from the books of Kisumu Enterprises. The company did not have any stocks at the beginning of the month.
DATE QUANTITT RECEIVED UNITS ISSUES COST PER UNIT
1 200 24
1 190
2 300 25
5 280 26
6 210
9 320
12 600 27
14 400
15 1000 28
16 500
20 400
23 800 28
27 360
28 500 30
30 700
REQUIRED
Calculate the value of the closing stock on 30th March 2011 using the following methods
i) LIFO (6 marks)
II) Weighted Average (8 marks)
b) Discuss three merits of FIFO as a method of pricing materials (6 marks)
QUESTION FOUR
a) An employee is allowed 30 minutes to produce a unit of product X. The time taken to produce a week’s output 25 hours and the time rate is Sh.30 per hour. A basic weeek has 35 hours.
REQUIRED
i) Calculate the employees pay based on the following incentive schemes:
1) Halsey scheme
2) Halsey Weir Scheme
3) Rowan scheme (9 marks)
b) Compute the effective hourly rate under each scheme. (3 marks)
c) Discuss four advantages of clock card time recording in control of labour costs. (8 marks)
QUESTION FIVE
a) The Eldoret Company manufactured one product, Eldo, the following costs relate to a financial year when 50,000 units of Eldo are made:
Direct materials 175,000
Direct labour 115,000
Indirect costs 155,000
Investigations into the cost behaviour of the costs revealed that:
- Director materials behave as variable costs
- Direct labour behaves as a variable cost
- Of the indirect costs, shs. 130,000 behave as fixed cost, and the remainder as a variabe cost.
REQUIRED
i) Calculate the cost of one unit of Eldo using marginal costing. (6 marks)
ii) If each unit of Eldo sells for sh. 10 and all the production of 50,000 units is sold, calculate the profit for the year using marginal costing statement. Show the contribution per unit and total contribution. (8 marks)
iii) Differentiate between management accounting and financial accounting. (6 marks)
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