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Introduction To Management Accounting Question Paper
Introduction To Management Accounting
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2010
UNIVERSITY EXAMINATIONS: 2009/2010
SECOND YEAR EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
CAA 201-A: INTRODUCTION TO MANAGEMENT ACCOUNTING -
(SATURDAY)
DATE: AUGUST 2010 TIME: 2 HOURS
INSTRUCTIONS: Answer ALL questions
QUESTION ONE
a) You have been asked to examine the performance of a subsidiary company for May. The
subsidiary supplies kitchen units to the building industry. The standard cost of one unit for May
was as follows”:
Kshs
Direct material 5kilos at Kshs 4 per kilo 20
Direct labor 4 hours at Kshs 6 per hour 24
Overheads (based upon an overhead absorption rate of Kshs 4 per
Labor hour) 16
60
The standard selling price of one unit was Kshs100 and budgeted sales were 1,200 units. All
overheads are fixed in nature.
The actual results were:
?? 1300 units were made and sold for a total of Kshs130, 000.
?? Direct material used was 6,600 kilos at a total cost of Kshs 25,080.
?? Direct labor was 5,330 hours at a cost of Kshs 32,513.
?? Actual fixed overheads were Kshs 22,000.
2
Required:
Calculate the following:
i. Material price variance
ii. Material usage variance
iii. labor rate variance
iv. labor efficiency variance
(10 Marks)
b) What are the major assumptions of CVP? (5 Marks)
QUESTION TWO
a) What are the benefits of planning variances? What are their limitations? (10 Marks)
b) Define management accounting & explain the elements of managerial accounting. (5 Marks)
QUESTION THREE
a) Define Zero Based Budgeting (ZBB) and identify the stages in implementing ZBB.
What are the merits & demerits of ZBB? (12 Marks)
b) Define the following terms (8 Marks)
?? Ideal Standard
?? Basic Standard
?? Attainable Standard
?? Current standard
QUESTION FOUR
From the data below, prepare a cash budget for the months of Nov, December & January (20 Marks)
i. Budgeted sales were as follows (In Kshs 000)
Oct Nov Dec Jan Feb
000 000 000 000 000
22 13 54 8 19
ii. Budgeted purchases were as follows (In Kshs 000)
Oct Nov Dec Jan Feb
3 9 8 3 3.5
3
iii. Additional information provided was as follows
?? The opening cash balance as at November 1st is Kshs 11,132
?? Collections from sales as follows
?? 45% within the month of sale
?? 40& within the 2nd month
?? 5% within the 3rd month
?? Balance during the 4th month
?? Purchases made are paid for using the following pattern
?? 45% within the month of sale
?? 35& within the 2nd month
?? 5% within the 3rd month
?? Balance during the 4th month
iv. Additional expenses were as follows
?? Electricity-constant figure of Kshs 2,300. for all the months in question
?? Other monthly expenses (including accrued wages of Kshs 4,000-)
amounted to Kshs 8,500.
?? Insurance claims of Kshs 4,500 each was received in the months of
December & February.
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