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Dbmg 031:Cost And Management Accounting Question Paper
Dbmg 031:Cost And Management Accounting
Course:Diploma In Business Administration
Institution: Kenya Methodist University question papers
Exam Year:2012
KENYA METHODIST UNIVERSITY
END OF 1''st ''TRIMESTER 2012 EXAMINATIONS
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : BUSINESS ADMINISTRATION
UNIT CODE : DBMG 031/ACCT 044
UNIT TITLE : COST AND MANAGEMENT ACCOUNTING
TIME: 2 HOURS
INSTRUCTIONS:
Answer question ONE and any other TWO questions.
Question One
What is a cost?
(2 Marks)
Describe the various cost elements used in production of variable goods.
(6 Marks)
Explain the following cost accounting terms:-
(7 Marks)
Prime cost.
Product cost.
Sunk cost.
Incremental cost.
Standard cost.
Break even point.
A budget.
A company produced K in Batch No.7 are incurred the following costs.
Stage 1 4000 hrs at Ksh.4
Stage 2 6000 hrs at Ksh.3
Direct material cost sh.34 000
Factory overheads are absorbed on labour hours and the rates are Ksh.7 for stage 1 and Ksh.4 for stage 2. The firm uses the cost plus method for setting prices and expects a 25% gross profit. Administrative overheads are absorbed at 12% of selling price. Assuming that 1200 units were produced in batch No.7
Calculate the selling price per unit.
(5 Marks)
The total amount of administrative overheads recorded by Batch 7.
(5 Marks)
The net profit per unit.
(5 Marks)
Question Two
Explain the term Economic order quantity (EOQ).
(2 Marks)
What are the basic assumptions of the EOQ model.
(4 Marks)
What is economic order quantity for a firm with a daily consumption of 30 units per day with ordering goods of Ksh.250 per order and the price of the items is Ksh.25 per unit stock holding cost is 11% per annum. Assume 300 working days in a year.
(6 Marks)
Describe the various costs associated with inventory management.
(8 marks)
Question Three
Discuss the various labour remuneration methods used in business organizations.
(8 Marks)
An employee is paid by differential piece rate. The scheme is as follows:-
Up to 50 units per day sh.5 per units.
51-70 units per day sh.8 per unit.
71-80 units per day Ksh.11 per unit.
81-100 units per day sh.14 per unit.
Above 100 units per day Ksh.18 per unit.
The employee daily production per day for five days is as follows:- 70 units, 80 units, 61 units, 95 units, 56 units.
Calculate his gross pay for the five days. (5 Marks)
What is labour turn over rates?
(3 Marks)
Identify four causes of labour turnover in an organization.
(4 Marks)
Question Four
Explain the following terms as used in process costing:
(3 Marks)
Process loss.
Normal loss.
Equivalent units of production.
Describe three basic characteristic features of process costing.
(6 Marks)
In the month of November 2011 sweet processors Ltd production cost data was as follows:-
Materials 65,000
Labour 39,500
Overhead 25,000
Total cost 130,000
Production was 1200 fully complete units and 300 partly complete units. The degree of completion of the 300 units WIP was as follows:-
Materials 80% complete, labour 50% complete, overheads 55% complete.
Calculate the total equivalent productions, the cost per complete unit and the value of the work in progress (WIP). (11 Marks)
Question Five
Define the term standard costing and explain three types of standards that are applied in standard costing.
(9 Marks)
Distinguish between marginal costing and absorption costing.
(6 Marks)
Distinguish between cost accounting and financial accounting.
(5 Marks)
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