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Dibm 0223: Management Accounting Question Paper

Dibm 0223: Management Accounting

Course:Diploma In Business Management

Institution: Chuka University question papers

Exam Year:2012

CHUKA UNIVERSITY

COLLEGE

UNIVERSITY EXAMINATIONS

SECOND YEAR EXAMINATION FOR THE AWARD OF
DIPLOMA IN BUSINESS MANAGEMENT

DIBM 0223: MANAGEMENT ACCOUNTING

STREAMS: DIP. (BUS MGT) Y2S2 TIME: 2 HOURS
DAY/DATE: TUESDAY 11/12/2012 8.30 A.M – 10.30 A.M.
INSTRUCTIONS:

• Answer ALL questions.
• Do not write on the question paper.

QUESTION ONE:

(a) Explain the functions of management accounting. [10 marks]

(b) Explain the main advantages of budgets. [8 marks]

(c) AB Ltd wishes to sell its products at Sh.100 per unit, which has a variable cost as follows:

Direct material Sh.20 per unit
Direct labour Sh.20 per hour
Variable overheads Sh.10 per unit
Fixed cost during the period were Sh.47,000 per annum.

Required:

(i) Determining the break-even point in units and shillings. [8 marks]

(ii) If the firm anticipates to earn a profit of Sh.200,000, determine the amount of units to be sold to obtain that target profit. [4 marks]

QUESTION TWO:

(a) Highlight the common types of cost classification. [4 marks]

(b) The following data relates to the repair cost incurred and the number of labour hours employed by Chuka Motor Garage Ltd for six months.

Month Jan Feb March April May June
Repair cost (Shs) 600,000 800,000 550,000 1,000,000 700,000 500,000
No. of hours employed 4000 5000 3000 6000 4000 2000

Required:

(i) Formulate a cost estimation function or equation in form of y = a + bx using:

• High-low method [5 marks]
• Simple linear regression method [7 marks]

(ii) Use the equations obtained (i) above to estimate the total repair cost for the month of July if the number of labour hours employed was 7000. [4 marks]

QUESTION THREE:

(a) Distinguish between job costing and process costing. [4 marks]

(b) The following information relates to X Ltd for three periods.

Selling price per unit Sh.100
Variable cost per unit Sh. 60
Fixed cost per period is Sh.3,000,000

The company produces only one product. The production and sales for each period are
as follows:
1 2 3
Units sold 150000 120000 180000
Units produced 150000 150000 150000

Required:

Income statement for each period using

(i) Marginal costing approach [8 marks]
(ii) Absorption costing approach [8 marks]

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Dibm 0223: Management Accounting Question Paper

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