Management Accounting I Question Paper

Management Accounting I

Course:Bachelor Of Business & Management (Business Management)

Institution: Kenyatta University question papers

Exam Year:2010

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2010/2011
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF BUSINESS
BAC 300: MANAGEMENT ACCOUNTING I
DATE: MONDAY 22ND NOVEMBER 2010

TIME: 2.00 P.M – 4.00 P.M

INSTRUCTIONS:
1.
Answer all the questions.

2.
Marks allocated to each question are indicated at the end of every

question.

3.
Answers to be provided logically and completely as possible.
1.
The figures provided below relute to a compound which manufactures a range of products.

Period
Total Sales

Total Costs

sh.

sh.

2008
2,223,000

1,983,000

2009
2,451,000

2,143,000

Assuming prices are stable and variable costs carefully controlled to reflect predetermined

relationships and with fixed cost unvarying, calculate:
a) The profit volume ratio, to reflect the rates of growth for profit and sales.
(15 marks)
b) Fixed cost.

(4 marks)
c) Fixed cost as a percentage of sales

(2 marks)
d) Break-even point

(2 marks)
e) Margin of safety

(2 marks)

Page 1of 3

2.
Makari Motura parts manufacturers produce various motor parts. The cost structure of a part

which production per annum is 90,000 units is as follows:

sh.

Materials (per unit)

540

Labour (25% fixed)

360

Expenses:

Variable (per unit)

180

Fixed

270

Total

1,350

The purchasing manager explores that a supplier is ready to supply the part at sh. 1,080.
Required:
a) Explain whether the part should be purchased and production stopped or not.
(5 marks)
b) Show the financial positions in both the situations.

(6 marks)
c) What would be your advise if the resources producing that part are used to produce a product for
which the selling price is sh. 390 per unit (show your computation)

(14 marks)
3.
The following are estimated cash flows for a company:

Year 0
sh.
10,000

1
Sh.
8,000

2
Sh.
4,000

3
sh.
2,000

4
sh.
1,000

a)
What is the payable period of the project?

(5 marks)

b)
Using a discount rate of 12%, what would be the net present value of the project?

(8 marks)
c) What would be the internal rate of return for the project?

(12 marks)
4. Use the information provided below to calculate:

a) Material cost variance

(5 marks)

b) Material mix variance

(5 marks)

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c) Material yield variance

(5 marks)
d) Labour cost variance

(5 marks)
e) Labour mix variance

(5 marks)

Standard

Actual

Material Input (kg) Unit cost
unit (sh)
Input(kg)
unit cost(sh)
unit(sh)
A
400

50
20,000
420

45

18,000
B
200

20
4,000
240

25

6,000
C
100

15
1,500
90

15

1,350
Labour:
100 man hours @ sh. 2 per hour 200
120 hours @ sh. 2.50
300
200 women hrs @ 1.50 per hour 300
240 hrs@ sh. 1.60

384
Normal loss 25kg

Actual loss 75kg

(25 marks)

***************************

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