Get premium membership and access revision papers, questions with answers as well as video lessons.
Cost Accounting Ii Question Paper
Cost Accounting Ii
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2009
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2008/2009
INSTITUTE OF OPEN LEARNING
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
BAC 404: COST ACCOUNTING II
DATE: MONDAY 10TH AUGUST 2009
TIME: 2.00 P.M. – 4.00 P.M.
INSTRUCTIONS:
• Answer ALL Questions.
• Show ALL your workings
QUESTION ONE
The national Avionics has just completed the assembly of 50 geographical balloons made for
the geodetic survey specially equipped to measure atmosphere weather conditions in the
Mora region. The company is now being asked to submit an estimate on costs for an
additional 40 units. Its management has noted that the direct labour hours on each unit seem
to be declining. For the first 20 units produced the average hours per unit were 420. for the
assembly of 50 units, however the average hours per unit dropped to 325.
Required
a)
Estimate the parameters of National Avionics learning curve for assembly of
geographical
ballons.
(8
marks)
b)
Calculate the total hours required to assemble 90 units.
(3 marks)
c)
Suppose incremental costs (labour plus unreliable overhead costs) are kshs 12 per
direct labour hour. What would be the incremental assembly cost for a new order.
(4 marks)
Page 1 of 5
d)
National Avionics wins its order for the next 40 units and in addition produces
another 10 balloon for another customer. Its cumulative experience with producing
these 100 balloons shows 28,000 total direct labour hours. Is this consistent with the
learning
curve
you
estimated.
(5
marks)
QUESTION TWO
A company manufactures a product where process costing is followed and work in progress
inventory at the end of the period are valued on FIFO basis. At the beginning of one period,
the inventory of work in progress showed 400 untis, 40% complete and valued as follows:
Kshs
Material 3,600
Labour
3,400
Overheads
1,000
In the period, materials were purchased for Kshs. 75,000. Wages and overheads in the period
totaled kshs. 79,800 and Kshs. 21,280 respectively. Actual issue of materials to production
was Kshs. 68,500. Finished stock in inventory account was 2500 units. At the end of the
process some 500 units were not fully processed but had reached the level of completeness as
follows:
Materials
- 80%
Labour
and
overheads
- 60%
Required
Prepare the process cost report for the period, showing the apportionment of cost to finished
goods
and
work
in
progress.
(20
marks)
QUESTION THREE
a)
State and explain the reasons as to why profit or loss between cost and financial
records may differ in an interlocking cost accounting system.
(3 marks)
Page 2 of 5
b)
The cost books of Kakamega Ltd reported the profits for the year ended 30/9/2008
as kshs. 1,209,750. The financial books of the company disclosed the following
position for period ended on the same date.
Manufacturing Account for the year ending 30/9/2008
Kshs
Kshs
Kshs
Raw materials:
Transfer to Finished
Opening Stock
47,500
Stock Account
2,785,000
Purchases 1,372,500
1,420,000
Less closing stock
(45,000)
1,375,000
Direct labour
887,500
Factory overhead
535,000
2,797,500
Work in progress
Opening
210,000
Closing (222,500)
(12,100)
________
2,785,000
2,785,000
Finished Stock Account
Kshs
Kshs
Opening
Stock
290,000 cost of Sales transferred
Transfer
from
manufacturing
to
trading
A/C
2,767,500
Account 2,785,000
closing stock
307,500
3,075,000
3,075,000
Page 3 of 5
Trading,
profit
and
Loss
Account
for
the
year
ended
30/9/2008
Kshs
Kshs
Sales
4,612,500
Less
cost
of
sales
(2,767,500)
Gross
profit
1,845,000
Discount received
45,150
Bank interest received
925
Dividends received
7,500
1,898,575
Less Expenses
Administration expenses
390,000
Distribution
expenses
254,550
Discount allowed
37,775
Debenture
interest
21,250
Fines
12,500
Losses of Non trading nature
8,750
(724,825)
Net
profit
1,173,750)
Additional information
i)
The valuation in the cost books were AS FOLLOWS
Opening
Balance
Closing
Balance
Kshs
Kshs.
Raw materials
49,225
46,250
Work in progress
207,000
218,250
Finished
stock
284,900 320,250
Page 4 of 5
i)
Depreciation amounting to Kshs 153,650 was charged in the cost books, whereas
factory overhead in the financial books included 146,825 for this expense
heading.
ii)
The profit shown in the cost books has been arrived at after charging notional
rent of the 37,500 and interest on capital of Kshs. 75, 000.
Required
Prepare a Memorandum reconciliation account for the year ending 30/9/2008.
(12 marks)
More Question Papers
Popular Exams
Return to Question Papers