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Cost Accounting I Question Paper
Cost Accounting I
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2009
KENYATTA UNIVERSITY
INSTITUTE OF OPEN LEARNING
UNIVERSITY EXAMINATIONS 2008/2009
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
BAC 202
COST ACCOUNTING I
DATE: 13TH AUGUST, 2009
TIME:
8.00 A.M – 10.00 AM
INSTRUCTIONS:
• Answer ALL Questions
• Show ALL your workings
• Marks allocated shown at the end of each question
Q1.
a)
Name and explain briefly FIVE factors that should be considered when
fixing
stock
levels.
[
5
marks]
b)
Explain any FOUR costing methods and give the most appropriate use of
each.
[8
marks]
c)
The following information is available from the records of a small
manufacturing
company:
Maximum Consumption
5000 units per week
Minimum consumption
3000 units per week
Re- order period or lead time 4 –6 weeks
Re-order quantity
20,000 units
Page 1 of 3
REQUIRED:
i)
Calculate re- order level
ii)
Calculate minimum stock level
iii)
Calculate maximum stock level
[ 7 marks]
( Total 20 marks)
Q2. A manufacturing company has three production departments and two service
departments. Overhead allocated for a period of these departments is as follows
Production
department
Sh
Sh
A
120,000
B
195,000
C
260,000 575,000
Service departments
X
68,000
Y
27,000
95,000
670,000
A technical assessment for the apportionment of costs of the service departments
shows:
Department
A
B
C
X
Y
X
25%
38%
32%
- 5%
Y
40%
27%
18%
15%
-
REQUIRED:
Apportion the service department costs by using algebraic approach. [20 marks]
Q3. a)
State and briefly explain THREE bases typically used in classification of
costs.
[ 6 marks]
b)
A Ltd and B Ltd are contracting companies. The following
information relate to their uncompleted contracts at 31 October 2006.
Company
A
Ltd
B
Ltd
Date contract commenced 1st November 2005 1st November 2005
Expected Completion date 31st December 2006 31st December 2006
Page 2 of 3
Sh
Sh
Cost of work to 31 October 2006
770,000
650,000
Estimated further costs to completion
30,000
100,000
Value of work certified to 31October 2006
750,000
600,000
Contract
price 1,000,000
900,000
Progress payments received to 31st October 2006 720,000
540,000
A Ltd and B Ltd take work certified and cash received into account respectively in
determining contract profits to be taken to their respective profit and loss accounts.
REQUIRED:
Prepare a statement in columnar form showing the profit or loss to be taken to the profit
and loss account of each of the two companies as at 31st 2006. Show all your workings.
[12 marks]
(Total 15 marks)
Q4.
The following information has been extracted from the books of Solar cross Ltd
1for the year to 31 March 2007.
Units
‘000’
Production
30
Sales
24
Production
cost
incurred
sh’000’
Direct material
7,200
Direct Labour
1 800
Variable overhead
1 500
Fixed overheads
2 700
Selling and administration costs
Salaries and sales
450
Variable sales commission
300
Promotion and advertising
480
Other fixed costs
720
The company’s unit selling price is sh 550
REQUIRED
a)
Profit and loss statement under direct costing approach
[ 6 marks]
b)
Profit and loss statement under absorption costing approach [ 6 marks]
b)
An explanation of the difference in profit or loss in (a) and (b) above
[ 3 marks]
Page 3 of 3
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