Bac 300 Management Accounting 1 Question Paper

Exam Name: Bac 300 Management Accounting 1 

Course: Bachelor Of Commerce

Category: Kenyatta University question papers

Exam Year:2008

UNIVERSITY EXAMINATIONS 2007/2008
INSTITUTE OF OPEN LEARNING
SPECIAL/SUPPLEMENTARY EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
BAC 300: MANAGERIAL ACCOUNTING 1

DATE: Tuesday 7th October, 2008

TIME: 8.00 a.m. – 10.00 a.m.

INSTRUCTIONS
1. Answer ALL the questions.
2. All questions carry equal marks.
3. Present your answers logically and as completely as possible.

Question 1

A Company makes and distributes two products A and B. The data relating to the two
products are given as follows:
Product A
B
Marginal cost per unit

sh

sh
Direct
materials 10

9
Direct
labour

3

2
Selling
price
20
15
Variable costs are allocated to production at 100% of direct wages. Fixed cost for the
period is sh 800. The products are to be produced and fixed in such a way that the
company makes the best benefit. On the basis of the above data, present to management
statements to show,
i)
Marginal product cost and contribution margin per unit.
ii)
Total contribution and profits resulting each of the following sales mixes
a) 1000 units of A and 2000 units of B
b) 1500 units of A and 1500 units of B
c) 2000 units of A and 1000 units of B

2

Question 2
a)
Explain what is understood by the term “cost”.
b)
State and explain the factors that may qualify a cost to be relevant or irrelevant
c)
How are costs classified for purposes of decision making?

Question 3
In one period, a company which makes a single product and using FIFO to value its cost
of production and stock of work-in-progress presented the following data and stages of
completion.
Work-in-progress
Stage
of
completion
Opening 200 units @


Materials 100%
Sh.4
per
unit
Labour
and
overheads
40%
Closing
150
units
Materials
100%
Labour
and
overheads
70%
During the period, 1050 units were produced and 1100 units transferred to the next
process.
Other information:
Elements
of
cost
Cost
(sh)
Material 1050
Labour
2250
Overheads
1125
Required
Complete the cost sheets and show the process account.

Question 4
A manufacturing company operates a costing system which showed the following data in
respect of the month of o November, 2007.
Actual number of working days


22 days
Actual man hours worked during the month
4300 hours
Number of products produced


425 units
Actual
overhead
incurred
Sh
1800

3

Information from the company’s budget and standard cost data are as follows:-
Budgeted number of working hours per month

20 hours
Budgeted man hours per month



4000 hours
Standard man hours per product



10 hours
Standard overhead rate per man hour


sh. 0.50
Required
Calculate the:-
a)
Overhead variance
b)
Calendar variance
c)
Volume variance

……………














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