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Cost Accounting (Acct 219) 3Rd Trimester 2014 Question Paper
Cost Accounting (Acct 219) 3Rd Trimester 2014
Course:Bachelor Of Business Information Technology
Institution: Kenya Methodist University question papers
Exam Year:2015
COST ACCOUNTING (ACCT 219) 3RD TRIMESTER 2014
KENYA METHODIST UNIVERSITY
END OF 3'RD 'TRIMESTER 2014 (FT) EXAMINATION
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING FINANCE AND INVESTMENT
UNIT CODE : ACCT 219
UNIT TITLE : COST ACCOUNTING
TIME: 2 HOURS
Instructions: Answer question one and any other two questions.
Question One
The following is the budget of superb engineering works for the year 2002.
Factory overheads Kshs. 62,000
Direct labour costs Kshs. 98,000
Direct labour hors 155,000
Machine hours 50,000
Actual labour hours were 40,000
Actual machine hours were 30,000
Actual direct labour costs were Kshs. 50,000
Actual direct material costs were Kshs. 45,000
Required
Determine the overhead application rate on the basis of
Director labour hours
Direct labour costs
Machine hours
Overheads costs
Production costs
(10mks)
Outline and discuss from categories in the classification of costs. (12mks)
Discuss from functions performed by preparing a budget for an organization.
(8mks)
Question Two
Jabali ltd manufactures a product that goes through three processes. The following data relates to the month of May 2012.
Process 1 Process 2 Process 3
Basic raw materials (40,000 units) 24,000 - -
Materials added 34,000 38,000 22,000
Direct wages 16,000 24,000 48,000
Direct expenses 4,800 3,720 5,360
Output process 36,800 units 34,800 units 31,600 units
Normal process loss of inputs 10% 5% 10%
Scrap value per unit Sh. 0.20 Sh. 0.50 Sh. 1.00
Total value of production overheads was sh. 66,000 and this will recovered in each process based on the direct wage input.
Required
Process accounts
(10mks)
Abnormal loss and gain accounts
(5mks)
Discus the characteristics of process costing systems
(5mks)
Question Three
Maendeleo clothing factory has for sections X,Y,W and Z. the actual costs incurred by the business are show below
Rent Shs. 20,000
Repairs to plant Shs. 12,000
Depreciation to plant Shs. 9,000
Light and power Shs. 2,000
Supervision Shs. 30,000
Repairs to building Shs. 8,000
The following information was available for the four departments
Details W X Y Z
Area to square metres 1500 1200 800 500
Number of employees 20 15 10 5
Wages paid Shs. 120,000 Shs. 8000 Shs. 60,000 Shs. 40,000
Value of machinery and plant 400000 300000 300000 -
Required
Apportion the costs among the four departments.
(10mks)
Distinguish between
Cost centre and cost units.
(4mks)
Allocation of costs and absorption of costs.
(4mks)
Flexible and fixed budgets
(2mks)
Question Four
Sam makengi plans to incorporate a company to be known as Makengi holdings ltd, for the distribution of locally made automotive spare parts. The intent to contribute an initial capital of shs. 45,000 in cash. After approaching his bank manager for financial support, he was asked to submit projected statements of profits and cash flows of the business for the next from months commencing 1st July 2008. After careful analysis Makengi gathered the following information relating to the business operations for the six months to December 31st 2008.
At the beginning of July operating furniture and equipment will be again for cash at a total cost of shs. 88,000. In addition, stocks costing shs. 50,000 will be acquired out of which half will be paid for in cash and the balance in the following month.
Stock levels will be maintained at a level that is sufficient to satisfy sales. Credit terms from suppliers require payment after one month from the date of purchase
Sales are expected to average shs. 60,000 per month for the next one year. It is expected that 75% of customers will pay in cash and 25% will take credit. All credit sales are due within 30 days.
The following monthly expenses will be incurred
Rent shs. 10,000
Salaries shs. 6,000
Miscellaneous expenses shs. 2500
Depreciation shs. 3,000
All expenses will be paid for in the month in which they are incurred, except for rent which is payable quarterly in advance.
The proprietor experts to withdraw shs. 5,000 from the business every month for personal use
Required
Prepare a cash budget for each of the months or why, August, September and October 2008 for Makengi Holdings ltd. The budget should be columns form and all supporting workings should be shown. (20mks)
Question Five
Mamba ltd buys and sells product Q-5. Its values stock on basis of last in first out (LIFO). As at 1st June 2009, Stock in hand consisted of 4,500 units which were acquired at shs. 50 per unit. The operations for the month were as follows:
Date Purchases Sales
June 1 5,000 @ sh 48 -
June 4 - 6,000 @ sh 60
June 7 5,500@sh49 -
June 11
7,000 @ 61
June 12 5,000@50 -
June 13 6,000 @ 47 -
June 18 7,000 @ 62
June 19 8,000 @ 64
June 20 6,000 @ 49.50 -
June 21 5,000 @ 65
June 22 7,000 @ 50 -
June 25 6,000 @ 49 -
June 26 2,000 @ 47 -
June 28 - 5,000 @ 60
June 29 - 14,000 @ 64
The salary income operating costs of sh. 450,000 during the month.
Required
Stores ledger card.
(14mks)
Closing stock valuation
(2mks)
Trading account for the month
(4mks)
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