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Cost Accounting (Acct 219) 1St Trimester 2015 Question Paper
Cost Accounting (Acct 219) 1St Trimester 2015
Course:Bachelor Of Business Information Technology
Institution: Kenya Methodist University question papers
Exam Year:2015
COST ACCOUNTING (ACCT 219) 1ST TRIMESTER 2015
KENYA METHODIST UNIVERSITY
END OF 1'st 'TRIMESTER 2015 (PT) EXAMINATION
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING FINANCE & INVESTMENT
UNIT CODE : ACCT 219
UNIT TITLE : COST ACCOUNTING
TIME: 2 HOURS
INSTRUCTIONS:
Answer question One and any other Two
Question One
Highlight THREE inventory valuation methods giving TWO advantages of each.
(10marks)
Discuss FIVE budgets that may be found in a master budget. (10marks)
Karibu Fabricators Ltd. Uses a job costing system to price its custom made products. Predetermined overheads rates are used to absorb overheads to each job. Each job passes through two departments- department 1 and department 2. In department 1 overheads are absorbed on basis of prime cost while in department 2 absorption is on the basis of machine hours. Management is in the process of setting overhead absorption rates for the next financial year and the following information is provided:
Department. 1 Department 2.
Budgeted direct labour hours 25000 5,000
Budgeted direct labour rates sh.30 per hour sh. 1250 per hour
Budgeted factory overheads 900,000 630,000
Budgeted direct materials (usage) 60000 kg. 90,000kg.
Budgeted direct materials (purchase price) 25 per kg 7.50per kg
Budgeted machine hours. 1,000 45,000
Required:
Calculate overhead absorption rates for each department. (10marks)
Question Two
Chang Chung Ltd has three production departments and two service departments. The following is their budgeted factory overheads for the year ended 30th September 2012.
Production Departments Sh. Sh.
A 240,000
B 180,000
C 220,000
640,000
Service departments
X 60,000
Y 40,000 100,000
Total 740,000
The service department costs are to be apportioned as per the following percentages:
A B C X Y
X 20 30 35 - 15
Y 30 20 30 10 -
Required:
Re-apportion the service department costs to the production departments using the simultaneous equation method. (20marks)
Question Three
Describe the advantages of FIFO method of valuing material issues.
(4marks)
The following details were extracted from the stores ledgers of ABC Ltd, a manufacturing company in Meru for month of June 2015.
Date Transaction
2nd June 2015 Opening stock 400 units valued at shs 1600
4th " Received 200 units @ shs. 5 each
10th " Issued 500 units
16th " Received 300 units @ shs. 6 each
20th " Issued 300 units
24th" Received 400 units @ shs. 4 each
30th " Issued 200
Required:
Prepare stock ledger cash and show value of closing stock using the following methods:
FIFO.
(5marks)
LIFO.
(5marks)
WAM.
(6marks)
Question Four
Jengo construction company was awarded a small contract on 1st July 2005 at our agreed price of shs. 4,000,000. The contract was expected to be completed by 31st March 2006. The following was expected to be computed by 31st March 2006. The following expenditure was incurred during the year ended 31st December 2005:
Shs.
Materials delivered to site 1,200,000
Materials sold (cost shs. 21,000) 13,000
Variable overheads 48,500
Plant delivered to site 400,000
Payment to sub-contractors 100,000
Wages paid 506,000
Proportion of Head Office costs 60,000
On 31st December 2005 the value of plant was 265,000/- and materials remaining at the site was shs. 20,000. The cash received from the client was shs. 2,100,000. In order to complete the contract on time the following estimates of expenditure were budgeted by the contractor:
: Shs.
Additional materials 600,000
Additional wages 380,000
Additional plant 120,000
Head office expenses 15,000
The value of the plant at the end of the contract will be kshs. 195,000. A contingency of shs 55,000 was provided.
Required:
Prepare a contract account for the year ended 31st December, 2005 showing the amount to be transferred to the profit and loss account. (20marks)
Question Five
Four Seasons company makes a product that goes through three processes. The following details relate to the month of May 2006.
PROCESS
Details 1 2 3 Total
Basic raw
Material 24,000 24,000
(40,000 units)
Materials added 34,000 38,000 22,000 94,000
Direct wages 16,000 24,000 48,000 98,000
Direct expenses 4,500 3,720 5,360 13,880
Production overhead - - - 66,000
Output 36,500 34,800 31,600
Normal process
loss 10% 5% 10%
Scrap value
per unit sh.0.20 sh. 0.50 sh 1.00
Production overhead is recovered as a percentage of direct wages.
Required:
a) Process 1 accounts
Process 2 accounts
Process 3 accounts
Abnormal gain account
Abnormal loss account.
(20marks)
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