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Cost Accounting (Acct 219) 2Nd Trimester 2015 Question Paper
Cost Accounting (Acct 219) 2Nd Trimester 2015
Course:Bachelor Of Business Information Technology
Institution: Kenya Methodist University question papers
Exam Year:2015
COST ACCOUNTING (ACCT 219) 2ND TRIMESTER 2015
KENYA METHODIST UNIVERSITY
END OF 2NDTRIMESTER 2015 (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
(i) Discuss the differences between cost accounting and financial accounting.
(5 Marks)
(ii) Discuss five different ways of classifying costs in cost accounting. (10 marks)
(iii) Discuss any five factors that affect stock levels. (5 marks)
..
Discuss 3 bonus schemes used in accounting for labor.
(3 Marks)
Define how costs are classified according to behavior.
(4 marks)
….
Service
Departments production Depts
General Plant (GP) Engineering (E ) Machining Assembly
overhead costs before allocation 20,000.00 10,000.00 30,000.00 40,000.00
Direct labor Hours by general plant (GP) 15,000 20,000 60,000 40,000
Engineering hours by engineering (E ) 5,000 4,000 50,000 30,000
From the above information, allocate the service costs using;
Direct method
Step method
Matrix method
(20 marks)
Question Two
Briefly distinguish between the following terminologies used in cost accounting clearly stating the importance of the distinction for decision making purposes;
Sunk costs and standard costs.
(2 marks)
Relevant cost and irrelevant costs
(2 marks)
Controllable costs and non-controllable costs
(2 marks)
Semi-fixed and semi-variable costs
(2 marks)
Produce costs and periodic costs
(2 marks)
The following information is given for material ABC consumption;
Annual 360,000 units
Maximum consumption 1200 units/day
Minimum consumption 800 units/day
Re-order period 12 – 24 days
Re-order quantity 32,000 units
Required:
Re-order level
(4 marks)
Minimum stock level
(3 marks)
Maximum stock level
(3 marks)
Question Three
ABC construction company has won contract to construct a building valued at Ksh. 400 million. The following details were available for the year ending 31st December 2009
shs. ’000’
materials issued at the site 95,000.00
materials purchased locally 75,000
Direct wages
Paid 5,000
Accrued 350
Plant purchased and installed 48,000
Direct Expenditure
Paid 1,780
Accrued 70
Establishment charges 180
Materials returned to the store 850
Work certified 350,000
Lost at work not certified 3,800
Materials on site on December 31st 5,330
Value of plant on December 31st 41,500
The company had received from the client payments amounting shs.326 Million.
Required:
Prepare a contract account
Contract account
Balance sheet as at 3rd December 2010
Question Four
The following information relates to the production of an VX (20 marks)
Stocks as at 1 January 2011
shs,’000’
Raw materials 3,000.00
Work in progress 2,500
Finished goods 4,200
Stocks as at 31 Dec. 2011
Raw Materials 2,000
Work in progress 3,200
finished goods 4,300
purchase of raw materials 30,000
carriage inwards 500
direct wages 8,000
salaries (50% factory and 50% administration 8,000
Rate (50% factory and 50% administration) 6,000
other factory overheads 3,500
other administration overheads 1,000
sales 20,000
Required:
Cost statement
Income statement
Question Five
Explain any three advantages and disadvantages of preparing budgets.
(6 marks)
Kona Mbaya Ltd gave the following information relating to its performance for six months in 2009
Month Sales (shs) Purchases (shs)
May 150,000 100,000
June 160,000 120,000
July 180,000 80,000
August 190,000 90,000
September 190,000 110,000
October 200,000 70,000
Additional information
Cash in hand as at 30th April 2009 was sh.150,000
50% of the sale proceeds are received in the current month, 30% in the following month and the balance received two months after sale.
Suppliers are usually paid one month after delivery of goods.
In August 2009 the Cardbury is due to receive ksh.30,000 as compensation for a civil suit
The monthly administrative expenses amounts to sh.40,000.
Office furniture worthy sh.20,000 will be paid in the month of July.
Corporate tax for the previous year amounting to sh.30,000 will be paid for in September 2009.
Required:
Prepare a cash budget for the period above (ie) 1st May to 31st October 2009. (14 marks)
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