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Cost Accounting(Acct 219) 3Rd Trimester 2017 Question Paper
Cost Accounting(Acct 219) 3Rd Trimester 2017
Course:Bachelor Of Business Information Technology
Institution: Kenya Methodist University question papers
Exam Year:2017
Cost Accounting(ACCT 219) 3rd Trimester 2017
KENYA METHODIST UNIVERSITY
END OF 3'RD 'TRIMESTER 2017 (PT) EXAMINATIONS
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING FINANCE AND INVESTMENTS
UNIT CODE : ACCT 219
UNIT TITLE : COST ACCOUNTING
TIME: 2 HOURS
INSTRUCTIONS
Answer Question ONE '''''and any other TWO '''''Questions.
Question One '(30 Marks)
Explain the difference between the following terms
(10 Marks)
Product cost and period cost
Sunk cost and relevant cost
Avoidable and unavoidable costs
Controllable and uncontrollable costs
Direct and indirect costs
Discuss five main factors which affect the stock levels in an organization.
(10 Marks)
The following information was obtained from the records of Mali ya Mungu Enterprises for the year 2007.
Maximum consumption 6,000,000 units
Minimum consumption 4,000,000 units
Lead time 5-7 weeks
Re-order quantity 30,000,000 units
Required:
Re-order
(4 Marks)
Minimum stock level
(3 Marks)
Maximum stock level
(3 Marks)
Question Two '(20 Marks)
Four Seasons company makes a product that goes through three processes. The following details relate to the month of May 2016.
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
Actual 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 apportioned as a percentage of direct wages.
Required
Process account for each of the processes
Abnormal gain/loss accounts
Finished goods account
Question Three '(20 Marks)
The following transactions relates to Fazio furnishers in the month of March 2016
Receipts Issues
Date Quantity Unit Cost Date Quantity
3 250 18 6 330
10 270 21 16 280
17 310 22 23 225
19 280 21 26 395
25 275 22 28 260
27 320 23 30 695
30 225 24
The closing balance for the month of February 2016 was 300 units valued at sh.20
Required:
Compute the value of closing stock using LIFO and AV.CO method.
(12 Marks)
Briefly discuss the mechanics and advantages of the following stock management systems
Just in time
ABC system
(8 Marks)
Question Four '(20 Marks)
Altec manufacturing Ltd has provided you with the following information for the year ended 31st December 2016.
Opening stock Sh
Raw materials 40,000,000
Work in progress 12,000,000
Finished goods 20,000,000
Closing stock
Raw materials 35,000,000
Work in progress 17,000,000
Finished goods 23,000,000
Purchase of raw materials 250,000,000
Factory wages 80,000,000
Supervisors' salaries 30,000,000
Factory rent 10,000,000
Power 5,000,000
Sundry factory expenses 15,000,000
Office salaries 7,500,000
Salesmen salaries 18,980,000
Sales 450,000,000
Required:
A production cost statement
(12 Marks)
Income Statement
(8 Marks)
Question Five '(20 Marks)
H young contractors have been engaged to construct a building to serve as the head office for Ultimate financiers construction work commenced in 1st June 2016. The following information was extracted from their books .
Shs.
Contract price 1,500,000
Wages paid 240,000
Accrued 10,000
Materials issued 275,000
Materials returned to the store 2,500
Plant and equipment at cost on June 1st 150,000
Installation costs 125,000
Direct expenses: paid
Accrued 75,00
5,000
Materials on site 30 November 27,500
Plant and equipment 30 November 100,000
Value of work not certified 50,000
Value of work certified 800,000
Cash renewed 780,000
Required:
Contract for the period ending November 30
Contractee account
Balance sheet extract as at November 30th
(20 Marks
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