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Cost Accounting (Acct 219) 3Rd Trimester 2013 Question Paper
Cost Accounting (Acct 219) 3Rd Trimester 2013
Course:Bachelor Of Business Information Technology
Institution: Kenya Methodist University question papers
Exam Year:2013
COST ACCOUNTING (ACCT 219) 3RD TRIMESTER 2013
KENYA METHODIST UNIVERSITY
END OF 3'RD 'TRIMESTER 2013 (PT) EXAMINATION
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING FINANCE & INVESTMENTS
UNIT CODE : ACCT 219
UNIT TITLE : COST ACCOUNTING
TIME: 2 HOURS
Instructions:
Answer question one and any other two.
Question One A.
Define the following terms:
(10 marks)
Apportionment
Notional profit
Sunk costs
Conversion costs
Rowan plan
Ideal products limited manufactures two products A and B for the financial year ended 30th June 2004. The following information was assembled for preparation of the budget:
Standard data per unit:-
Direct materials Standard price per Kg (Shs. Product A Shs. Product B (shs)
M1 10 10 4
M2 20 4 6
Direct labor Standard rate per hr Product A Product B
L1 30 8 10
L2 20 12 5
The following additional information was available:
Fixed production O/H costs were recovered on a direct labour basis.
Admin, selling and distribution costs were absorbed at the rate of 20% of production costs.
Profit was estimated at a rate of 25% or cost of making and selling the products.
Expected sales where:
Product A = Shs. 13,494
Product B = Shs. 18,816
Finished goods stock valued at standard production cost was as follows:
Product A Product B
1st July 2003 1,730,000 1,176,000
30th June 2004 1,038,000 1,568,000
Direct materials stock was valued at standard prices as follows:
Product A Product B
1st July 2003 640,000 600,000
30th June 2004 360,000 800,000
For the year ended 30th June 2004, fixed overheads had been budgeted at Shs. 5,760,000 and direct labour hours budgeted at 3,600,000 (110hrs)
It is management’s expectations that there will be no opening and closing work in progress.
Required: Calculate:
Production budget in units.
(8 marks)
Direct materials cost budget
(3 marks)
Purchases budget
(6 marks)
Direct labour cost budget
(3 marks)
This extent less 10% retention money.
B. The management of the company decided for the purpose of preparing the company’s annual accounts to make a provision of a third of the notional profit against the possibility of defects and other contingencies arising later in respect of the work already certified for payment.
Required: Prepare
The contract account
Amount of profit or loss to be taken to the main profit and loss account of the company
Value of work in progress.
(20 marks)
Question Two
XYZ Limited has been awarded a contract to build a house. This is a contrat no. 45 for the company and the contract price is Shs. 2.65 million. At the end of the company’s financial year, the contract was 85% complete and hence regarded as being near completion. You are also provided with the following information about the contract:
Particulars Shs.
Materials purchased & delivered 580,000
Material issued from store 60,000
Materials returned to stores 7,000
Site expenses 300,000
Site wages 200,000
Plant rent to site 10,000
Subcontractor’s fees 105,000
Head office overheads absorbed 60,000
Valuation at the year ending disclosed the following.
Sh.
Materials 19500
Plant on site 50,000
Work done but not yet certified 60000
Additional information:
1. The portion of work which was completed during the year and certified by the architect was assessed as representing 75% of the whole contract price. The contractee made payments to.
Question Three
Angelo trucking is divided into 2 operating divisions: Perishable foods and household goods. In its service division, personnel costs are allocated on basis of employees and accounting costs are allocated on the basis of the number of transactions processed.
Service department operating Dpt
Personnel Accounting perishable foods Household goods
Overhead Costs 100,000 205,000 80,00 50,000
No. of employees 20 60 60 80
Transactions processed 2,000 200 3,000 5,000
Required:
Allocate the service costs using the direct method
Allocate the service costs using the step method
Allocate the service costs using the reciprocal method.
(20 marks)
Question Four
SimSim is a texturises of polyster yarn. On June 1st 2010, an inventory of 10,000 pounds was complete as to materials, but only three quarters complete as to conversion. During the period, 160,000 Kgs were completed. The inventory at the end of the period consisted of 40,000kgs that were complete as to materials but only a quarter complete as to conversion. Costs for materials and conversion were as follows:
materials Conversion total
work in process, beginning 10000 5000 15000
current costs 140000 76600 216600
Required:
Prepare a cost of production report for simsim using the weighted average method. (14 marks)
Highlight costs classified according to:
Behavior
Traceability
(6 marks)
Question Five
Explain the difference between job order and process costing.
(10 marks)
Explain the benefits of direct costing against absorption costing.
(10 marks)
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