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Cost Accounting Question Paper

Cost Accounting

Course:Bachelor Of Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2012

DEPARTMENT OF BUSINESS ADMINISTRATION
ACCT 219: COST ACCOUNTING
November 2012
Lecturer: J. Gatauwa / M. Onchomba Email: jmgatauwa@yahoo.com
Deadline:
QUESTION ONE
a) State and explain the essential requirements of an effective stock control system. (4 marks)
b) An organization intends to use the following budgets;
Sales budget
Manufacturing budget
Purchasing budget
Selling & administration overheads budget
Budgeted balance sheet
Required
Briefly explain the relationship between these budgets and also the content in each. (6 marks)
c) Zil Ltd has three production departments and two service departments. The following is the
budgeted overheads for the year ended 31/12/2011.
Sh. Sh.
Production departments
A 240,000
B 180,000
C 220,000 640,000
Service departments
X 86,000
Y 44,000 130,000
770,000
The service department costs are to be re-apportioned as per the following percentages
A B C D E
X 20 30 35 - 15
Y 30 30 30 10 -
Required
Re-apportion the service department costs to the production departments using the simultaneous
equation method. (10 marks)
QUESTION TWO
Yang Ltd was awarded a contract to construct a tarmac road on 1/7/2011 and is to be completed
by mid 2013. The following information was extracted from the accounting records of the
company as at 30/06/2012.
Sh.
Materials – issued from store 5,500,000
– by a supplier to the site 14,200,000
Labour 10,100,000
Sub-contracting fee 4,501,000
Plant and machinery bought on 1/7/2011 6,000,000
Tools & consumables 126,000
Head office expense – apportioned 1,184,000
On 30/6/2012 materials at site were valued at sh. 2,100,300. On the same day outstanding wages
were sh. 350,000 and subcontract work sh. 25,000. The company received sh. 36,000,000 from
the contractee which represents work certified as at 30/6/2012 after deducting 15% retention
money. It is estimated that work costing sh. 360,000 is not covered by the certificate.
The plant and machinery specifically purchased for the project is to be depreciated at 20%
straight line with no residual value. The company only takes 2/3 of the profits on the work
certified to its revenue account.
Required
Prepare a contract account as at 30/6/2012, work in progress account and a balance sheet extract
(20 marks)
QUESTION THREE
Xpect Ltd has processes J and K. The material for 12,000 units was placed in process J.
unfinished items were complete as to the material and 50% complete as to labour and overhead.
There was no opening stock and no process losses and there were transfers of 9000 items to
process K.
The costs of process J were direct material $ 36000, direct labour $ 32000 and overheads $ 8000.
Process K completed 7600 units and there were 600 scrapped which was considered normal. The
balance was unfinished and deemed to be 25% complete in labour and overheads. The costs for
process K were labour $ 28500 and overheads $ 14000.
Required
Prepare the accounts for processes J and K while showing the relevant workings.
(20 marks)

Cost Accounting Question Paper

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