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FINAL Examination Paper (COVER PAGE) Session Programme January 2008 Bachelor of Business Administration (Hons) Programme Bachelor of Intemational Business (Hons) Programme Course Date of Examination Time Duration Special Instructions This paper consists of SEVEN (7) questions. provided. All questions carry equal marks. Answer any FIVE (5) questions in the answer booklet

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ACC 3203: Cost and Management Accounting
15 April 2008 __;;_8._0_0...::..:a~m:;_-__;;_1 O-'-' •...::..:O_:_O ...::..:a:;_m:,____Reading Time 2 Hours Nil

Materials permitted Non Programmable Calculator

Materials provided Nil

Examiner(s) Moderator

Shamala Krishnan
Prof. Dr. Foong Soon Yau

This paper consists of 10 printed pages, including the cover page.

Question 1 Clean Soap Company produces two different types of detergents Clean and Bersih. Quantity of chemical required per box of each ofthe two detergents is as follows: GLB (KG) 5 3 YLB (KG) Clean Bersih 4 6 The purchase price of chemical GLB and YLB per kilogram is expected at £2. answer any FIVE (5) questions in the answer booklet provided.000 SELLING PRICE PER BOX (£) 10.00 8.ACC 3203 (F) I Page 1 of9 INTI INTERNATIONAL UNIVERSITY COLLEGE BACHELOR OF BUSINESS ADMINISTRATION (HONS) PROGRAMME BACHELOR OF INTERNATIONAL BUSINESS (HONS) PROGRAMME ACC 3203: COST AND MANAGEMENT ACCOUNTING FINAL EXAMINATION: JANUARY 2008 SESSION This paper consists of SEVEN (7) questions. All questions carry equal marks.00 (2) Material usage Chemical GLB and YLB are required in the production of the detergents.00 respectively. (3) Forecasted stock levels Year Beginning 250 boxes 300 boxes 1200 kg 2800 kg Year End 320 boxes 240 boxes 2000 kg 2500 kg Clean Bersih GLB YLB . production and material requirements for next year are given below: (1) Sales PRODUCT Clean Bersih QUANTITY (Boxes) 750 1.00 and £3. Forecast information of sales.

(3 marks) (ii) Production budget in units.' Explain and discuss the importance of "principal budget factor". (4 marks) (iv) Material purchases budget in units and value. (4 marks) (v) . (5 marks) 'Sales are often considered to be the principal budget factor of an organization. including total value of the two products. including the total value of the two products.ACC 3203 (F) I Page 2 of 9 Required: Prepare the following budgets for each detergent: (i) Sales budget in units and value. (4 marks) (iii) Material usage budget in units.

" Do you agree with the statement above? Explain with numerical examples. Month Production (units) Total cost (£) a) 15.000 The costing assistant has approached you on the steps he has to take in order to enable him to divide the total cost to variable cost and fixed cost. Advise him.000 units. (3 marks) b) c) .ACC 3203 (F) I Page 3 of9 Question 2 (i) "A variable cost is a cost that varies per unit of a product while fixed cost per unit of product is constant.000 70.000 64. (4 marks) If the production in July is 20.000 17. The following information is provided to the costing assistant for the analysis. (5 marks) By using the steps as suggested in (a). compute the variable cost and fixed cost for the month of May and June. (8 marks) (ii) Company Bee has been producing product Cee for the past six months. The production units and the cost incurred for the last two months were given to the costing assistant and he was directed by the cost accountant to analyse the total cost to the variable and the fixed cost components. Compute the total production cost for the month of July.

00 per kilogram for order sizes of 500 kilograms and above.00 and annual demand is expected to be 7. The supplier is willing to supply in the following order quantities: 500 Required: (i) U sing the above five order size options as headings. (11 marks) Indicate on the statement which order size should be selected.500 kilograms of material Z. (2 marks) (iii) Calculate the economic order quantity using the traditional showing details of your workings. requires material Z for its production. (4 marks) 750 1500 3750 7500 (ii] . The material can be purchased at £1. EOQ formula. The cost of holding stocks is 10% per annum. prepare a tabular statement which shows the total annual cost of ordering and holding stock under each option. (3 marks) (iv) Distinguish between a periodic and perpetual inventory system. The costs of placing an order are £15.ACC 3203 (F) I Page 4 of 9 Question 3 Zulton Ltd.

000) and sales volume (60.000 calculators. Calculate: a) b) The annual profit. (5 marks) Discuss any TWO (2) assumptions that could have been made by the company in their breakeven analysis. while the marginal cost remains at £15.000.ACC 3203 (F) / Page 5 of 9 Question 4 HSB Company produces pocket calculator which is sold to the retail trade at a price of £20. (5 marks) (ii) The marginal cost increases by £1 (5 marks) (iii) Both fixed cost (£180. (5 marks) (iv) .000) increased by 10%. and Break-even point (£ Sales) for each of the following circumstances: (I) As outlined above. The marginal cost of a calculator is £15 and annual fixed costs amounts to £180. the current annual turnover being 60.

4. 7. A dividend amounting to £88. 10% of all sales are made on a cash basis. March £000 Purchases Sales Salaries Overhead expenses 440 640 133 77 April £000 280 420 140 75 May £000 560 160 119 84 June £000 160 150 124 70 Other information are as follows: 1. the remainders are being sold to customers who pay in the month following sale.000. Required: (i) Construct a monthly cash budget in columnar form for the three months ending 30th June. Overhead expenses include depreciation amounting to £12. (4 marks) (ii) . All goods are bought on credit from suppliers who allow 2 % cash discount for payment in the month following purchase. 6. The balance at the bank on 1 April is expected to be £90. 5.000 each month. showing the bank balance at each month end (16 marks) Explain TWO (2) benefits of preparing a cash budget. 3. A delivery van is to be sold for £3.000 cash in June.000 will be paid in May. 2. All payments to supplier are expected to be made in the month following purchase.ACC 3203 (F) I Page 6 of 9 Question 5 The following forecasts are being prepared by Wholesalers Ltd. Cash payments for overhead expenses are made in the month following the month in which expenses are incurred. Salaries and wages are paid in the month in which they are incurred.

00 12.4. Actual data Boxes produced Direct labour Direct material Variable overhead Required: (i) Calculate the following variances: (a) (b) (c) (d) Direct material price variance Direct material usage variance Direct labour rate variance Direct labour efficiency variance (12 marks) (ii) List ONE (1) possible reason for the direct material price variance and ONE (1) for the direct labour efficiency variance.35. You are given the following standard cost information and the actual production information for the month of January.500 kg at £4.5 per kg) Direct labour (2 hours at £6 per hour) Overhead Variable .9.000 (iii) .ACC 3203 (F) I Page 7 of 9 Question 6 Betteroff Ltd.60 per kg . Standard cost per box Direct material (8 kg at £4.500 hours at £5.£57. specializes in producing fertilizers.00 The planned production for January is 5.70 per hour . (4 marks) Explain the term relevant cost and illustrate with an example.500 boxes .00 per hour £ 36.2 hours at £5. (4 marks) .000 boxes.00 10.

The following data relates to December 2007: Production 1 £ EX12ensesincurred Indirect materials Indirect labour Standing charges Rent Rates Insurance Other ex~enses Lighting and heating Building maintenance 400 500 Production 2 £ 240 300 Service £ 460 420 150 500 320 100 80 200 260 180 400 50 80 30 50 220 60 At the end of each month. The overhead absorption rates in operation during December 2007 were calculated from the following data: Production 1 Production2 Estimated overhead for the month Estimated machine hours Estimated direct labour hours Required: (a) Calculate the overhead absorption rate for each production department for the month of December 2007. (6 marks) £3000 300 £6000 2000 (b) (ii) Explain the reasons on why actual overhead cost is not used usually used in determining the overhead rate for a department. (4 marks) Prepare a statement showing the actual overhead borne by each production department for December 2007. the expenses of the service department are apportioned to the production departments on the basis of the total expenses of those production departments for the month.ACC 3203 (F) / Page 8 of 9 Question 7 (i) KKK Company operates two production departments and one service department. (4marks) .

and recently the company faced shortage of raw materials and production was temporarily disrupted.ACC 3203 (F) / Page 9 of 9 (iii) Worker B is employed under the monthly salary scheme. Explain any TWO (2) other reasons that could cause idle time. (6 marks) -THE ENDAce 3203 (F) / Jan 2008/ Shamala Krishnan /26-02-2008 . During this period of disruption worker B was idle.

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