BAF 2102

COST ACOUNTING
CAT 1and 2
QUESTION ONE

Daima ltd has an aggregate demand of 1.2 million units. Each time they place an order
there is an ordering cost of Ksh1000, holding costs is sh100 per unit.

Required;

i) Compute economic order quantity (3 marks)

ii) Determine number of orders to be made based on economic order quantity
(2 marks )

QUESTION TWO

Explain why last in first out (LIFO) has an edge over first in first out (FIFO) or any
other method of pricing maternal issues. (5 marks)

QUESTION THREE

The following is a standard cost card.

Standard cost/unit Ksh

Raw material 50kgs @ ksh 2. 125
Direct labour 7 @ 49.50 66.50
191.50
Actual results for January
Production
Direct material purchase 7000 kgs at a 18200
Opening stock direct materials 1300 kgs
Closing stock direct materials 850
Wages paid (1010 Hs) Ksh 9898

Required

i. Calculate material price variance (2 marks)

ii. Material Usage variance (2 marks)

iii. Labour rate variance (1 marks)

iv. Labour efficiency variance. (1 marks)

QUESTION FOUR

In a period production and cost data were as follows.

Total costs material 5115

Labour 3952
Overheads 3000
12067

Production was 1400 fully complete units and 200 partly units. The degree of
completion of the 200 units W-1-P was as follows

Material 75% complete

Labour 60% complete
Overhead 50% complete

Required

Calculate total equivalent production cost per complete units and the value of W-1-P.
(5 marks)
QUESTION FIVE

The Blank Manufacturing Company Ltd. Consists of four production departments and
two service departments. For the month of September the direct departmental
expenses were as follows:
Production A, Shs.800; B, Shs.5,600; C,Shs.800; D,Shs.400
Departments -
Service Department- X, Shs1,800 Y, Shs2,400
The cost of service departments X and Y are allocated to the other departments on a
percentage basis viz:
A B C D X Y
X 30 20 25 15 - 10
Y 20 30 10 25 15 -
Required
Prepare a statement showing the distribution of the service department expenses.
( 5 marks)
QUESTION SIX
A company produces three products, Y1, Y2, and Y3 in the same process. The data
below reflects average monthly results:

Y1 Y2 Y3
Monthly output (kg) 40,000 20,000 20,000
Sales Value at split off (shs.) 0 30,000 105,000
Sales Value after Split off 45,000 100,000 155,000
Costs of further processing 20,000 40,000 65,000
The joint costs were Shs.100,000
Required
Allocate the joint cost using the three methods used to allocate joint costs. ( 5 marks)