DUAL DEGREE PROGRAMME

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FINAL EXAM
Academic Year 2021-2022, Semester 1
Dual Degree Programme – DDP

Course name: Management Accounting 1 ........................... Course code: ACCO 3033

Duration: 180 minutes .............................................................. Date: 24/12/2022

Student’s ID:........................................................................................ DOB: ....................................................

Marking:

Section/Question First mark Second mark

Question 1

Question 2

Question 3

Question 4

Question 5

Total

Conclusion

Instructions:
✓ Close book examination.
✓ Answer all of the questions.
✓ Begin each question on a fresh page.

First marker: ......................................................................................................................................................

Second marker: ................................................................................................................................................

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ANSWER ALL OF THE QUESTIONS

Question 1 (20 marks)

Aldo company produces three products, Alpha, Beta and Gamma. For the coming accounting period budgets
are to be prepared based on the following information.
Budgeted sales
Alpha 2,000 at £100 each
Beta 4,000 at £130 each
Gamma 3,000 at £150 each

Budgeted usage of raw material

RM11 RM22 RM33
Alpha 5 2 -
Beta 3 2 2
Gamma 2 1 3
Cost per unit of material £5 £3 £3

Finished inventory budget

Alpha Beta Gamma
Opening 500 800 700
Closing 600 1,000 800

Raw materials inventory budget

RM11 RM22 RM33
Opening 21,000 10,000 16,000
Closing 18,000 9,000 12,000

Alpha Beta Gamma

Expected hours per unit 4 6 8
Expected hourly rate (labor) £9 £9 £9

Required: Prepare the following budgets:

1. Sales budget (2 marks)
2. Production budget (5 marks)
3. Material usage budget (5 marks)
4. Material purchase budget (5 marks)
5. Labour cost budget (3 marks)

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Question 2 (20 marks)
Super Star also manufactures and sells Galaxy in the market, and the following information relates to the actual
selling price and actual cost of the product for the four weeks to 31 March 2014:
£000
Sales (50,000 units) 2,250
Direct materials (240,000 metres) 528
Direct labour (250,000 hours) 1,375
Variable production overhead 245
Fixed production overhead 650
Loss (548)
Super Luggage Management Accountant estimated budgeted selling price and standard cost of each unit was
as follows:
£
Selling price 48
Direct materials (4.5 metres) 9
Direct labour (5 hours) 20
Variable production overhead 2
Fixed production overhead 15
46
Budgeted profit 2
Total budgeted production: 40,000 units
Required:
1. Calculate the following variances: sales price variance, material price variance, material usage variance,
labour rate variance, labour efficiency variance, fixed overhead variance (15 marks)

2. Explain 2 reasons for labour rate variance and 3 reasons for labour efficiency variance (5 marks).

Question 3 (20 marks)

Amazon makes cakes, for which the standard cost card is as follows:
£
Materials 4
Labour 6
Variable production overhead 6
Fixed production overhead 8
Variable selling cost 2
Fixed selling overhead 4
Profit 10
Sales price 40
Both types of fixed overheads were based on a budget of 10,000 cakes a year

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In the first year of production, the only difference from the budget was that Amazon produced 9,000 cakes and
sold 9,000
Assume that budgeted fixed overhead and actual fixed overhead are equal.
Required:
a. Prepare income statement using a marginal costing system. (8 marks)
b. Prepare income statement using an absorption costing system. (8 marks)
c. In a period where opening stocks were 15,000 units and closing stocks were 13,000 units, a firm had a
profit of £130,000 using absorption costing. If the fixed overhead absorption rate were £8 per unit.
Determine the profit using marginal costing? (4 marks)

Question 4 (20 marks)

ABC Corporation is a biotech company based in Vietri. It makes a cancer-treatment drug in a single processing
department. Direct materials are added at the start of the process. Conversion costs are added evenly during
the process. ABC uses the weighted-average method of process costing. The following information for July 2011
is available.
Equivalent Units
Direct Materials Conversion
Physical Units Costs ($) Costs ($)
Work in process, July 1 8,500 (a ) 8,500 1,700
Started during July 35,000
Completed and transferred out during July 33,000 33,000 33,000
Work in process, July 31 10,500 (b) 10,500 6,300
(a) Degree of completion: direct materials, 80%; conversion costs, 30%.
(b) Degree of completion: direct materials, 90%; conversion costs, 70%.
Total Costs for July 2008
Work in process, beginning
Direct materials $63,100
Conversion costs $45,510 $108,610
Direct materials added during July 284,900
Conversion costs added during July $485,040
Total costs to account for $878,550

Required
a. Weighted-average method (10 marks)
Calculate cost per equivalent unit for direct materials and conversion costs, and assign total costs to units
completed (and transferred out) and to units in ending work in process.
b. FIFO method (10 marks)
Calculate cost per equivalent unit for direct materials and conversion costs, and assign total costs to units
completed (and transferred out) and to units in ending work in process.

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Question 5
Sprint Manufacturing Company produces two products, X and Y. The following information is presented
for both products:
X Y
Selling price per unit $60 $40
Variable cost per unit 40 10

Total fixed costs are $292,500.

Required:
a. Calculate the contribution margin for each product. (5 marks)
b. Calculate breakeven point in units of both X and Y if the sales mix is 3 units of X for every unit of Y.
(5 marks)
c. Calculate breakeven volume in total dollars if the sales mix is 2 units of X for every 3 units of Y.
(5 marks)
d. What are the assumptions when CPV is analyzed? (5 marks)

THE END

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