UNIVERSITY OF PROFESSIONAL STUDIES, ACCRA (UPSA)

FACULTY OF ACCOUNTING & FINANCE

DEPARTMENT OF ACCOUNTING
BACHELOR OF BSUINESS ADMINSTRATION
BACT 312: MANAGEMENT ACCOUNTING
MID-SEMESTER EXAMINATIONS- 2024/2025 ACADEMIC YEAR
EXAMINER: SAEED SALAHUDEEN ESQ, BL, LLB, CA, MBA, [Link].
TIME ALLOWED: 2 HOURS
INSTRUCTION(S): ATTEMPT ALL QUESTIONS IN SECTION A AND ONE
QUESTION IN SECTION B

SECTION A

1. Which of the following statements about management accounts is/are true?

(i) There is a legal requirement to prepare management accounts.
(ii) The format of management accounts is largely determined by law.
(iii) They serve as a future planning tool and are not used as a historical record.
A (i) and (ii)
B (ii) and (iii)
C (iii) only
D None of the statements are correct.
2. Which of the following is a characteristic of an investment centre?
A Managers have control over marketing.
B Management have a sales team.
C Management have a sales team and are given a credit
control function.
D Managers can purchase capital assets.

Number of
valuations Total cost
Period 1 (V) 420 (TC) 82,200
Period 2 515 90,275

3. The total cost model for a period could be represented as follows.

A TC = $46,500 + 85V C TC = $46,500 – 85V
B TC = $42,000 + 95V D TC = $51,500 – 95V
4. A wholesaler has 8,450 units outstanding for Part X100 on existing customers' orders; there are
3,925 units in inventory, and the calculated free inventory is 5,525 units.
How many units does the wholesaler have on order with his supplier?
A 9,450 B 10,050 C 13,975 D 17,900
5. Spaced Out Co has two production departments (F and G) and two service departments
(Canteen and Maintenance). Total allocated and apportioned general overheads for each
department are as follows.
F G Canteen Maintenance
$125,000 $80,000 $20,000 $40,000
 Canteen and Maintenance perform services for both production departments and Canteen also
provides services for Maintenance in the following proportions.
F G Canteen Maintenance
% of Canteen to 60 25 - 15
% of Maintenance to 65 35 - -

What would be the total overheads for production department G once the service department
costs have been apportioned?
A $90,763 B $100,500 C $99,000 D $100,050

6. The following data relate to one year in department A.

Budgeted machine hours 25,000
Actual machine hours 21,875
Budgeted overheads $350,000
Actual overheads $350,000
Based on the data above, what is the machine hour absorption rate as conventionally calculated?
A $12 B $14 C $16 D $18

7. A management consultancy recovers overheads on chargeable consulting hours. Budgeted

overheads were $615,000 and actual consulting hours were 32,150. Overheads were under-
recovered by $35,000. If actual overheads were $694,075 what was the budgeted overhead
absorption rate per hour?
A $19.13 B $20.50 C $21.59 D $22.68
8. When opening inventories were 8,500 litres and closing inventories 6,750 litres, a firm had a
profit of $62,100 using marginal costing. Assuming that the fixed overhead absorption rate was
$3 per litre, what would be the profit using absorption costing?
A $41,850 B $56,850 C $67,350 D $82,350
9. Last month a manufacturing company’s profit was $2,000, calculated using absorption costing
principles. If marginal costing principles have been used, a loss of $3,000 would have occurred.
The company’s fixed production cost is $2 per unit. Sales last month were 10,000 units. What
was last month’s production (in units)?
A. 7,500 B. 9,500 C. 10,500 D. 12,500
10. Which of the following statements is/are true?
I Information is the raw material for data processing
II External sources of information include an organisation's financial accounting records
III The main objective of a non-profit making organisation is usually to provide goods and
services
A I and III only C II and III only
B I, II and III D III only
11. Which of the following statements is not true?
A Management accounts detail the performance of an organisation over a defined period and
the state of affairs at the end of that period
B There is no legal requirement to prepare management accounts
C The format of management accounts is entirely at management discretion

12. Which of the following could higher level management carry out?
A taking long-term decisions
B taking short-term decisions
C taking long-term and short-term decisions
13. Which of the following statements is not correct?
 A Financial accounting information can be used for internal reporting purposes
B Routine information can be used to make decisions regarding both the long
term and the short term
C Management accounting provides information relevant to decision making, planning, control
and evaluation of performances
D Cost accounting can only be used to provide inventory valuations for internal reporting
14. Which of the following is not part of the planning stage in the decision-making process?
A Deciding on the optimal way in which an objective might be achieved
B Identifying ways which might contribute to the achievement of specified objectives
C Obtaining data about actual results
D Identifying goals or objectives
15. Which of the following items might be a suitable cost unit within the accounts payable
department of a company?
(i) Postage cost (iii) Supplier account
(ii) Invoice processed
A Item (i) only C Item (iii) only
B Item (ii) only D Items (ii) and (iii) only
16. Which of the following are direct expenses?
(i) The cost of special designs, drawing or layouts
(ii) The hire of tools or equipment for a particular job
(iii)Salesman's wages
(iv)Rent, rates and insurance of a factory
A (i) and (ii) C (i) and (iv)
B (i) and (iii) D (iii) and (iv)

17. Which of the following would be appropriate cost units for a passenger coach company?
Appropriate Not appropriate
A Vehicle cost per passenger-kilometre
B Fuel cost for each vehicle per kilometre
C Fixed cost per kilometer
18. A cost which contains both fixed and variable elements, and so is partly affected by changes in
the level of activity, is called….
A A direct cost C An unavoidable cost
B A semi-variable cost
19. A cost unit is…
A A measure of output of work in a standard hour
B A unit of product or service in relation to which costs are ascertained
C The cost per hour of operating a machine
20. Variable costs are conventionally deemed to
A be constant per unit of output
B vary per unit of output as production volume changes
C be constant in total when production volume changes
 The following is a graph of total cost against level of activity.

21. To which one of the following costs does the graph correspond?
A Photocopier rental costs, where a fixed rental is payable up to a certain number
of copies each period. If the number of copies exceeds this amount, a constant
charge per copy is made for all subsequent copies during that period.
B Vehicle hire costs, where a constant rate is charged per mile travelled, up to a
maximum monthly payment regardless of the miles travelled.
C Supervisor salary costs, where one supervisor is needed for every five
employees added to the staff.
D The cost of direct materials, where the unit rate per kg purchased reduces when
the level of purchases reaches a certain amount.
22. Identify which type of cost is being described in (A)-(D) below.
VARIABLE STEPPED SEMI-VARIABLE
FIXED COST
COST FIXED COST COST
A This type of cost stays the same, no matter how many
products you produce
B This type of cost increases as you produce more products.
The sum of these costs are also known as the marginal
cost of a product.
C This type of cost is fixed but only within certain levels of activity

D This type of cost contains both fixed and variable elements

23. At the beginning of the year, Bob Co enters into a rental agreement with a landlord who is
entitled, under the terms of the agreement, to change the rent (either upwards or downwards)
according to economic conditions. Bob Co cannot cancel the agreement during the first six
months.
For the first six months of the agreement, Bob Co could classify the rent as a
A Fixed cost C Semi-variable cost
B Avoidable cost D Uncontrollable cost
24. Brady Co is a painting and decorating company. The following information is available for two
periods:
Period 1 Period 2
Square metres decorated 10,000 14,000
Total cost $44,000 $56,000

When more than 12,000 square metres are decorated, the fixed costs increase by $6,000.

The total cost for period 3 if 15,500 square metres are decorated is $
25. Based on the data given above, what is the labour hour overhead absorption rate?
A $17.20 per hour C $18.44 per hour B $17.50 per hour D $18.76 per hour
26. Based on the data given above, what is the amount of under-/over-absorbed overhead?
A $2,550 under-absorbed overhead C $7,460 over-absorbed overhead
B $2,550 over-absorbed overhead D $7,460 under-absorbed overhead
27. The budgeted production overheads and other budget data of Eiffel Co are as follows.

Budget Production dept X

Overhead cost $36,000
Direct materials cost $32,000
Direct labour cost $40,000
Machine hours 10,000
Direct labour hours 18,000
What would be the absorption rate for Department X using the various bases of apportionment?
a) % of direct material cost =
b) % of direct labour cost =
c) % of total direct cost =
d) Rate per machine hour =
e) Rate per direct labour hour =
28. The overhead absorption rate for product Y is $2.50 per direct labour hour. Each unit of Y
requires 3 direct labour hours. Inventory of product Y at the beginning of the month was 200
units and at the end of the month was 250 units. What is the difference in the profits reported for
the month using absorption costing compared with marginal costing?
A. The absorption costing profit would be $375 less
B. The absorption costing profit would be $125 greater
C. The absorption costing profit would be $375 greater
D The absorption costing profit would be $1,875 greater
29. B Co makes a product which has a variable production cost of $21 per unit and a sales price of
$39 per unit. At the beginning of 20X5, there was no opening inventory and sales during the
year were 50,000 units. Fixed costs (production, administration, sales and distribution) totalled
$328,000. Production was 70,000 units.
The contribution per unit is $

30. Davy Crockett Co makes hats, mainly for fancy dress costumes. The company expected to
produce 25,000 hats during the year which would be expected to incur $125,000 in fixed costs.
The total cost of each hat is $30 (including fixed costs) and the company can sell them for $40
each. Sales during the year were 15,000 hats from a production volume of 20,000. Actual fixed
costs were $80,000 and there was no opening inventory.

What is the marginal costing net profit for the year? $

SECTION B

QUESTION 1
Star Boyee Limited produces three products using a two-stage production system. The following
cost has been collected by the cost accountant for the month ending June 2018.
Product X Y Z
GH¢ GH¢ GH¢
 Direct Material 200 300 100
Direct Labour 900 1,250 1,040

The following cost was incurred at the various stages of production:

Process Stages 1 Stages 2
GH¢ GH¢
Production set up 500 600 Analysis of the
Ordering 400 300 various activities
Quality control 300 100 revealed the
Material handling 800 400 following:
Machining cost 200 150
Ordering cost 100 250
Total 2,300 1,800
Product X Y Z
Number of setups 10 15 30
Number of order received 5 15 30
Number of inspections 4 6 10
Number of orders placed 20 30 20
Number of requisition 10 5 10
Machine operating hours 100 80 120
Number of units produced 300 400 600
Labour operating hours 150 100 75

Stage 1 process is capital intensive and recorded 300 machine hours during the month, whereas
stage 2 process is labour intensive process, recorded 320 labour hours.

Required:
Calculate the product cost per unit for each product using:
a. The traditional overheads analysis approach.
b. Activity Based Costing approach

QUESTION TWO

RH makes and sells one product, which has the following standard production cost.

GHȼ
Direct Labour 3 hours at GHȼ6 per hour 18
Direct Materials 4 kilograms at GHȼ7 per kg 28
Production Overhead Variable 3
Fixed 20
Standard production cost per unit 69

Normal output is 16,000 units per annum. Variable selling, distribution and administration costs are
20 percent of sales value. Fixed selling, distribution and administration costs are GHȼ180,000 per
annum. There are no units in finished goods inventory at 1 October 20X2. The fixed overhead
expenditure is spread evenly throughout the year. The selling price per unit is GHȼ140. Production
and sales budgets are as follows:
 Six months ending Six Months Ending
31 March 2018 30 September, 2018
Production 8,500 7,000
Sales 7,000 8,000

Required:
Prepare profit statements for each of the six-monthly periods, using the following methods of
costing.

(a) Marginal costing

(b) Absorption costing