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Hbc2117:Cost Accounting Question Paper
Hbc2117:Cost Accounting
Course:Bachelor Of Commerce
Institution: Meru University Of Science And Technology question papers
Exam Year:2010
QUESTION ONE – (25 MARKS)
(a) With examples explain what breakeven point is and its importance. (5 Marks) (b) A company that manufactures Robots produced two products ‘PACK’ and ‘QUANTA’ The following information was availed: Product ‘PACK’ Sh. Selling price per unit 10 Variable cost per unit 2 Fixed cost of operations per month 50,000 Product ‘QUANTA’ Sh Selling price per 12 Variable cost per unit 8 Fixed cost of operation per month 34,000
Required: (i) Calculate the break-even point of each product in units (4 Marks) (ii) Compute the profits of each product if sales in units are 20% above break-even point (8 Marks) (iii) Compute the profits of each product if sales promotion of Sh.5,000 is incurred on each product and as a result sales in units for each product increases by 50% above break-even point. (8 Marks)
QUESTION TWO – (15 MARKS)
(a) A Company which manufactures tubes for motor vehicles has the following information for the month July 2006.
Production 30,000 tubes Sales 25,000 tubes Production cost Sh.(000) Direct Materials 3,400 Direct Labor 800 Variable overheads 700 Fixed overhead 1,100 Selling and Administration Sales Commission 350 General expenses 160 Overheads (Fixed) 240
Required: (a) Profit and loss account on the basis of absorption costing. (7 Marks) (b) Profit and loss account on the basis of marginal costing. (8 Marks)
QUESTION THREE - (20 MARKS)
(a) Describe the following terms with examples. (i) Overheads (2 Marks) (ii) Prime cost (2 Marks) (iii) Fixed costs (2 Marks) (iv) Variable costs (2 Marks) (b) Ideal Company Limited is a manufacturing enterprise. The following data on costs for the year ending 31st Dec. 2007 has been extracted from the company’s cost ledger.
Stocks on 1st January 2007 Kshs.(000) Raw Materials 45,000 Working progress 58,000 Furnished goods 62,000
Stock on 31st Dec 2007 Raw Materials 50,000 Work in progress 52,000 Finished goods 65,000 Purchases of raw material 480,000 Carriage inwards 9,000 Returns of raw materials 25,000 Direct wages 100,000 Salaries 80,000 Rent 60,000 Factory power 25,000 Factory expenses 40,000 Administration expenses 22,000
Selling and distribution expenses 28,000 Sales 850,000 NB: (i) Apportion salaries to factory office and salesmen in the ratio of 4:3:3. (ii) Apportion rent to factory, office and warehouse in the ratio 3:2:5
Required:
(a) Production cost statement (6 Marks) (b) A profit statement. (6 Marks)
QUESTION FOUR – (10 MARKS)
(a) State and explain the difference between cost and financial accounting. (2 Marks) (b) Discuss any four purposes of cost accounting. (2 Marks) (c) Define marginal costing and explain how it is used in decision making. (2 Marks) (d) What do you understand by the term cost behavior? (2 Marks) (e) Explain the following terms with examples: (i) Cost unit (1 Mark) (ii) Cost centre (1 Mark)
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