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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:2011
QUESTION ONE – (30 MARKS)
(a) Give five differences between cost accounting and financial accounting (5 Marks) (b) Explain three purposes of cost accounting. (3 Marks) (c) Explain the following terms as used in cost accounting (i) Cost unit (2 Marks) (ii) Cost centre (2 Marks) (iii)Profit centre (2 Marks) (d) Calculate the earnings arising under Straight piece work and differential piece work of the following jobs issued to make a common product. - Under one system, a rate of £0.025 per unit is paid. - Under the other, the first 480 units are paid at £0.00625/unit and increasing by the same amount each subsequent 240 units produced.
Job Units D 720 E 1200 F 480 G 1680
2
For each method give (i) Total cost of the total output (ii) Average cost per unit. (11 Marks) (e) From the following information you are required to calculate, any five overheads recovery rate. (5 Marks) Shs Overheads 360,000 Direct wages (60,000 hrs at Sh3 per hr) 180,000 Indirect wages (10,000 hrs @ Sh3/hr) 30,000 Direct materials (10,000 kg @ 6/kg 600,000 Indirect materials 15,000 Direct expenses 20,000 Units of output 720,000 Machine hours 30,000
QUESTION TWO – (20 MARKS)
Nairobi Tanners manufacture leather products with various end users. The company applies factory overheads to individual jobs on the basis of machine hours for department A and on the basis of direct labour cost for department B. The following budget estimates were made by the company at the start of year two.
Department
A (Shs) B(Shs)
Direct material cost 800,000 600,000 Direct labour cost 600,000 500,000 Factory overheads 600,000 400,000 Direct labour hours 40,000 50,000 Machine hours 120,000 75,000
Cost records kept by the company showed that Job No.T506 consumed the following inputs during the year. B(shs) B(Shs) Material issued 5,000 15,000 Direct labour cost 4,800 4,000 Direct labour hours 400 500 Machine hours 1,500 100
Required:
(a) Determine the overhead application rate for both department A and B. (4 Marks)
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(b) Calculate the total cost of Job No.T506. (7½ Marks) (c) Suppose the job consist of 50 items, what would be the cost per unit. (1½ Marks) (d) At the end of year 2, total factory overheads amounted to Sh975,000. A total of 110,000 machine hours were worked in department A while the total labour cost for department B was Sh540,000. Required: Calculate the over or under applied overhead for the company as a whole and indicate whether it is favourable or unfavourable. (7 Marks)
QUESTION THREE – (20 MARKS)
(a) Kihoto Limited manufactures products in two production departments, namely; Machining and Assembly. The company operates a job consisting system and used predetermined overhead rates in applying production overheads to individual jobs. Shown below are the estimates that had been made by the management for the month of October 2007.
Machine Department Assembly Department
Machine hours 1,500 800 Direct labour hours 500 2,500 Production overheads (Shs) 27,000,000 22,500,000
Additional Information
1. Service department costs are apportioned as follows: Machine Assembly Maintenance Stores Maintenance 60% 30% - 10% Stores 30% 50% 20 - 2. At the end of the month of October 2007, the actual overheads incurred were on follows. Department Shs. Machining 19,500,000 Assembly 13,500,000 Maintenance 7,500,000 Stores 6,000,000
Actual results were 1450 machine hours for machining department and 2,600 direct labour hours for assembly department.
Required: (i) The overheads to be charged to the production departments for the month of October 2007. (13 Marks)
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(ii) The under/over absorption of overheads in both production department. (4 Marks) (b) The following data relates to a job which the company intends to undertake Material costs Sh690,000 Direct labour hours 35 Wage rate per hours Machinery (Shs) 9,000 Assembly (Shs) 7,500 Determine the price to be quoted for this job if the company wishes to earn 25 percent on selling price. (3 Marks) (Use continuous allotment method for overheads apportionment)
QUESTION FOUR – ( MARKS)
Company X, Y Z manufactures a product which passes through three processes. Given below is data relating to the final process in the month of November.
Sh.
Transfer from process 2, 10,000 units (Material 1) 300,000 Materials (Material 2) 230,400 Labour 105, 600 Overheads 50,400 The normal process loss is estimated at 2%. During the month of November 7,200 units were completed and remained as work-in-progress whose degree of completion was 60% for materials, labour and overheads. The selling price normal loss unit is estimated at Sh30 per unit.
Required:
(a) Calculate the value of the completed units transferred to finished goods. (b) Calculate the value of work-in-progress at the end of November. (c) Assuming that any units of normal loss or abnormal loss were sold at a price of Sh30 per unit, show the abnormal loss account as it would appear after the units were sold. Assume that abnormal loss units are complete in all respects.
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