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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:2012
QUESTION ONE (30 MARKS)
a) Describe the scope and nature of cost accounting. (4 Marks)
b) Differentiate between cost accounting and financial accounting. (4 Marks)
c) The following cost data has been observed at Unity School for the last five years.
Year number of students total cost incurred
2006 180 3,200,000 2007 200 3,600,000 2008 400 7,000,000 2009 300 3,530,000 2010 320 3,820,000 Calculate the cost estimation equation that can be used to predict the cost of this school using i. The high-low method (5 Marks) ii. Regression analysis (5 Marks) iii. Estimate the cost for 2011 when the school expects to enroll 366 students. (5 Marks) d) Describe factors determining the stock levels to hold. (6 Marks)
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QUESTION TWO (20 MARKS)
The following information is extracted from the books of the Wet Look Manufacturing Company Ltd for the year ended 31 Dec 2011 Shs. Stock on 1 January 2011 Raw materials 20,000 Work-in-progress 33,000 Finished goods 40,000 Raw materials purchased during the year 300,000 Direct wages 90,000 Direct expenses 60,000 Salaries (50% factory, 25% office, 25% salesmen) 60,000 Rent (35% factory, 35% office, 30% warehouse) 40,000 Factory power 10,000 Other factory overheads 15,000 Administration expenses 16,000 Selling and distribution expenses 20,000 Sales 700,000 Stocks on 31 Dec 2011 Raw materials 25,000 Work-in-progress 27,000 Finished goods 42,000
Required: a) A production statement clearly showing prime cost factory overhead and total cost of production. (10 Marks) b) A profit statement clearly showing the gross profit and the net profit. (10 Marks)
QUESTION THREE (20 MARKS) Sarora Ltd produces tubes for motor vehicles. The following information was provided for the year 2011. Production cost 30000 tubes Sales 25000 tubes Production cost Direct materials 3,000,000 Direct labour 1,000,000 Variable overheads 700,000 Fixed overheads 1,000,000
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Selling and administration Sales commission 300,000 General expenses 200,000 Overheads fixed 300,000 The company sells each tube at a price of shs. 450
Required: a) Profit and loss statement on the basis of absorption costing. (10 Marks) b) Profit and loss statement on the basis of marginal costing. (10 Marks)
QUESTION FOUR (20 MARKS) a) The following information was extracted from the books of Rivatex Limited regarding its stocks. Reorder quantity 1,800 Reorder period 4 weeks Maximum consumption 450 units per week Normal consumption 300 units per week Minimum consumption 150 units per week Maximum reorder period 5 weeks Minimum reorder period 3 weeks
Required: Determine the following stock levels for Rivatex Ltd i. Re-order level (3 Marks) ii. Maximum stock level (3 Marks) iii. Minimum stock level (3 Marks)
b) What is stock out costs? (1 Mark)
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