Hba2303:Financial Accounting Question Paper
Hba2303:Financial Accounting
Course:Bachelor Of Commerce
Institution: Meru University Of Science And Technology question papers
Exam Year:2013
QUESTION ONE (30 MARKS)
a) Discuss four standards of ethical conduct to be observed by management accountants as formulated by the Institute of management accountants. (8 Marks) b) Discuss five areas in business that marginal costing can be applied. (10 Marks) c) A manufacturing company is considering two mutually exclusive projects. Whose initial cash outlay is of sh.20,000 each and with a useful life of 5 years. The company required rate of return is 10% The following information on cashflows is given Year 1 2 3 4 5 Project x (sh) 3,000 5,000 5,000 5,000 5,000 Project y (sh) 7,000 4,000 4,000 6,000 6,000
Required;
Calculate for each project;
i. The payback period ii. The net present value iii. Profitability index iv. The internal rate of return (12 Marks)
2
QUESTION TWO (20 MARKS)
a) Explain five areas where the selling price may be set below the marginal cost. (10 Marks) b) A manufacturer sells 3,000 units of product T in the home market at sh 18 per unit. The marginal cost of production is sh2 per unit and the fixed expenses for these unit are sh.6,000. He wants to sell another 3,000 units in the foreign market at sh.14 each bearing additional cost of sh1 per unit for distribution cost for export. Fixed overheads remain the same. Should he try to sell in the foreign market? (10 Marks)
QUESTION THREE (20 MARKS)
a) Discuss four models of performance management. (8 Marks) b) Nkubu stores manufactures and sells product X. the data relating to the product is given below Sales sh.100,000, direct material sh.40,000, direct labour sh. 20,000, variable and semi variable overheads sh. 10,000, fixed cost sh. 20,000 and profit is sh.10,000. Additional information; i. The company is currently operating at 70% capacity. ii. There is demand for sh. 20,000 products in the market
Required:
Should the company accept the order? Assume that fixed costs will not change. (12 Marks)
QUESTION FOUR (20 MARKS)
a) Discuss the following costing techniques. i. Life cycle costing ii. Target costing iii. Kaizen costing iv. Environment cost management v. Back flush costing. (10 Marks) b) A process industry unit manufacturers three joint products A, B and C. But C has no renewable value unless it undergoes further process after the point of separation. The details of manufacturing product C are as follows. Per unit (sh)
Upto point of separation
Variable cost 15
Fixed cost 10
3
After point of separation
Variable cost 6
Fixed cost 3
Total cost 34
c. Can be sold at sh. 18 per unit and no more. Would you recommend discontinuing product C.? Would you recommend differently if A,B and C are not joint products. (10 Marks)
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