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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) Nchiru Limited produces three products X, Y and Z which the following operating statement has been produced.
X (Shs.) Y (Shs.) Z (Shs. Sales 116,000 125,000 122,500 Total Costs 118,000 119,000 117,000 Net Profit / Loss (2,000) 6,000 5,500
The total costs comprise two-thirds variable and one-third fixed. The directors consider that as product X shows a loss it should be discontinued.
Required:
Based on the above cost data should product X be discontinued. (10 marks) b) Sometimes a business organization may be forced by circumstances to set the selling price of its products or services below the marginal costs. Explain FIVE such circumstances. (10 marks) c) Discuss the historical development of management accounting, highlighting the current issues in Management Accounting. (10 marks)
2
QUESTION TWO (20 MARKS)
a) Discuss the concept of environmental cost management and giving examples where necessary. (10 marks) b) cost of Shs.4 per unit and there is a home market for the entire production at a sales price of Shs.4.25 per unit. In the following year, there is a fall to Shs.3.72 per unit for 10,000 units. The analysis of the cost per 10,000 units is:
Shs. Materials 15,000 Wages 11,000 Fixed Costs 8,000 Variable costs 6,000
The foreign market is explored and it is found that this market can consume 20,000 units of the product if offered at a sales price of Shs.3.55 per unit. It is also discovered that for additional 10,000 units of the product fixed costs will increase by 20%.
Required:
Should the company export or not? (10 marks)
QUESTION THREE (20 MARKS)
a) Discuss the major limitations of activity based costing methods. (8 marks) b) Laare company limited wishes to expand its output by purchasing a new machine worth Shs.170,000 and installation costs are estimated at Shs.40,000. In the fourth year, this machine will call for an overhaul to cost Shs.80,000. Its expected cash flows are:
Year Shs. 1 60,000 2 72,650 3 35,720 4 48,510 5 91,630 6 83,715
The company can raise finance to purchase machine at 12% interest rate. Compute NPV, PI and PBP and advise the management of Laare accordingly. (12 marks)
3
QUESTION FOUR (20 MARKS)
a) The balanced score card is one of the models in performance management. Discuss the FOUR perspectives of the model. (8 marks) b) is given below:
Shs. Sales 100,000 Direct materials 40,000 Direct Labour 20,000 Variable costs 10,000 Fixed costs 20,000 Profit 10,000
Additional information:
1. The company is currently operating at 70% capacity. 2. There is
Required:
Should the company accept the order? (12 marks)
QUESTION FIVE (20 MARKS)
a) Discuss the impact of ICT in Management Accounting today. (10 marks) b) A manufacturer sells 3,000 units of product T in the home market at Shs.18 per unit. The marginal cost of production is Shs.2 per unit and the fixed expenses for these units are Shs.6,000. He wants to sell another 3,000 units in the foreign market at Shs.14 each bearing an additional cost of Shs.1 per unit for distribution cost for export. Fixed costs remain the same.
Required:
Should they try to sell in the foreign market. (10 marks)
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