Hps2111:Quality Management Question Paper
Hps2111:Quality Management
Course:Bachelor Of Supplies Management
Institution: Meru University Of Science And Technology question papers
Exam Year:2012
QUESTION ONE (30 MARKS)
a) A budget is a very vital planning tool in a firm. However, budgets may cause conflicts in an organization. Required: i) Discuss the relevance of budgets in staff motivation (4 marks) ii) How can budgets cause conflicts in a firm and what precautions should be taken in order to avoid such conflicts. (6 marks) b) Discuss FOUR factors that may be considered in setting market price of a product. (4 marks) c) Wampa Limited has the following functions for its product: Demand function: P = 100-2q; P = Unit selling price in Shs.,
Q = Quantity demanded in “000” of units Total cost function: C=Q2 + 10q + 500; C =total cost in Shs.000 and Q is as above. Required:
i) Output in units that will maximize total profit, unit selling price, the total profit and total revenue. (4 marks) ii) Output in units that will maximize total revenues, the corresponding unit selling price, total profit /loss and total revenues. (4 marks) d) Kaka Limited manufacturers a single product „Zoe?. The following standard cost data apply in relation to the product:
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Materials per unit 12kgs @ Shs.9 each Labour 10 hours @ Shs.4 each The actual production and costs for one accounting period were as follows:
Materials per unit 3,370kgs At a cost of Shs.35,815 Labour costs: Actual hours worked 2,755 Hours paid for 2,900 Wages paid Shs.11,571 Actual output 290 units
Required:
i) Calculate the relevant material and labour variance. (8 marks)
QUESTION TWO (20 MARKS)
a) Outline the various ways of dealing with uncertainity in Cost Volume Profit (CVP) analysis. (4 marks) b) Citing a firm with which you are familiar, discuss the relevance of responsibility accounting in the firm, its limitations and possible solutions thereof. [Hint: you must relate your details to that specific firm] (8 marks) c) A University?s records show that the cost of carrying out health checks in the last five accounting periods have been as follows:
Period No. Of students Total Cost (Kshs.) 1 650 17,125 2 940 17,800 3 1,260 18,650 4 990 17,980 5 1,150 18,360
Required:
i) Using the High-low method and ignoring inflation, find the estimated cost of carrying out health checks on 850 students in period 6. (3 marks) ii) Using Linear Regression analysis, find the estimated cost of carrying out health checks on 960 students in period 7. (4 marks) iii) The regression model above has been found to have a Product Moment?s correlation co-efficient (r) of 0.99. Interprate the results. (1 marks)
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QUESTION THREE (20 MARKS)
a) Discuss FOUR limitations of Management accounting. (4 marks) b) Outline the limitation of using standard costing in a firm. (4 marks) c) Mafuko limited has prepared a schedule of its manufacturing overheads at 80% capacity. The company can produce a maximum of 100,000 units per period. The overhead costs have been classified as fixed and variable.
Overheads Overhead costs (Shs.) Supplies 375,000 (all Variable) Indirect Labour 1,942,000 (Shs.1,710,000 fixed) Rent 2,364,200 (All fixed) Utilities 272,100 (All variable) Depreciation 810,000 (All fixed) Maintenance 243,300 (Shs.85,000 fixed) Data Processing 253,200 (Shs.158,200 fixed) Technical support 169,400 (All fixed)
Required:
i) Determine using high-low method, the cost of producing 98,000 units for the coming period (4 marks) ii) A computerized regression programme produced the following equation: Overhead cost = 6,265,000 + 51x (x is the number of units produced) Using this function, estimate the cost of producing 7700 units. (4 marks) iii) The co-efficient of determination (t) of the equation is 72. Interprate the co-efficient of determination and comment on the accuracy of the model. (4 marks)
QUESTION FOUR (20 MARKS)
a) Under what circumstances can the Engineering methods be appropriately used to estimate cost? (3 marks) b) Explain why the linear regression analysis is a better method of cost estimation than the Range method. (3 marks) c) Jasho Limited manufactures a product branded „Vumilia?. The marketing department has expressed concern that the product has not been profitable. The department has therefore, recommended that appropriate action be taken to stem the losses. Vumilia is produced from material Exe which is one of two materials jointly produced by passing chemicals through a process. The other material is Wye. During the month of February 2013, the following data was recorded for the process:
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Output Kilogrammes Material Exe 12,000 Material Wye 36,000 Process Costs Shs. Raw materials 100,400 Labour 40,000 overheads 30,600
Additional information:
1. Joint costs are apportioned to the two materials Exe and Wye on the basis of weight of output. 2. Production costs incurred in converting material Exe into finished product „Vumilia? are Sshs.3 per kg of material used. 3. Normal loss for the process is 10% with no scrap value. 4. The selling price per kg of Vumilia is Shs.7. 5. Material Wye is sold without further processing for Shs.8 per kg.
Required:
i) Calculate the profit /loss per kg of product Vumilia and material Wye. (8 marks) ii) Analyze the marketing departments recommendation and advise the company as appropriate. (3 marks) iii) Demonstrate and comment on the alternative method of Joint Cost
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