Bac 202: Cost Accounting I November 2016 Question Paper

Bac 202: Cost Accounting I November 2016

Institution: Kenyatta University question papers

Exam Year:2016

FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE

BAC 202: COST ACCOUNTING I

DATE: November, 2016 TIME: 2 HOURS

INSTRUCTIONS:

Answer ALL questions.

Question One
a) List eight classes of cost classifications
(4 marks)
b) Briefly distinguish between marginal and absorption costing.
(5 marks)
c) Describe the following cost estimation approaches high – low, regression and inspection of account.
(6 marks)
d) What is absorption of overheads? Give four (4) bases of overhead absorption.
(3 marks)
e) Distinguish between period and product costs and relevant and irrelevant costs.
(2 marks)

Question TWO
The purchase and issue of Materials by Mwangaza Manufacturers for the month of June, 2016 is extracted as follows:

June 2 received---2000 units @ sh. 250 each
4 received----1000 units @ sh. 260 each
9 Issued---800 units
15 issued----1400 units
21 Received---1600 units @ sh. 280 each
25 Issued----1000 units
28 Issued----800 units

An order for 2000 units at Sh. 300 has been placed for delivery on July 1, 2016. There was no opening inventory of the raw materials. You are required to prepare the stores ledger accounts on perpetual inventory framework when issues are priced, respectively, according to:
1. First – In – First – Out (FIFO)
(10 marks)
2. Weighted Average
(10 marks)

Question Three
A manufacturing company produces a single product. During the year ended 31 December 2015, 15, 000 units were produced and 12, 000 units sold. There was no opening inventory. All the 12, 000 units were sold at

$500 each. The cost of manufacturing in$ during the year were shown as follows:
Direct Materials----1, 200, 000
Direct Labour-----4, 200, 000
Variable Manufacturing Overheads---80, 000
Fixed Manufacturing Overheads---600, 000
Variable Selling Overheads----375, 000
Fixed Selling and Administrative overheads----500, 000

Prepare an operating statement using both marginal and absorption costing
(15 marks)

Question Four
a) Highlight any six objectives of cost according and any four differences between cost and financial accounting.
(5 marks)
b) A factory issues a Job 101 to an employee James to produce 70 units of item A1. It takes 3 standard hours to produce each item in Job 101. Another Job 102 is given to employees Jane to produce 50 units of Items B1. It takes 2 standard hours to produce each item. For every hour saved, a bonus is paid at the rate of 50% of the base rate, which is Kshs. 600 per hour. The factory works a 30 hour week and overtime is paid at double the normal rate. At the end of the first three weeks of the month, James and Jane clock cards show 95 and 88 hours respectively, and the work is complete.
However, 5 of James units’ and 3 of Jane’s units failed to pass inspection. This was due to a defective material and in view of this all the items produced were paid for, although as scrap
They have no sealable value.
Required:
Compute the Bonus, Total wages due, and wages cost per unit of the items passing inspection for both employees.
(10 marks)

Bac 202: Cost Accounting I November 2016 Question Paper

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