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- Undugu Limited started its operations on 1 July 2010. The company manufactures a single product which sells at Sh.25 per unit. For the year ended...(Solved)
Undugu Limited started its operations on 1 July 2010. The company manufactures a single product which sells at Sh.25 per unit. For the year ended 30 June 2011, the cost accountant presented the following data to the management:
Selling and distribution expenses are 75% fixed
Upon examination of the above data, the management made some independent proposals.
Required:
Evaluate the following four alternative proposals and comment briefly on each:
(i) Reduce the selling price by 12%. This would result in an increase in sales volume by 50%.
(ii) Pay the salesmen a commission of 8%. This would result in an increase in sales volume to
achieve break-even point.
(iii) Increase the direct labour rate by 10% per hour. This would result in an increase in production
and sales volume by 30%. In addition, advertising costs would increase by Sh.50, 000.
(iv) Increase sales through additional advertising at a cost of Shs l00, 000, increase the selling price
by 20% and set a profit margin of 10%.
Date posted: December 16, 2021. Answers (1)
- The profit shown in the financial accounts of MRM Co Ltd for the year ended 31st December 2002 is Shs 18,592,000. The cost accounts for...(Solved)
The profit shown in the financial accounts of MRM Co Ltd for the year ended 31st December 2002 is Shs 18,592,000. The cost accounts for the same period reflected a profit of Shs 20,496,000. Comparison of the two set of accounts revealed the following:
Dividends and interests received of Shs 500,000 and Shs 52,000 respectively were reflected in the
financial accounts. The company disposed a production machine costing Shs 5 million for Shs 0.25
million. It had been depreciated to the extent of Shs 3 million.
Required;
Prepare reconciliation for the cost and financial profits for the period.
Date posted: December 15, 2021. Answers (1)
- Biashara Ltd. maintains separate cost and financial accounts. In the financial accounts for the three months.
Required:
A statement reconciling the cost accounting profit with the financial...(Solved)
Biashara Ltd. maintains separate cost and financial accounts. In the financial accounts for the three months.
Required:
A statement reconciling the cost accounting profit with the financial accounting profit.
Date posted: December 15, 2021. Answers (1)
- Distinguish between valuation of assets based on current cost and historical cost.(Solved)
Distinguish between valuation of assets based on current cost and historical cost.
Date posted: December 15, 2021. Answers (1)
- Explain the financial and non-financial performances measures used by business organizations.(Solved)
Explain the financial and non-financial performances measures used by business organizations.
Date posted: December 15, 2021. Answers (1)
- Takers Limited operates separate cost accounting and financial accounting systems. The following manufacturing and trading statement has been extracted from the company's financial accounts for...(Solved)
Takers Limited operates separate cost accounting and financial accounting systems. The following manufacturing and trading statement has been extracted from the company's financial accounts for the quarter ended 31 march 2011
Additional information:
1. The cost accounts indicated that raw materials issued during the quarter ended 31 March 2011
amounted to sh. 104,800,000
2. As per the cost accounts cost of goods produced and cost of goods sold amounted to sh.
222,500,000 and sh. 212,100,000 respectively
3. Raw materials lost through floods amounted to sh, 2,400,000 Insurance claim for these raw
materials is pending
This claim was reflected in the cost accounts
4. A notional rent of sh. 4,000,000 per month has been charged in the cost accounts
5. Production overheads were absorbed at the rate of 185% of direct wages
Required:
a) Prepare the following control accounts in the cost ledger
i. Raw materials stores
ii. Work in progress
iii. Finished goods
iv. Production overhead
b) A statement reconciling the gross profit as per the cost accounts and the gross profit as per the
financial accounts
Date posted: December 15, 2021. Answers (1)
- Mexwel Ltd. maintains separate books for financial accounting and cost accounting.
The extracts from the financial accounting books of the company for the year ended 31...(Solved)
Mexwel Ltd. maintains separate books for financial accounting and cost accounting.
The extracts from the financial accounting books of the company for the year ended 31 October 2012 was as follows:
Additional information:
1. Opening inventory of finished goods is valued at Sh.312 per unit sold.
2. The company values work-in-progress at factory cost for both financial profit and cost profit reporting.
3. Factory overheads are absorbed at 60% of direct labour.
4. Administrative overheads are recovered at 20% of factory cost.
5. Selling and distribution overheads are charged at Sh. 12 per unit sold.
6. The number of units produced during the year was 14,000.
Required;-
Prepare statements for the year ended 31 October 2012 to show:
(i) The profit as per cost accounting records.
(ii) The profit as per financial accounting records.
Date posted: December 15, 2021. Answers (1)
- The following balances were provided in the cost ledger of GDR Ltd., a manufacturing company as at 1 April 2013:
Required:
i) Prepare necessary accounts in the...(Solved)
The following balances were provided in the cost ledger of GDR Ltd., a manufacturing company as at 1 April 2013:
Required:
i) Prepare necessary accounts in the cost ledger.
ii) A trial balance as at 31 March 2014.
Date posted: December 15, 2021. Answers (1)
- Ushindi Limited manufactures ornaments for export trade. Jobs are allocated to two operators.
Mbotela and Juma with bonus paid for hours saved.
In the month of February...(Solved)
Ushindi Limited manufactures ornaments for export trade. Jobs are allocated to two operators.
Mbotela and Juma with bonus paid for hours saved.
In the month of February 2005, Mbotela made 186 units and Juma made 210 units for which the
time allowed of 30 standard minutes and 25 minutes per unit respectively was credited.
The basic wage rate was Sh.18 per hour for both employees. For every hour saved, a bonus was
paid at 20% of the basic wage rate. Hours worked in excess were paid at the basic wage rate plus
two thirds.
Mbotela completed his job in 44 hours and Juma completed his job in 39 hours.
A basic working week has 40 hours.
Required:
For each operator:
(i). The amount of bonus payable.
(ii). The total gross wage payable.
(iii). The wages cost per unit.
Date posted: December 15, 2021. Answers (1)
- Ardhi company Ltd. Is considering the type of remuneration scheme to adopt for its employees.
The following information is availed to you for your analysis:(Solved)
Ardhi company Ltd. Is considering the type of remuneration scheme to adopt for its employees.
The following information is availed to you for your analysis:
For the calculation of piecework earnings the company values each minute at a rate of Sh.0.5
Required:
Calculate the earnings for each employee using
(i). Basic guaranteed hourly rates
(ii). Piece work rates.
(iii). Premium bonus, given that an employee earns the premium bonus at the rate of two thirds of the time saved.
Date posted: December 15, 2021. Answers (1)
- Mjengo Ltd. Is a medium sized company which operates three production departments and two service departments. The three production departments are: Machinery department D, machinery...(Solved)
Mjengo Ltd. Is a medium sized company which operates three production departments and two service departments. The three production departments are: Machinery department D, machinery department E and Assembly department.
The two service departments are materials procurement and general support department.
Date posted: December 15, 2021. Answers (1)
- MMC Ltd. produces machine parts on a job-order basis. Majority of the business contracts are obtained through bidding. Business firms competing with MMC Ltd. bid...(Solved)
MMC Ltd. produces machine parts on a job-order basis. Majority of the business contracts are obtained through bidding. Business firms competing with MMC Ltd. bid full cost plus 20 per cent mark up. Recently, with the expectation of increase in sales, MMC Ltd. reduced its mark up from 25 per cent to 20 per cent.
The company operates two support departments and two production departments. The budgeted costs and the normal activity levels for each department are given below:
Additional information:
1. The direct costs of the maintenance department are allocated on the basis of employees while
those of power department are allocated on the basis of maintenance hours.
2. Departmental overhead rates are used to assign costs to products. Grinding department uses
machine hours and assembly department uses labour hours.
MMC Ltd. is preparing to bid for a contract, job K, that requires three machine hours per unit
produced in grinding and zero hours in assembly department. The expected prime costs per unit are Shs. 670.
Required:
a) Allocate the support service costs to the production departments using the direct allocation method
b) What will be the bid for job K if the direct allocation method is used?
c) Allocate the service costs to the production departments using the sequential allocation method
d) What will be the bid for job K if the sequential allocation method is used?
e) Briefly explain the problems encountered in setting overhead cost standards.
f) Distinguish between cost allocation and cost apportionment.
Date posted: December 15, 2021. Answers (1)
- Give the disadvantages of Activity Based Costing (ABC)(Solved)
Give the disadvantages of Activity Based Costing (ABC)
Date posted: March 4, 2019. Answers (1)
- Give the advantages of using Activity Based Costing (ABC)(Solved)
Give the advantages of using Activity Based Costing (ABC)
Date posted: March 4, 2019. Answers (1)
- What factors should be taken into consideration before setting up a cost accounting system(Solved)
What factors should be taken into consideration before setting up a cost accounting system
Date posted: March 4, 2019. Answers (1)
- What should be put into consideration in order for the system to be efficient.(Solved)
What should be put into consideration in order for the system to be efficient.
Date posted: February 26, 2019. Answers (1)
- Give the possible causes of discrepancies revealed by physical stock counts include:(Solved)
Give the possible causes of discrepancies revealed by physical stock counts include:
Date posted: February 26, 2019. Answers (1)
- Give the essential requirements of an effective stock control system.(Solved)
Give the essential requirements of an effective stock control system.
Date posted: February 26, 2019. Answers (1)
- Give the advantages of Standard Costing:(Solved)
Give the advantages of Standard Costing:
Date posted: February 26, 2019. Answers (1)
- List the arguments in favour of Marginal Costing:(Solved)
List the arguments in favour of Marginal Costing:
Date posted: February 26, 2019. Answers (1)