Question 1

School of Business & Management Department of Professional Studies Bachelor of Science Degree

in

Business Administration with a major in Production & Operations Management Supplemental ExaminationCENTRE : MODULE : Cost and Management Accounting [ACT 208]

DATE : TIME :

DURATION :

INSTRUCTIONS:

1. Please read all instructions carefully before attempting any question.

2. This paper consists of four (4) printed pages and four questions3. Answer Section ALL questions.

4. The total marks for this Paper is 20 percent.

All questions must be answered in the answer booklet provided

Please ensure that you number your questions correctly.

Clearly write the number of the question on each of the relevant pages.

Where questions have multiple parts, all parts must be answered. Start the response to each question on a new page.Write your REGISTRATION NUMBER clearly on each page of your answer booklet.

DO NOT WRITE YOUR NAME.

NB. Your script will not be marked if it has your name.DO NOT TURN OVER UNTIL YOU ARE TOLD TO DO SO

ANSWER ALL QUESTIONS

Question 1You have landed your first job as a Cost Accountant after graduating from The University College of the Caribbean. The following costs incurred at the stated activity levels expressed in labour hours have been presented to you for analysis.

Activity (labour hours)Costs ($)

30048,000

26044,000

22040,000

19037,000

17035,000

16034,000

Required:(a) Use the High/Low Method to:

(i) Find the variable cost per unit. (7 marks)

(ii) Determine the fixed costs present in the above structure. (5 marks)

(iii) Determine the equation/cost function that associates activity to costs. (7 marks)

(iv) Calculate the activity level at which total costs is $36,000? (3 marks)

(v) Calculate the total cost at an activity level of 200 labour hours? (3 marks)

Question 2

Imperial Juices Ltd produces and sells Product XYZ. At the end of February 2010, there were on hand 300 units of the stock item, valued at $150 each. During the month of March 2010, the company sold one unit of the stock item for $430 and had the following receipts and sales:

Receipts Sales

DateQuantityUnit Cost/$DateQuantity

March 2200155.00March 7300

March 10400165.00March 14400

March 29300180.00March 30150

March 31200190.00March 31300

Note: During March 2010 the company incurred the following operating expenses: Wages $50,000; Electricity $20,000; Stationery $5,000.Required:

(a) Write up the companys Stores Ledger Card showing the values of the receipts, issues, and closing stocks using the FIFO method of stock valuation. (12 marks)

(b) Calculate the profit or loss made from selling stock item XYZ during March 2010. (8 marks)

(c) List two disadvantages of the FIFO valuation method. (2 marks)(d) Name and define three types of inventories found in manufacturing companies. (3 marks) Question 3JKL Ltd produces and sells a single product for which the following details were made available for the month of September 2012:

Budgeted sales: 8,000 units

Selling price: $1,250 per unit

Marginal Cost Statement

Details$

Direct materials300

Direct labour200

Variable overheads100

Total variable cost600

Fixed overheads150

Total cost750

Required:

(a) Calculate the breakeven point in units and sales revenue. (4 marks)

(b) Calculate the C/S Ratio. (3 marks)

(c) Calculate the budgeted profit or loss for the period. (8 marks)

(d) Calculate the margin of safety in units and sales revenue. (4 marks)

(e) If JKL Ltd wants to make a profit of $6,000,000 how many units must be manufactured and sold. (6 marks)

Question 4

Jamaica Innovation Ltd produces a single product-The Upliftment. The following is an extract from the standard cost card for The Upliftment:

$

Raw material 8 kgs @ $500 4000

Direct labour 4 hrs @ 250 1000Total 5000Actual Results for the Period:

Production 1500 units

Direct material purchased 11,000 kgs for $5,280,000

Opening stock direct material 2000 kgs

Closing stock direct material 700 kgs

Direct wages $1,325,000 for 6100 hrs

Required:

Calculate and give a reason for each of the following variance:

(a) (i) Direct material price variance. (4 marks)

(ii) Direct material usage variance. (6 marks)

(iii) Direct labour rate variance. (5 marks)

(iv) Direct labour efficiency variance. (5 marks)

(b) Explain the concept of variance analysis. (5 marks)

END OF QUESTION PAPER

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