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CAH610S-COST AND MANAGEMENT ACCOUNTING FOR HOSPITALITY AND TOURISM-2ND OPP-JAN 2025 |
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nAmI BIA unIVE RSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF HOSPITALITY AND TOURISM
QUALIFICATION CODE: 07BHOM & 07BOTM LEVEL:6
COURSE CODE: CAH610S
DATE: JANUARY 2025
COURSE NAME: COST& MANAGEMENT
ACCOUNTING FORHOSPITALITY& TOURISM
PAPER: THEORYAND CALCULATIONS
DURATION: 3 HOURS
MARKS: 100
SECOND OPPORTUNITY EXAMINATION PAPER
EXAMINER
MODERATOR
Sheehama, K.G.H.
Odada, L.
INSTRUCTIONS
1. This question paper is made up of five (5) questions.
2. Answer ALL the questions in blue or black ink only. NO pencil
3. Start each question on a new page in your answer booklet and show all workings.
4. Work with four (4) decimal places in all your calculations and only round off only final
answers to two (2) decimal places unless otherwise stated.
5. Questions relating to this examination may be raised in the initial 30 minutes after the
start of the paper. Thereafter, candidates must use their initiative to deal with any
perceived error or ambiguities & any assumption made by the candidate should be
clearly stated.
NON - PROGRAMMABLE CALCUTOR
1. Examination paper
2. Examination script
THIS QUESTION PAPER CONSISTS OF 6 PAGES (INCLUDING THIS FRONT PAGE)
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QUESTION1
(22 MARKS)
Eachof the following questions(1.1-1.11) hasonly ONE correct answer. Pleaseanswer
this question ON the answer sheet provided. E.g. 1.1-A
1.1 The term "prime costs" refers to:
A
Manufacturing costs incurred to produce units of output.
B
All costs associated with manufacturing other than direct labour costs and
direct material costs.
C
The sum of direct labour costs and all factory overhead costs.
D
The sum of direct material costs and direct labour costs.
1.2 The term conversion costs refers to:
A
Manufacturing costs incurred to produce units of output.
B
All costs associated with manufacturing other than direct labour costs and
raw material costs.
C
The sum of direct labour costs and all factory overhead costs.
D
The sum of raw material costs and direct labour costs
1.3 The following cost is most representative of a direct cost:
A
Glue in a furniture factory
B
Electricity for machinery
C
Supervisors' salaries
D
Milk in the processing of cheese
1.4 Production costs are represented by:
A
Direct material plus direct labour only
B
Direct material plus manufacturing overheads only
C
All manufacturing costs plus non-manufacturing costs
D
Direct material plus direct labour plus factory overheads
1.5 The following inventories were received in the storeroom:
1 January 2024
15 January 2024
1 000 units at N$20 per unit
500 units at N$23 per unit
On 31 January 2024, 1 250 units were issued to production. According to the
weighted average method of pricing material, the value of the closing inventory would
be:
A
N$6 500
B
N$2 750
C
N$4 625
D
N$5 250
1.5 The following item is an example of an overhead cost:
A
Direct material
B
Depreciation on factory equipment
C
Direct labour
D
Marketing costs
1.6 The following item is NOT an overhead cost:
A
Rent paid on production equipment
B
Insurance on factory building
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C
Direct labour
D
Indirect material
1.7 The following statement is NOTtrue:
A
Overheads can be under-absorbed or over-absorbed
B
Budgeted overheads represent overhead costs that are estimated at the
beginning of the accounting period, e.g. a year.
C
Overheads absorbed is also called overheads recovered.
D
Overhead costs are all direct costs
1.8 Under/Over-absorbed overheads is the difference between:
A
Budgeted overheads and absorbed overheads
B
Actual overheads and absorbed overheads
C
Budgeted overheads and actual overheads
D
Absorbed overheads and budgeted overheads
The following information refers to Questions 1.9 and 1.10:
Budgeted figures
Manufacturing overhead costs
$26 600
Direct labour hours
5 320 hours
Machine hours
8 500 hours
Actual figures
N$$21 280
6 800 hours
7 450 hours
1.9 The manufacturing overhead predetermined rate is:
A
N$3.13 per direct labour hour
B
N$3.91 per direct labour hour
C
N$4.00 per direct labour hour
D
N$5.00 per direct labour hour
1.10 The amount of absorbed manufacturing overheads is:
A
N$34 000
B
N$21284
C
N$26 588
D
N$27 200
1.11 A basis that is NOT suitable for the calculation of an overhead absorption rate is:
A
Production units
B
Direct labour cost
C
Weight of direct material
D
Machine hours
E
Prime cost
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QUESTION 2
(21 MARKS)
The management of Atlas Ltd is eager to know what affect the different price issue
methods will have on their profits. The following are their transactions regarding
Material 212/18 for the past month:
1
Balance
5
Receipts
9
Receipts
15 Issues
19 Receipts
27 Issues
100 kg at N$40 per kg
200 kg at N$50 per kg
150 kg at N$55 per kg
250 kg
300 kg at N$45 per kg
350 kg
REQUIREMENTS:
Prepare a Stock Ledger Card and enter the above transactions according to the First-
in-first-out {FIFO) method of pricing material issued to production.
QUESTION 3
[18 MARKS]
Maxime Ltd manufactures and sells a certain type of bag. The company has budgeted to sell
3 000 bags at a price of N$40 per bag during the next year. The following information
regarding the company's costs is available:
Variable costs per bag:
Direct material
Direct labour
Sales commission
N$
120
60
20
Monthly fixed costs:
Factory rent
Advertising
Salaries
80000
110 000
260 000
REQUIREMENTS:
{a) Calculate the contribution per bag
(3)
{b) Calculate the Contribution ratio {Profit/Volume ratio)
(3)
{c) Calculate the break-even point in sales value and in units
(6)
(d) Calculate the margin of safety in N$ and in units
(6)
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QUESTION 4
[29 MARKS]
You have been recently appointed as the new management accountant of Bushveld Steel, a
business that specialises in the manufacturing of specialised tyres.
The raw materials that are used for manufacturing a tyre are rubber, steel belts, beads (steel
coated in rubber), ply fabric and tread. Rubber is a major component that makes up 85% of
the tyre. The tyre price has fluctuated over the period since June 2024.
You are provided the following information:
•
500 tyres are produced and sold in June 2024. It usually takes 1 000 machine hours
to produce 500 tyres.
•
Purchased rubber, steel belts, beads and other materials amounted to N$500 per tyre.
•
Direct labourers are paid N$125 per tyre.
•
Indirect labour cost is N$40 per tyre.
•
Depreciation on the factory machinery in the processing department amounts to
N$30 000 per month.
•
Factory electricity: the cost formula is y = N$45b + N$50 000, where b is machine
hours.
REQUIRED:
(a)
Explain "sunk cost" and "opportunity costs"
(4)
(b)
From the above-mentioned costs identify which costs are variable, fixed, (5)
or mixed.
(c)
Calculate the primary cost per tyre.
(3)
(d)
Calculate the variable production cost per tyre
(5)
(e)
Calculate the total manufacturing overhead cost
(5)
(f)
Calculate the total conversion cost
(3)
(g)
"A variable cost is a cost that varies per unit of product, whereas a
(4)
fixed cost is constant per unit of product." Do you agree? Explain.
QUESTION 5
{10 MARKS)
Northern and Southern Cola-Cola is considering the purchase of a special-purpose bottling
machine for N$154 080. The plant manager estimates the following annual cash flow from the
operations:
Year
1
2
3
4
Total
Amount
M
40000
40000
50000
80000
210 000
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Northern and Southern Cola-Cola uses a required rate of return of 10% in its capital budgeting
decisions. Ignore income taxes in your analysis. Assume all cash occur at year-end except for
initial investment amounts.
REQUIRED:
Calculate the following for the Northern and Southern Cola-Cola:
(a) Payback period
(b) Net present value
(5 marks)
(Smarks)
END OF EXAMINATION QUESTION PAPER
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APPENDIXTABLE1
Present Value Tables
Number
Interest Rateper Year
of Years 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15%
1 .990 .980 .971 .962 .952 .943 .935 .926 .917 .909 .901 .893 .885 .877 .870
2 .980 .961 .943 .925 .907 .890 .873 .857 .842 .826 .812 .797 .783 .769 .756
3 .971 .942 .915 .889 .864 .840 .816 .794 .772 .751 .731 .712 .693 .675 .658
4 .961 .924 .888 .855 .823 .792 .763 .735 .708 .683 .659 .636 .613 .592 .572
5 .951 .906 .863 .822 .784 .747 .713 .681 .650 .621 .593 .567 .543 .519 .497
6 .942 .888 .837 .790 .746 .705 .666 .630 .596 .564 .535 .507 .480 .456 .432
7 .933 .871 .813 .760 .711 .665 .623 .583 .547 .513 .482 .452 .425 .400 .376
8 .923 .853 .789 .731 .677 .627 .582 .540 .502 .467 .434 .404 .376 .351 .327
9 .914 .837 .766 .703 .645 .592 .544 .500 .460 .424 .391 .361 .333 .308 .284
10 .905 .820 .744 .676 .614 .558 .508 .463 .422 .386 .352 .322 .295 .270 .247
11 .896 .804 .722 .650 .585 .527 .475 .429 .388 .350 .317 .287 .261 .237 .215
12 .887 .788 .701 .625 .557 .497 .444 .397 .356 .319 .286 .257 .231 .208 .187
13 .879 .773 .681 .601 .530 .469 .415 .368 .326 .290 .258 .229 .204 .182 .163
14 .870 .758 .661 .577 .505 .442 .388 .340 .299 .263 .232 .205 .181 .160 .141
15 .861 .743 .642 .555 .481 .417 .362 .315 .275 .239 .209 .183 .160 .140 .123
16 .853 .728 .623 .534 .458 .394 .339 .292 .252 .218 .188 .163 .141 .123 .107
17 .844 .714 .605 .513 .436 .371 .317 .270 .231 .198 .170 .146 .125 .108 .093
18 .836 .700 .587 .494 .416 .350 .296 .250 .212 .180 .153 .130 .111 .095 .081
19 .828 .686 .570 .475 .396 .331 .277 .232 .194 .164 .138 .116 .098 .083 .070
20 .820 .673 .554 .456 .377 .312 .258 .215 .178 .149 .124 .104 .087 .073 .061
Discounftactors:Presentvalueof $1to bereceivedaftert years= 1/(1+ r)'.
Number
Interest Rateper Year
of Years 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 26% 27% 28% 29% 30%
1 .862 .855 .847 .840 .833 .826 .820 .813 .806 .800 .794 .787 .781 .775 .769
2 .743 .731 .718 .706 .694 .683 .672 .661 .650 .640 .630 .620 .610 .601 .592
3 .641 .624 .609 .593 .579 .564 .551 .537 .524 .512 .500 .488 .477 .466 .455
4 .552 .534 .516 .499 .482 .467 .451 .437 .423 .410 .397 .384 .373 .361 .350
5 .476 .456 .437 .419 .402 .386 .370 .355 .341 .328 .315 .303 .291 .280 .269
6 .410 .390 .370 .352 .335 .319 .303 .289 .275 .262 .250 .238 .227 .217 .207
7 .354 .333 .314 .296 .279 .263 .249 .235 .222 .210 .198 .188 .178 .168 .159
8 .305 .285 .266 .249 .233 .218 .204 .191 .179 .168 .157 .148 .139 .130 .123
9 .263 .243 .225 .209 .194 .180 .167 .155 .144 .134 .125 .116 .108 .101 .094
10 .227 .208 .191 .176 .162 .149 .137 .126 .116 .107 .099 .092 .085 .078 .073
11 .195 .178 .162 .148 .135 .123 .112 .103 .094 .086 .079 .072 .066 .061 .056
12 .168 .152 .137 .124 .112 .102 .092 .083 .076 .069 .062 .057 .052 .047 .043
13 .145 .130 .116 .104 .093 .084 .075 .068 .061 .055 .050 .045 .040 .037 .033
14 .125 .111 .099 .088 .078 .069 .062 .055 .049 .044 .039 .035 .032 .028 .025
15 .108 .095 .084 .074 .065 .057 .051 .045 .040 .035 .031 .028 .025 .022 .020
16 .093 .081 .071 .062 .054 .047 .042 .036 .032 .028 .025 .022 .019 .017 .015
17 .080 .069 .060 .052 .045 .039 .034 .030 .026 .023 .020 .017 .015 .013 .012
18 .069 .059 .051 .044 .038 .032 .028 .024 .021 .018 .016 .014 .012 .010 .009
19 .060 .051 .043 .037 .031 .027 .023 .020 .017 .014 .012 .011 .009 .008 .007
20 .051 .043 .037 .031 .026 .022 .019 .016 .014 .012 .010 .008 .007 .006 .005
Note:Forexamplei,f theinterestrateis 10%peryear,thepresentvalueof $1receivedatyear5 is S.621.
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