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CAH610S- COST AND MANAGEMENT ACCOUNTING FOR HOSP AND TOURISM- 2ND OPP- NOV 2023 |
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nAmlBIA UnlVERSITY
OF SCIEnCE
TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION CODE: 07BHOM & 07BOTM
COURSE CODE: CAH610S
DATE: JANUARY 2024
LEVEL: 6
COURSE NAME: COST& MANAGEMENT
ACCOUNTINGFORHOSPITALITY& TOURISM
PAPER: THEORYAND CLACULATIONS
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 four (4) 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 8 PAGES (INCLUDINGTHIS FRONTPAGE)
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QUESTION 1
(30 MARKS)
Each of the following questions (1.1-1.15) has only ONE correct answer. Please answer
this question ON the answer sheet provided. E.g. 1.1-A
1.1 Management accounting is used by:
a) Shareholders
b) Internal managers
c) Employees
d) External users
e) None of the above
1.2 Management accounting has the following functions:
a) Providing information to external parties
b) Estimating costs of products and services
c) Providing information for internal use
d) a and c
e) band c
1.3 In the code of ethics followed by management accountants, integrity is:
a) Being honest, standing for what is right
b) Being just and unbiased
c) Being courteous and decent
d) Not revealing or disclosing privileged or private information
e) Accepting the consequences of actions and decisions
1.4 In the code of ethics followed by management accountants, confidentiality is:
a) Being honest, standing for what is right
b) Being just and unbiased
c) Being courteous and decent
d) Not revealing or disclosing privileged or private information
e) Accepting the consequences of actions and decisions
1.5 In the code of ethics followed by management accountants, accountability is:
a) Being honest, standing for what is right
b) Being just and unbiased
c) Being courteous and decent
d) Not revealing or disclosing privileged or private information
e) Accepting the consequences of actions and decisions
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1.6 Fixed cost per unit:
a) Increases as activity volume decreases
b) Remains constant with volume of activity
c) Increases as activity volume increases
d) Dcreases as activity volume increases
e) band c
1.7 A cost that will change in the future due to a decision being made is known as:
a) An opportunity cost
b) A sunk cost
c) A changing cost
d) An incremental cost
e) A relevant cost
1.8 Conversion costs include:
a) Direct labour
b) Direct material
c) Direct material and manufacturing overheads
d) Direct labour and direct materials
e) Direct labour and manufacturing overheads
1.9 Costs unaffected by a choice between alternatives and have been included in the past is:
a) A sunk cost
b) A period cost
c) A product cost
d) A direct cost
e) An indirect cost
1.10 Variable cost per unit:
a) Increases as activity volume decreases
b) Remains constant with volume of activity
c) Decreases as activity volume increases
d) a and b
e) band c
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1.11 A company has fixed costs of N$60 000 per annum. It manufactures a single product
which it sells for N$20 per unit. Its variable cost to sales ratio is 60%. The company's
break-even point in N$ is:
a) N$240 000
b) N$260 000
c) N$160 000
d) N$150 000
e) None of the above
1.12 Luxury Hotel Ltd supplied the following details regarding its product:
Selling price per unit
Variable production cost per unit
Variable selling cost per unit
Fixed production cost per year
Fixed selling costs per year
The contribution margin per unit is:
N$600.00
N$120.00
N$40.00
N$358 000
N$60 000
a) N$160
b) N$560
c) N$440
d) N$480
e) None of the above
The following details refer to questions 1.13 and 1.14:
Nam-Shoes Ltd currently sells 2 500 pairs of shoes per year. Other details for the past year
are as follows:
Selling price per pair of shoes N$200
Purchase cost per pair of shoes N$125
Annual fixed costs:
Salaries
N$65 000
Advertising
N$20 000
Miscellaneous
N$35 000
1.13 The company's break-even in number of shoes is:
a) 1200
b) 1400
c) 1600
d) 1500
e) None of the above
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1.14 Assume that for the next year an additional fixed advertising campaign costing
N$8 700 is proposed, whilst at the same time selling price is increased by 12%. In
this case the new contribution margin per pairs of shoes will be:
a) N$75.00
b) N$99.00
c) N$77.50
d) N$97.50
e) None of the above
1.15 A firm's water and electricity account would normally be classified into the following
category:
a) Fixed cost
b) Variable cost
c) Stepped fixed cost
d) Semi-variable/mixed cost
e) None of the above
QUESTION 2
(20 MARKS)
The Patio is a manufacturer of garden furniture that has consistently used First-In-First-Out
(FIFO) in valuing inventory. The management of the Patio are now interested in knowing the
effect of using Weighted Average Cost (AVCO) in inventory valuation instead of FIFO. The
following transactions for the Patio were recorded for the period:
2August
SAugust
6August
7 August
8 August
9 August
Opening inventory
Received
Issued/sales
Received
Issued/sales
Return to supplier units purchased on 7 August
100 units
120 units
200 units
180 units
150 units
20 units
@N$50 per unit
@N$57.50 per unit
@N$60 per unit
REQUIRED:
Prepare an inventory ledger card of the Patio for the month of August
a) using four columns showing the date, receiving, issuing, and balancing
columns. Each column contains quantity, unit price and the total amount
Calculate the gross profit of the Patio. Assume that the selling price is
b)
N$300 per unit.
MARKS
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6
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QUESTION 3
(20 MARKS)
Angie Silva has recently opened The Sandal Shop in Rundu, a store that specializes in
fashionable sandals. Angie has just received a degree at the NUSTand she is anxious to apply
the principles she has learned. In time, she hopes to open a chain of sandal shops.
As a first step, she has prepared the following analysis for her new store:
Sales price per pair of sandals
N$400
Variable expenses per pair of sandals
160
Contribution margin per pair of sandals
N$240
A pair of sandals sold
320
Fixed expenses per year:
Building rental
Equipment depreciation
Selling expenses
Administrative expenses
Total fixed expenses
N$15 000
7 000
20000
18 000
N$60000
REQUIRED:
MARKS
Calculate how many pairs of sandals must be sold each year to break even
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a)
in units and N$.
Angie has decided that she must earn at least N$31 200 as a profit in the
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b) first year to justify her time and effort. Calculate how many pairs of
sandals must be sold to reach this target profit.
Angie now has two salespersons working in the store - one full-time and 11
one part-time. It will cost her an additional fixed expense N$40 000 per
c) year to convert the part-time position to a full-time position. Angie
believes that the change will bring in an additional 300 pairs of sandals
annually. Would you recommend her to change the position?
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QUESTION 4
{30 MARKS)
The management of Penguin CC presently considers investing in a new machine which it
believes will increase productivity in its factory. The initial cash outlay will be N$334 000 and
a return of at least 12% per annum is required on all new capital projects. It is estimated that
the following cash flows will be derived from operations with this new machine:
Year
Cash flow
1
N$155 000
2
N$144000
3
N$75 000
4
N$ 61000
5
N$12 161
Additional information:
The factory supervisor is of the opinion that this machine will have an economic useful life of
5 years after which it will most probably have no resale value.
REQUIRED:
MARKS
Make a recommendation to the management of the corporation as to the 10
a) viability of investing in this machine. Make use of the net present value
method.
b) Calculate the discounted payback period of the project
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Mr Nicol, one of the senior members of the corporation has stated that,
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according to his calculations, the actual rate of return of this investment
c)
is 15%. State, with reasons, whether you agree with Mr Nicol or not. You
may substantiate your statement with the aid of additional calculations
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 .sos .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:Presenvt alueof $1to be receivedafterI years= 1/(1+ r')1.
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 S1receivedat year5 is S.621.
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