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CMA512S - COST MANAGEMENT ACCOUNTING 102 - 2ND OPP - JAN 2020 |
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NAMIBIA UNIVERSITY
OF SCIENCE AND TECHNOLOGY
FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING
QUALIFICATION CODE: 07BACC LEVEL: 5
COURSE CODE: CMA512S
COURSE NAME: COST & MANAGEMENT ACCOUNTING 102
SESSION: JANUARY 2020
PAPER: THEORY AND CALCULATIONS
DURATION: 3 HOURS
MARKS: 100
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINERS
E. Kangootui, S. Lishokomosi, G. Sneehama and L. Odada
MODERATOR | K. Boamah
INSTRUCTIONS
This question paper is made up of four (4) questions.
Answer ALL the questions and in blue or black ink. NO pencil
Start each question on a new page in your answer booklet and show all workings.
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.
THIS QUESTION PAPER CONSISTS OF 4 PAGES (Excluding this front page)
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QUESTION 1
[25 MARKS]
Monica Ltd is preparing its overhead budgets for a forthcoming period. The company has three production
departments A, B and C, and two service departments X and Y. The following figures have been produced:
Departments
Overhead cost
Machine hours
A
400 000
15 000
B
420 000
12 000
C
450 000
13 000
X
400 000
Y
420 000
Overhead is absorbed on a machine hour basis.
It has been estimated that service department usage is as follows:
Departments
A
B
Cc
X
Y
Department X 20%
30%
10%
40%
Department Y 30%
30%
20%
20%
REQUIREMENT
MARKS
a) | Prepare a schedule of the overhead costs to be charged to departments A, B and C,
12
using the reciprocal/repeated distribution method to apportion the service department
costs to the production departments (work to the nearest NS). Stop allocation when the
overheads to be allocated are below N$100.
b) | Calculate the overhead absorption rates for the period for departments A, B and C (work
6
to decimal places).
c) | Other than the repeated distribution method, identify the two other methods of
2
reapportionment that could be used for the reapportionment of service department costs
across production departments
d) | Explain why hourly rates are generally accepted to be the most appropriate method of
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overhead absorption, and comment upon other methods of absorption that may be used.
TOTAL
25
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QUESTION 2
[25 MARKS]
Bailey is a Namibian fisherman who works in a newly established organisation called Shimano
Manufacturers. This organisation was founded by Mr Sage in late 2012. It specialises in the catching and
processing of fresh salmon to manufacture fish cakes for the retail industry across the country. Bailey
earns a basic wage rate of NS60 per hour. Shimano manufacturers operate eight hours a day, five days a
week, fifty-two weeks per annum. Employees also work one Saturday every month for five hours which
is considered a normal overtime remunerated at 1.5 times the normal rate. The organisation’s policy is to
award employees a birthday bonus of N$10 000. Employees are entitled to twelve days annual leave and
there are seventeen public holidays a year. Both the employer and employee contribute to the pension
fund on a 60:40 basis, and on equal basis for the medical aid fund. Monthly pension fund contribution
made by Bailey is NS1 400. Total weekly medical aid contribution is NS700. The organisation’s annual
Unemployment Insurance Fund (UIF) contribution is NS4 750. Idle time is calculated at a rate of 7% of
available hours.
REQUIREMENT
a) | Determine the total annual labour cost for Shimano Manufacturers.
b) | Determine the total annual productive hours for Shimano Manufacturers.
c) | Explain the term “labour recovery rate” and compute the labour recovery rate for
Shimano Manufacturers.
d) | Differentiate idle time from overtime
MARKS
11
7
3
4
TOTAL
25
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QUESTION 3
[25 MARKS]
The following are the operating details of Bunny Ltd for the year ended 31 December 2018. The company
uses job order costing system and the following related to one of its major client undertakings for the
year:
1.
Direct material:
On hand at 1 January 2018:
40 000 kg at NS$2.50 per kg
Purchases:
180 000 kg at NS2.70 per kg
On hand at 31 December 2018:
20 000 kg
2.
Direct labour:
80 000 direct labour hours at NS4 per hour
3.
Manufacturing overheads:
Recovered at NS6 per direct labour hour
4.
Work in Progress:
On hand at 1 January 2018:
NS100 000
On hand at 31 December 2018:
NS 80 000
5.
Finished goods:
On hand at 1 January 2018:
4 000 units at NS90 per unit
Manufactured during the year:
20 000 units
On hand at 31 December 2018:
?
6.
Sales:
18 400 units at NS200 per unit
7.
Marketing and administrative expenses
NS980 000
8.
Actual manufacturing overheads
NS464 000
9.
Inventory valuation method in use:
FIFO
10.
Manufacturing overheads over or under applied must be charged to cost to sales
REQUIREMENT
Prepare journal entries to record the above transactions relating to Banny Ltd.’s major client
for the year ended 31 December 2018
TOTAL
MARKS
25
25
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QUESTION 4
[25 MARKS]
Van Schaik Bookstore has a proud heritage as one of the oldest bookstores in southern Africa and reached
their 100-year milestone in 2014. It is arguably Southern Africa’s leading academic bookstore chain with
more than 70 stores located in South Africa, Botswana, Swaziland and Namibia. In addition to these
outlets they have several seasonal sales points, online sales through their website and a library supply
service. Van Schaik Bookstore has experience in optimally servicing institutions, professionals and
students by deploying the most appropriate sales channel required. You have been appointed as inventory
accountant at Van Schaik Bookstore. Van Schaik Bookstore wants to install an efficient inventory control
and pricing system within the company and seeks your advice on a number of issues. Van Schaik Bookstore
uses First-In- First Out (FIFO) method for inventory valuation.
The textbook price has fluctuated over the period since June 2019. You are given the following
information:
1 July: Textbooks on hand: 500 @ total of NS225 000.
2 July: Cash purchases from Van Schaik Publishers: 150 textbooks @ NS5O00 per textbook.
10 July: Credit purchases from Van Schaik Publishers: 50 textbooks @ total of NS27 500.
12 uyJuly:
13 July:
15 Jumlyy:
20 July:
Returns to Van Schaik Publishers 50 textbooks that was purchased on the 2 July because the
box was damaged when bought.
550 textbooks were sold @ NS800 per textbook.
20 textbooks were donated to NUST students who came from disadvantaged families as part
of corporate social responsibility.
Textbooks returned to Van Schaik Publishers on the 12 July were replaced.
25 July: Administrative and selling expenses of NS90 000 was paid with credit card.
REQUIREMENT
a) | Determine the value of the textbooks in store on 25 July
b) | Determine how much profit or loss was made during the month of July.
TOTAL
MARKS
20
5
25
END EXAMINATION PAPER
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