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BAC212S - BUSINESS ACCOUNTING 2B - 2ND OPP - JAN 2020 |
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3
NAMIBIA UNIVERSITY
OF SCIENCE AND TECHNOLOGY
FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE
QUALIFICATION : VARIOUS
QUALIFICATION CODE: VARIOUS
COURSE CODE: BAC212S
SESSION: JAN 2020
DURATION: 3 HOURS
LEVEL: 6
COURSE NAME: BUSINESS ACCOUNTING 2B
PAPER: THEORY
MARKS: 100
EXAMINER(S)
MODERATOR:
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
Mr. C Jerry
Mr. D Kamotho
INSTRUCTIONS
This question paper is made up of four (4) questions.
Answer ALL the questions and in blue or black ink.
Start each question on a new page in your answer booklet.
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.
5. Programmable calculators are not allowed
THIS QUESTION PAPER CONSISTS OF 3 PAGES (Excluding this front page)
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Question 1
(20 Marks)
Southways Ltd uses a standard absorption costing system. The company has budgeted the following
figures for January 2019 for a capacity of 10 000 units:
N$
Direct material — 20 000 kg at N$3 per kg
60 000
Direct labour — 10 000 hours at N$5 per hour
50 000
Manufacturing overheads — variable (N$1 per hour)
10 000
— fixed (N$4 per hour)
40 000
160 000
Variable manufacturing overhead is recovered on direct labour hours.
- During January 2019 the company started and completed 11 000 units. The following
transactions were recorded:
- Credit purchases of material, 30 000 kg at N$3.10 per kg.
- Material issued to production, 22 500 kg.
- Direct wages paid, 11 500 hours at N$5 per hour.
- Manufacturing overheads incurred, variable N$11 800
- Fixed Manufacturing overhead is N$40 500.
Required:
Calculate the operating variances for January:
Material price variance
Material quantity (usage) variance
Wage rate variance
Labour efficiency variance
Variable overhead expenditure variance
Variable overhead efficiency variance
Fixed overheads expenditure variance
Fixed production overheads volume variance
(2 marks)
(3 marks)
(2 marks)
(3 marks)
(3 marks)
(2 marks)
(2 marks)
(3 marks)
Question 2
(30 Marks)
The following budgeted information regarding the first quarter of 2019 were supplied by Chineke CC:
Al,
Expected sales:
January
February
March
5 000 units
3 000 units
7 000 units
2.
Selling price per unit:
N$70
3
Opening and closing inventory of completed goods:
January
February
March
Opening inventory
1 000 units
1 500 units
?
Closing inventory
?
1 600 units
1 700 units
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4.
Opening and closing inventory of raw materials:
January:
Type A
Opening inventory
8 000 kg
Closing inventory
Type B
600 litres
March:
Type A
9 000 kg
Type B
750 litres
a) 5. Quantities of raw materials required to produce one unit:
TypeA 4kg
TypeB 3 litres
b) 6. Prices raw materials:
Type A N$2 per kg
Type B_ N$1 per litre
c) 7. Direct labour required to produce one unit:
d) 8.
Category 1
Category 2
Wage rates:
2 hours per unit
1 hour per unit
Category 1
N$7 per hour
Category 2
N$5 per hour
e) 9. Overheads are absorbed at a predetermined rate of N$6 per direct labour hour
10. Administrative costs:
Selling costs:
N$50 000 for the quarter
N$20 000 for the quarter
Required:
Prepare the following budgets of Chineke CC for the first quarter in months of 2019:
1.
Production budget in units & N$
2.
Material purchases budget per type of material
3.
Direct labour budget per category,
Question 3
(30 Marks)
The management of Mangope
months for the year 2019:
Items
Sales (On account)
Salaries
Purchases
Other cash operating
expenses (Including
depreciation)
Additional information:
Corporation
Nov
N$
60 000
20 000
15 000
10 000
has supplied
Dec
N$
70 000
22 000
20 000
10 000
the following
Jan
N$
50 000
21 000
15 000
11000
information
Feb
NS
60 000
22 000
25 000
12 000
for the next five
Mar
N$
70 000
23 000
20 000
11 000
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1. Collections of accounts receivable amount to 25% in the month of sales, 60% in the first month
after sales, 10% in the second month after sales and 5% written off as uncollectible.
2. Purchases are paid for at the rate of 20% in the month of purchase and 80% in the first month
following purchase.
3. Total depreciation for each month amount to N$ 5000
4. Cash on hand at January is N$ 6 000.
Required:
Prepare Mangope Corporation’s cash budget for January, February, and March the year of 2019.
Question 4
20 marks
The National Food Company is comparing two projects — project X and project Y. Project X
has a useful life of 6 years while project b has a useful life of 4 years. Both the projects require
an equal initial investment of N$180,000.
The information about cash inflow expected from project X and project Y is given below:
Net Cash Flows
Year
Project X
Project Y
N$
1
60,000
2
60,000
3
50,000
4
40,000
5
30,000
6
30,000
7
20,000
N$
60,000
60,000
60,000
60,000
The management of National Food Company wants a 10% rate of return on capital
investments.
Required:
1 computes the net present value of each project.
25 marks
2 Advise the National Food Company on which project, the company should invest in. 5 marks
END
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