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CMA611S- COST AND MANAGEMENT ACCOUNTING 201- 2ND OPP- JUNE 2023 |
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nAmlBIA unlVERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING
QUALIFICATION CODE: 07BOAC LEVEL:6
COURSE CODE: CMA611S
COURSE NAME: COST & MANAGEMENT ACCOUNTING 201
SESSION: JULY 2023
DURATION: 3 HOURS
PAPER: THEORY AND CALCULATIONS
MARKS: 100
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINERS
Ms Kangala, H. and Sheehama, K.G.H.
MODERATOR Tjondu, K.
INSTRUCTIONS
• Answer ALL the questions in blue or black ink only. NO PENCIL.
• Start each question on a new page, number the answers correctly and clearly.
• Write clearly, and neatly showing all your workings/assumptions.
• Work with at least four (4) decimal places in all your calculations and only round off final
answers to two (2) decimal places.
• Questions relating to this examination may be raised in the initial 30 minutes after the
start of the examination. Thereafter, candidates must use their initiative to deal with any
perceived errors or ambiguities and any assumptions made by the candidate should be
clearly stated.
PERMISSIBLE MATERIALS
• Silent, non-programmable calculators
THIS QUESTION PAPER CONSISTS OF_ 4_ PAGES (excluding this front page)
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QUESTION 1
The following information is available from the books of Jones Ltd.
Actual Manufacturing cost per unit:
Fixed
Variable (Material - N$2; Labour - N$3; Overheads - N$1)
Actual Selling and administrative cost:
Total fixed selling and administrative cost
Variable per unit
N$
N$4.00
N$6.00
N$8,000
N$2.00
Actual Selling price per unit
Company Budgeted Figures:
Pre-determined overhead absorption rate per unit
Normal monthly production
N$15.00
N$5.00
9,000 units
(16 Marks)
In March 2023, Jones Ltd produced and sold 9,000 units, while in April 2023, Jones manufactured
8,500 units and sold 8,000 of them.
Required:
l. Compile separate Statements of Profit or Lossfor the month of April 2023 in accordance with:
a) The absorption costing method
(8 Marks)
b) The variable costing method
(8 Marks)
QUESTION 2
(19 Marks)
Flowers Ltd sells two products, Roses and Tulips, with contribution margin ratios of 40% and 30%
respectively. Roses are sold at N$50 per unit, while Tulips sell at N$25 per unit. The company's fixed
costs amount to $72,000 a month. Monthly sales average 30,000 units of Roses and 45,000 units of
Tulips.
Required:
a) Calculate the weighted average contribution
(4 Marks)
b) Calculate the break-even sales value (N$) of the individual products
(5 Marks)
c) Flowers Ltd is considering spending an additional $9,678.40 a month on advertising, giving
more emphasis on the sale of Roses and less emphasis on the sale of Tulips. If its analysis is
correct, sales of Roses will increase to 39,600 units a month, but sales of Tulips will fall to
32,400 units a month.
i. Recalculate the break-even in sales volume, at this new product mix.
(4 Marks)
ii. Should the proposal to spend the additional $9,678.40 a month be accepted?
Show all your calculations.
(6 Marks)
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QUESTION 3
(30 Marks)
Nicola's Pets produces cat food for the retail market. The production process involves two stages,
mixing and baking. Manufacturing cost comprises materials, which are added at the start of the
process, and conversion costs (labour and overheads), which are incurred evenly throughout
production. The following details relate to the mixing process for the month of March 2023:
Opening WIP (39 000 kgs)
- Material
- Conversion cost
Degree of completion N$
67
60%
350
12
40%
045
Materials input and costs incurred
837
- Materials (630 000 kgs)
900
396
- Conversion costs
240
Output 646 500 kgs
Closing WIP (22 500 kgs)
- Materials
- Labour
60%
40%
Required:
a) Briefly outline the circumstances where process costing may be suitable as a method of
valuing production
(2 marks).
b) Assume that Nicola's Pets uses the weighted average method of valuing inventory. Prepare a
quantity schedule or physical units, equivalent units and equivalent unit cost for the materials
and the conversion costs
(14 marks).
c) Assume that Nicola's Pets uses FIFOmethod of valuing inventory. Prepare a quantity schedule
or physical units, equivalent units and equivalent unit cost for the materials and the
conversion costs
(14 marks).
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QUESTION 4
{15 Marks)
Navy XYZ produces 2 products Navy Green and Navy Blue that are produced from one process. The
following costs are incurred in the process:
Direct materials: 3,500 kg valued at N$45,000.
Direct labour - N$25,000
Overheads - N$20,500
The process produces 1,000 units of product Navy Green and 2,000 units of product Navy Blue. Upon
analysis, the production manager expects S00kgs to come out of the process as waste, which are sold
at N$25 per kg.
Sales information for the 2 products are as follows:
Product Navy Green - 800 kgs at a market value of N$70 per kg
Product Navy Blue - 1,600 kgs at a market value of N$50 per kg
Before selling products, Navy XYZincurs further processing costs as follows:
Product Navy Green - N$6,580
Product Navy Blue - N$12,420
The company allocates Joint costs based on the net realizable value method and the net sales of waste
and by-products are used to reduce joint costs.
Required:
a) Allocate joint cost to the products of Navy XYZ.
(5 marks)
b) Draw up the income statement to determine the gross profit of the 2 products. (10 marks)
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Question 5
20 Marks
Morrie Limited makes three types of bed sheets - the Linen, Silk, and Satin. A traditional product
costing system is used at present, although an activity-based costing (ABC) system is being considered.
Details of the three products for a typical period are:
Linen
Silk
Satin
Hours per unit
Labour hours
2.5
1.5
1
Machine hours
2
2
1
Materials
Cost per unit (N$)
20
15
25
Production
Units
3,000
4,000
6,000
Direct labour costs N$5 per hour and production overheads are absorbed on a machine hour basis.
The overhead absorption rate for the period is N$30 per machine hour.
Actual production overheads amount to $900,000 and further analysis shows that the total
production overheads costs can be divided as follows:
%
Set-up costs
30
Machine running cost
25
Materials handling
20
Inspection cost
25
Total production overhead
100
The following total activity volumes are associated with each product line for the period as a whole:
Number of set
Number of movements of Number of
ups
materials
inspections
Linen
60
84
200
Silk
120
24
650
Satin
420
12
150
Required:
a) Calculate the cost per unit for each product using traditional methods, absorbing overheads
based on machine hours.
(3 marks)
b) Calculate the cost per unit for each product using Activity based costing (work to two decimal
places).
(15 marks)
c) Discuss 2 differences between traditional absorption costing and Activity Based Costing
(ABC).
(2 marks)
Endof question paper.
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