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BAC1200S-BUSINESS ACCOUNTING 1B-1ST OPP-NOV 2024 |
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n Am I BI A u n IVER s ITY
OF SCIEnCE Ano TECHn0L0GY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
COURSE CODE: BAC1200S
COURSE NAME: BUSINESSACCOUNTING lB
SESSION: NOVEMBER 2024
PAPER: THEORYAND CALCULATIONS
DURATION: 2 HOURS
80 MARKS
EXAMINER
FIRST OPPORTUNITY EXAMINATION
DR Z VAN DERWALT
MODERATOR: MR G SHEEHAMA
INSTRUCTIONS
1. Answer ALL the questions on the answer sheet.
2. Read all the questions carefully before answering.
3. The examination paper consists of 50 questions
4. The use of a non-programmable calculator is allowed
5. There is only one correct option, the shading of more than one option will be
marked as incorrect
6. Make sure to shade your student number correctly
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INFORMATION
The question paper is divided into different sections. The first section contains theoretical
knowledge questions and counts for one mark each. Section B assesses your ability to
record information in the accounting records, and the last section consists of calculations
based on various topics. The mark allocation for Sections Band Care indicated next to the
questions.
THIS MEMORANDUM CONSISTS OF 14 PAGES (Including this front page)
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SECTION A THEORETICAL KNOWLEDGE (20 QUESTIONS, 1 MARK EACH)
1. Salaries paid to permanent manufacturing staff members are an
example of?
a. Fixed Costs
b. Variable costs
c. Mixed Costs
d. Product Costs
e. None of the above
2. A mixed cost is:
a. Is fixed over a broader range of activity than a variable cost.
b. Is product and period costs.
c. Contains both fixed and variable components.
d. Always increases on a per-unit basis.
e. None of the above
3. Variable cost per unit ................ due to an increase in production? Fill
in the missing word.
a. Remains the same
b. Increase
c. Decrease
d. Partly increase
e. None of the above
4. Non-manufacturing costs are also called:
a. Manufacturing
b. Marketing costs
c. Period
d. Administrative costs
e. All of the above
5. Sunk costs are:
a. Relevant for decision-making
b. Not relevant for decision-making.
c. Cost to be incurred in future.
d. Future costs.
e. None of the above.
6. Which of the following is not a recognised method to calculate the
variable cost portion included in the mixed cost?
a. High/Low method
b. Least Square method
c. Scatter Graph method
d. Simple mixed method
e. All options are recognised methods
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7. Discounts received on bulk orders have the following effect. Which one
of the options is incorrect?
a. Purchase prices decrease
b. Holding Costs decreases
c. Ordering costs decrease
d. Increase in Profits
e. All the options are correct
8. Which document is issued by the production department when they
need material?
a. Purchase order
b. Purchase requisition order
c. Goods received note
d. Material requisition order
e. None of the above
9. An overhead absorption rate is used to
a. Charge overheads to products
b. Share out common costs over benefiting cost centres
c. Find the total actual overheads for a cost centre
d. Allocate actual! overheads to products
e. None of the above
10. Overheads can be absorbed into cost units by means of:
a. Physical unit produced
b. Percentage of prime cost
c. Percentage of direct wages
d. Machine hour rate
e. All of the above
11. If the amount of production overheads applied to product costs is more
than the actual production overhead expenditure, there are:
a. Over-applied overhead
b. Under-applied overhead
c. Neither A or B
d. None
e. The information is insufficient
12.A cash budget consists of certain elements. Choose the incorrect
option.
a. Cash received from customers
b. Cash paid for operating expenses
c. Cash paid for purchases
d. Cash paid to customers
e. None of the above options are incorrect
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13. Which of the following will not be included when preparing a cash
budget?
a. Depreciation
b. Loss on the sale of an asset
c. Credit Sales
d. All of the above will be included
e. None of the above will be included
14. Which of the following are the purposes for preparing a cash budget?
a. To determine the need for short-term financing
b. Indicates the probable cash position as a result of the planned activities
c. Indicates cash shortages in advance
ct. All of the above
e. None of the above
15. Choose the correct statement
a. A cash budget shows the debtors' and creditors' outstanding balances
b. A cash budget is part of a set of financial statements
c. A cash budget states all the cash inflows and outflows for a certain period
of time
d. A cash budget is done to calculate profits
e. None of the above options are correct.
16. Net cash flow will be calculated as:
a. Opening cash balance, plus all cash sales, less cash purchases
b. Cash inputs less cash outputs
c. Cash outputs less cash inputs
d. Opening cash balance, plus all cash receipts, less all cash payouts
e. None of the above options is correct.
17. If overtime is resorted to at the desire of the customer, then the
overtime premium:
a. It should be included as an overhead
b. It should not be charged at all
c. It should be charged to the job directly
d. It should be charged to the highest profit-making department
e. None of the above
18. Planning provides ________
and reducing the risk of
uncertainty, planning helps managers in many other ways." Fill in the
missing word.
a. Actions
b. Direction
c. Coordination
d. Source documents
e. None of the above
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19. Which one of the following statements is correct?
a. Gross remuneration is also known as "take-home pay."
b. Nett remuneration is also known as "take-home pay."
c. Pension fund contributions by an employer are compulsory
d. The employer and not the employee make Social Security contributions.
e. None of the above.
20. Taxable gross earnings are calculated as follows:
a. Gross earnings less Pension fund contributions
b. Gross earnings less Social Security
c. Gross earnings less overtime
d. Gross earnings less all deductions
e. None of the above
SECTION C APPLICATION IN THE ACCOUNTING RECORDS (13 QUESTIONS, 30
MARKS)
21.ABC Woodworx CC paid salaries and wages via EFT on 25th September
2024. The total amount paid was N$100,000. N$70,000 can directly be
associated with Product A, while N$30,000 cannot directly be related to
the production of specific products and involves the supervision of the
manufacturing processes. As the management accountant, you are
required to allocate the labour costs in the general journal (3 marks)
Option a
Direct labour
70,000
Manufacturing overheads
30,000
Salaries and wages control
100,000
Allocation of labour costs
Option b
Salaries and wages control
Direct Labour
Allocation of labour costs
100,000
100,000
Option c
Direct Labour
Salaries and wages control
Allocation of labour costs
100,000
100,000
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Option d
Salaries and wages control
Direct Labour
Manufacturing Overheads
Allocation of labour costs
100,000
70,000
30,000
Option e
None of the above options are correct.
22.As the management accountant, you received the following information:
The business uses a time-based system. A normal week consists of 40
hours and is paid N$100 per hour. Overtime is paid according to the
current Labour Act provisions. You are required to enter the following
information in the general ledger. Eight employees each worked 40
hours during the week, and in addition, worked 20 hours of overtime.
These hours, all on a Saturday were not related to a specific order (2
marks)
Option a
Salaries and wages control
30 Direct Labour
32,000 30 Gross Wages
38,000
Manufacturing Overheads
6,000
Direct Labour
I I I 30 Salaries and Wages control 32,000
Manufacturing Overheads
I I I 30 Salaries and Wages control 6,000
Option b
Salaries and wages control
30 Gross wages 38,000 30 Direct Labour
Manufacturing Overheads
Direct Labour
I I 30 Salaries and Wages control
I 36,000
Manufacturing Overheads
I 30 I Salaries and Wages control
I 2,000 I
36,000
2,000
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Option c
Salaries and wages control
30 Gross wages
38,000 30 Direct Labour
Manufacturing Overheads
Direct Labour
I I 30 Salaries and Wages control
I 32,000 I
Manufacturing Overheads
I I I 30 Salaries and Wages control
6,000
32,000
6,000
Option d
Salaries and wages control
I 30 I Gross wages I 38,000 I 30 I Manufacturing Overheads
Manufacturing Overheads
I 30 I Salaries and Wages control
I 38,000
I 38,000 I
Option e
None of the above options are correct.
The following information relates to the September 2024 payroll.
Questions 23-27 are based on this information.
Item
N$
Basic salaries
40,000
Housing Allowances
10,000
Pension fund contributions (Note 1)
7% of the basic salaries
Social Security contributions (Note 2)
1% of the basic salaries
1) The employer does not contribute towards the pension fund.
2) Employers and employees each contribute 1% of the basic salaries to Social
Security.
23. Which is the correct option for posting the employees' social security
contributions to the general ledger (2 marks)
a. Debit Wages control, credit social security
b. Debit social security, credit wages control
c. Debit employee, credit social security
d. Debit wages, credit bank
e. None of the above
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24. Which of the following is the correct option when paying the SSC? The
payment was made via EFT (2 marks)
a. Debit employee, credit bank
b. Debit social security, credit bank
c. Debit Wages control, credit bank
d. Debit bank, credit wages control
e. None of the above
25. Which of the following is the correct option when providing for the
employees' net wage (2 marks)
a. Debit wages control, credit bank
b. Debit wages for creditors, credit bank
c. Debit wages control, credit wages for creditors
d. Debit bank, credit wages control
e. None of the above
26. The amount calculated as the pension fund contributions will be (1
mark):
a. N$3,500
b. N$2,800
c. N$2,562
d. N$2,744
e. None of the above options is correct
27.Assume a tax liability of N$11,000, calculate the take-home pay (4 marks)
a. N$24,800
b. N$35,100
c. N$26,200
d. N$29,000
e. None of the above
28.An over-allocation of overheads will be recorded in the general journal
as: (2 marks):
a. Debit cost of sales and credit manufacturing overheads
b. Debit manufacturing overheads and credit cost of sales
c. Debit manufacturing overheads and credit bank
d. Debit work in progress (WIP) and credit cost of sales
e. None of the above entries are correct
29. The entry to record the completion of products would be: (2 marks):
a. Debit Work in Process and Credit Finished Goods.
b. Debit Overhead Control and Credit Finished Goods.
c. Debit Cost of Goods Sold and Credit Work in Process
d. Debit Finished Goods and Credit Work in Process
e. None of the above entries are correct
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30. Which entry is recorded when materials are moved from the storeroom
to production (2 marks)
a. Debit Work in Process and Credit Raw Materials
b. Debit Raw Materials and Credit Work in Process.
c. Debit Manufacturing Overhead and Credit Raw Materials
d. Debit Materials Expense and Credit Raw Materials
e. None of the above entries are correct
31. Which of the following journal entries would record the allocation of
overheads to a specific job (2 marks)
a. Debit manufacturing overheads, credit finished products
b. Debit manufacturing overheads, credit production (WIP)
c. Debit production, credit finished goods
d. Debit production (WIP), credit manufacturing overheads
e. None of the above entries are correct
The information below relates to Questions 32 and 33. Accountants use a
specific format to compile a cost of goods manufactured statement. Carefully
consider the below format and fill in the missing terminology.
Raw Materials
Openinq inventory
XXX
Plus: Purchases of raw materials
=Raw materials available for use
Deduct: A
=Raw materials used in production
XXX
XXX
(xxx)
XXX
Add:B
XXX
=C
XXX
Add:D
XXX
=Total manufacturing cost transferred to work in
XXX
process
Add: Opening Work in·process inventory
Deduct: E
=Cost of goods manufactured transferred to
finished qoods
XXX
(xxx)
XXX
Add: opening inventory of finished goods
XXX
=F
Deduct closinq inventory of finished qoods
=Cost of goods sold
XXX
(xxx)
XXX
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32. Replace the placeholders (A, 8 and C) with the correct terminology.
Carefully consider the below and choose the correct option (3 marks)
a. A= Closing work in process inventory; B = Total Manufacturing overheads;
C = Prime Cost
= = b. A Opening inventory of finished goods; B Closing work in process
inventory; C = Prime Cost
c. A = Closing work in process inventory; B = Closing inventory of raw
materials; C = Cost of goods sold
d. A= Closing inventory of raw materials; B = Direct labour; C = Prime Cost
e. None of the above options is correct.
33. Replace the placeholders (D, E and F) with the correct terminology.
Carefully consider the statements below and choose the correct one (3
marks)
= = a. D Total Manufacturing overheads; E Closing Work in process inventory;
F = Cost of goods manufactured transferred to finished goods
b. D = Total Manufacturing overheads; E = Closing work in process inventory;
F = Goods available for sale
= = c. D Closing Work in process inventory; E Total Manufacturing Overheads;
F = Prime Cost
d. D = Total Manufacturing overheads; E = Cost of goods sold; F = Cost of
goods sold
e. None of the above options is correct.
SECTION C CALCULATIONS (17 QUESTIONS, 30 MARKS)
Any manufacturer must be able to calculate their costs. Thefollowing questions
assess your ability to perform necessary calculations regarding materials, Jabour, and
manufacturing overheads.
A company uses components at a rate of 1000 monthly units, bought for N$3.00
each from the supplier. It costs N$30 to place an order each time, regardless of
the quantity ordered. The total holding cost is 20% per annum of the value of
inventory held. The average inventory is 700 units.
34. You are required to calculate the Economic Order Quantity (2 marks)
a. 775 units
b. 1095 units
c. 316 units
d. 1000 units
e. None of the above
35. Calculate the annual holding cost for this specific unit (1 mark)
a. N$420
b. N$2,100
c. N$0.60
d. N$7,200
e. None of the above
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The following details relate to "Toys are U" CC's inventory
EOQ
60 000 units
Lead time
8-10 working days
Average usage
2500 units per day
Minimum usage
2000 units per day
Maximum usage
2800 units per day
36. The re-order level is.... (1 mark)
a. 28,000 units
b. 72,000 units
c. 5500 units
d. 12 000 units
e. None of the above
MS Plumbers employs Joseph. Joseph worked 55 hours during the week and 4 hours
on Sunday. A normal week is 40 hours. Normal hours are paid N$100 per hour, and
overtime rates follow the Labour Act. The employer offers a housing allowance of
N$300 per week. The employer does not contribute to Joseph's retirement.
Pension fund contributions are calculated at 8% of normal wage, and income tax is
calculated at 20% of taxable income. Answer Questions 37 - 41.
37.Assume the overtime worked was to finish a specific order. Calculate
the overtime premium accounted for during the week (2 marks)
a. N$3,050
b. N$750
c. N$400
d. N$1,150
e. None of the above
38.Assume the overtime worked was general of nature. Calculate the
amount allocated to direct labour (2 marks)
a. N$800
b. N$300
c. N$5,900
d. N$1,100
e. None of the above
39. How would your answer differ if the overtime was worked to complete
a specific order (1 mark)
a. Direct labour will increase, and overheads will decrease
b. Direct labour will decrease, and manufacturing overheads will increase
c. Prime cost will increase, and manufacturing overheads will decrease
d. Conversion cost will decrease and manufacturing overheads will
increase
e. None of the above options is correct
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A bakery employs Lucas to decorate chocolate cakes. Based on normal
wages, he will receive N$100 per standard hour for a standard 8-hour day or an
agreed-upon piecework rate of N$36 per unit. The bakery estimates that it
would take 20 minutes to decorate a cake. He decorated 30 cakes for the day.
Carefully consider this information and answer questions 40 - 42.
40. If Lucas is remunerated according to a time-based system, what will his
gross remuneration be for one day, assuming he worked for a full day (1
mark)
a. N$800 per day
b. N$1,080 per day
c. N$280 per day
d. N$500 per day
e. None of the above
41. Based on the information, how does the actual output differ from the
estimated output (1 mark)
a. Lucas decorated six fewer cakes than supposed to, according to the
estimates.
b. Lucas decorated 12 fewer cakes than supposed to, according to the
estimates.
c. Lucas decorated six more cakes than supposed to, according to the
estimates.
d. The information is insufficient.
e. None of the above
42. If Lucas is remunerated according to the piecework system, what will
his gross earnings for the day be (1 mark)
a. N$800 per day
b. N$1,080 per day
c. N$280 per day
d. N$500 per day
e. None of the above
43.A business applied overheads on a direct labour hourly basis, which
were budgeted at 2,700 labour hours with overheads of N$52,500. Actual
results were 2,600 hours with overheads of N$54,000. Calculate the POR
(1 mark)
a. N$19.44
b. N$20.19
c. N$20.76
d. N$20.00
e. None of the above
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44. Based on question 43, calculate the under or over-allocation of
overheads (1 mark)
a. N$3,456 Over-allocated
b. N$3,456 under-allocated
c. N$3,500 under- allocated
d. N$3,500 over-allocated
e. None of the above
45.A company produces three types of products- product A, product Band
product C. Product A requires 200 machine hours. Product B requires
400 machine hours. Product C requires 620 machine hours. The
company uses machine hours as a cost driver. The total overhead cost
assigned to that cost pool was $183,000. The machine hours overhead
assigned to each of the products were (3 marks):
a. N$61,000 for A; N$61,000 for B; N$61,000 for C
b. N$61,000 for A; N$30,500 for B; N$91,500 for C
c. N$30,000 for A; N$60,000 for B; N$93,000 for C
d. N$30,000 for A; N$63,000 for B; N$90,000 for C
e. None of the above
The following information relates to Questions 46 to 51. These balances were obtained
from the company's records for the year ended 30 June 2024:
Raw material (1 July 2023)
380,000
Raw material (30 June 2024)
396,000
Work in process (1 July 2023)
270,000
Work in process (30 June 2024)
248,000
Finished Goods (1 July 2023)
280,000
Finished Goods (30 June 2024)
400,000
Raw Material purchased
700,000
Direct labour
400,000
Indirect labour
156,000
Factory ManaQers' salary
216,000
Other Factory overheads
209,000
Indirect material used
46,000
Selling and administrative costs
108,000
46. Use the above information and calculate the prime cost (3 marks)
a. N$1,084,000
b. N$1,080,000
c. N$780,000
d. N$700,000
e. None of the above
47. Use the above information and calculate the period cost (1 mark)
a. N$209,000
b. N$46,000
c. N$108,000
d. N$156,000
e. None of the above
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48. Use the above information and calculate the total manufacturing
overheads (3 marks).
a. N$202,000
b. N$627,000
C. N$372,000
d. N$46,000
e. None of the above
49.Assume the prime cost is calculated correctly as N$500,000 and
manufacturing overheads are N$100,000; calculate the cost of goods
manufactured (3 marks)
a. N$600,000
b. N$750,000
c. N$870,000
d. N$676,000
e. None of the above
You are provided with the following information for Company A.
• Sales are expected to be N$10,000 in January and are expected to grow at
10% per month.
• 30% of the sales are cash sales.
• 50% of the sales are paid within the month the sales took place.
• The remaining 20% will be received in the month following the sales
transactions.
50. Using the information above, the cash flow budget for February
displays the following amounts (3 marks)
a. N$10,800
b. N$5,300
c. N$5,500
d. N$8,800
e. None of the above options are correct
END OF THE EXAMINATION PAPER
GOOD LUCK WITH THE REST OF YOUR STUDIES
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