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CMA611S-COST AND MANAGEMENT ACCOUNTING 201-1ST OPP- JUNE 2025 |
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nAmlBIA UnlVERSITY
0 F SCIEn CE Ano TECHn OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING
QUALIFICATION CODE: 07BGAC
LEVEL: 6
COURSE CODE: CMA611S
COURSE NAME: COST & MANAGEMENT ACCOUNTING 201
SESSION: JUNE 2025
DURATION: 3 HOURS
PAPER: THEORY AND CALCULATIONS
MARKS: 100
EXAMINERS
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
Mrs Modestus, M., Ms Mkhulisi, M., Ms Shikoyeni, F .,and Sheehama, K.G.H.
MODERATOR Kangala, H.
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 only
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 _6_ PAGES (excluding this front page)
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QUESTION 1
(15 marks)
In each of the following questions, ON THE PROVIDED ANSWER SHEET, choose the letter that, in
your opinion, represents the correct answer: E.g., 1. E
1. Games Stores is planning to diversify into other products. The management accountant has
produced the following budget for the next 12 months:
Product
Sales
(in units)
Selling price
per unit (N$) Variable ratio
Jugs
30000
200.00
0.40
Kettles
10000
400.00
0.30
Budgeted fixed costs are N$240 000 per annum.
Budgeted average contribution margin per unit will be: (2 marks)
A
N$400.00
B
N$120.00
C
N$280.00
D
N$160.00
E
None of the above
2. Games Stores is planning to diversify into other products. The management accountant has
produced the following budget for the next 12 months:
Product
Sales
(in units)
Selling price Variable cost
per unit (N$) per unit (N$)
Light bulbs
30 000
200
0.40
Mugs
10 000
400
0.3
Budgeted fixed costs are N$240 000 per annum.
The break-even in units will be: (2 marks)
A
400 units
B
500 units
C
1 500 units
D
1 600 units
E
Noneoftheabove
3. A company operates a process that produces two joint products, X and Y. The joint costs
amounted to N$117 000 during the past month. Other details are as follows:
Product
Output (kg) Selling price Sales (kg)
X
5 000
N$200
4 000
y
15 000
N$300
14 000
If joint costs are apportioned on a physical unit basis, the joint cost allocated to Product
Y will be: (2 marks)
A
N$87 000
B
N$87 700
C
N$87 750
D
N$87 770
E
None of the above
4. A company operates a process that produces two joint products, X and Y. The joint costs
amounted to N$117 000 during the past month. Other details are as follows:
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Product
Output (kg) Selling price Sales (kg)
X
5 000
N$200
4000
y
15 000
N$150
8 000
If joint costs are apportioned on a sales value at split basis, the joint cost allocated to
Product X will be: (2 marks)
A N$48 600
B N$46 700
C N$46 800
D N$48 700
E None of the above
5. HELAO Ltd uses a process costing system. During the month they put 500 units of total
manufacturing costs of N$33 750. The company has estimated that the normal loss would be
10%.
The unit cost of "good unit" is: (2 marks)
A N$55.00
B N$65.50
C N$67.50
D N$75.00
E None of the above
6. Caleb Ltd uses a process costing system. During the month they put 6 400 units of total
production at a cost of N$276 800. The company has estimated that the normal loss would
be 5% with a scrap value of N$100 per unit.
The amount to be transferred to finished goods account is. (2 marks)
A
N$276 800
B
N$273 600
C
N$264 000
D
N$270 000
E
None of the above
7. A firm has two producing departments: Department A and Department B. Department A
processes the raw material and then transfers it to Department B. After Department B has
put on its finishing touches, it transfers the product to finished goods inventory.
During the month, Department A put 570 000 units into process and had 126 000 ending
units in process at the end of the month. Department B had 72 000 units in process at
the end of the month. The firm's direct material is added at the beginning of the
production process in Department A. Department A's ending units in process were 60%
complete with respect to conversion costs.
The number of equivalent units completed in Department A during the month with
respect to conversions costs was: (2 marks)
A
444 000
B
324 600
C
486 600
D
519 600
E
None of the above
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8. In activity-based costing systems, costs are accumulated by activities using: (1 mark)
A
cost drivers
B
cost centres
C
cost pools
D
cost benefit analysis
E
None of the above
QUESTION 2
{25 marks)
The following summary was extracted from the books of Goofy Ltd for the year ended July 2024:
Actual figures:
N$
Direct material
Direct labour
Variable manufacturing overheads
Variable selling and administrative expenses
Fixed manufacturing overheads
Fixed selling and administrative expenses
101 700
337 500
54 000
30 000
135000
162 000
Production
Sales at N$165 per unit
9 000 units
N$990 000
Goofy Ltd use machine hours to allocate fixed manufacturing overheads.
The overheads absorption rate/predetermined overheads rate is N$34 per machine hour. It takes
0.5 hour to produce one product.
Requirement:
a) Prepare a statement of profit or loss statement according to direct costing method.
b) Prepare a statement of profit or loss statement according to absorption costing method.
c) Reconcile the profit figures as calculated according to the two methods used
(25)
(10)
(12)
(3)
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QUESTION 3
(26 marks)
Nam-Wooden Joinery (NWJ) is a company that specializes in manufacturing tables that will last a
lifetime: Quality, solid wood tables combining craftsmanship and a passion for solid wood in all shapes
and forms.
"Most of our wood comes from areas up north in Kavango west region. Sadly, the traditional chiefs
of many a rural area are selling off land to people in their community who then develop this land.
In most cases, the trees that are chopped down for development are then used as fire-wood, never
to be seen again. We feel that although we cannot save the trees, at least we can save the wood by
turning it into unique pieces of beautiful furniture that can be appreciated and loved for generations
to come.
You are welcome to show us a picture of how you would like your table to look, and we will quote
accordingly. We do have several different designs for tables which you can also choose from," said
Ntate Mandala, a marketing manager.
The company operates a standard absorption costing; and the following information for 2024 were
available:
Cost per table:
N$
Wood
520 000
Carpenter
880 000
Variable manufacturing overheads costs
480 000
1880 000
Other actual overhead costs were N$1 638 000 per annum. The other overhead costs are made up of
fixed production overhead costs; as well as the selling overheads that vary with units sold. The selling
overheads cost was N$200 per unit. The actual production of Nam-Wooden Joinery (NWJ)) Company
was 4 000 tables. In 2024, 3 000 tables were sold to different schools around Windhoek at a price of
N$1 200 per table. The company had no opening inventory in that year.
The marketing director made the following comment at the recent directors' meeting:
"We will price our tables at N$870 per table for the coming year. At this level we shall sell 9 500 tables."
"but.../ believe we will out-price ourselves if we set the table price at N$870 per table."
The following information is available regarding the cost structures of Nam-Wooden Joinery (NWJ:
1. Nam-Wooden Joinery (NWJ) Ltd's administration and marketing costs, on an activity basis, for
various levels are provided below:
Number of tables
Total overhead costs
2 000
N$190 000
5 000
N$390000
8 000
N$490000
2. Overheads
Total administration and marketing costs have been allocated between the activities above.
However, should activity levels exceed 9 000 tables, additional overhead costs amounting to
N$55 000 per annum will be incurred.
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Requirement:
(26)
a) Determine the break-even point of Nam-Wooden Joinery (NWJ n units and value, for the
year 2024.
(8)
b) Comment on whether you agree or disagree with the marketing director's statement that
decreasing the selling price to N$870 will be detrimental, assuming the variable cost per unit
remains constant. (show all workings clearly).
(8)
c) Determine the new contribution margin per packet if Nam-Wooden Joinery (NWJ) would like
to sell 3 000 packets without making a loss or profit, assuming the variable cost per unit
remains constant.
(2)
d) What is the percentage increase or decrease in the selling price if Nam-Wooden Joinery
(NWJ ould like to sell 3 000 packets without making a loss or profit, assuming the variable
cost per unit remains constant?
(2)
e) What assumptions are usually made when using cost volume (CVP) analysis concerning the
costs?
(6)
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QUESTION 4
(34 marks)
Markel (Pty) Ltd manufactures two kinds of shoes, namely Men's shoes and Women's boots, using an
automated manufacturing process.
Markel has budgeted to manufacture and sell 75 000 pairs of Men's shoes and 55 000 pairs of
Women's boots. Men's shoes are manufactured in batches of 1 000 pairs and Women's boots in
batches of 500 pairs.
Markel currently allocates all manufacturing overheads to products using machine hours. It takes four
(4) machine hours to manufacture a batch of Men's shoes and six (6) machine hours to manufacture
a batch of Women's boots. Morkel's policy is to price all products at budgeted fixed manuafacturing
overheads cost plus 50% of budgeted overheads cost. The budgeted fixed manufacturing overheads
cost for the year is N$17 400 000.
The management of Markel (Pty) Ltd has heard of other alternative ways of allocating fixed
manufacturing overheads to products. They consulted experts on this new costing technique called
Activity Based Costing (ABC) and they were provided with the following analysis of the budgeted fixed
manufacturing overheads:
Activity
Material purchase and
storage
Setting up of machines
Production
Maintenance (routine
inspection of machines)
Percentage of
budgeted fixed
manufacturing
overheads cost
10%
25%
55%
10%
Cost driver
Number of orders placed: 75 orders for Men's shoes
and 50 orders for Women's boots per year
Set-up hours: set-ups are done for every batch and
each set-up takes 24 min for Men's shoes and 15 min
for Women's boots
Machine hours
Inspection hours: An inspection is done after every
10 hours of machine time.
Management is not sure if they will be better off by implementing the new costing system.
Requirement:
(34)
a) Compute unit product cost and selling price for each product under the current costing
system (show all workings clearly).
(8)
b) Compute unit product cost and selling price for each product under the new costing
system (show all workings clearly).
(20)
c) Advise Morkel's management by mentioning five non-financial factors to be considered if
they should adopt ABC costing techniques.
(6)
End of Question Paper
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