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BAC1200S- BUSINESS ACCOUNTING 1B- 1ST OPP- NOV 2023 |
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•.r
n Am I BI A u n IVER s ITY
OF SCIEnCE Ano TECHn OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
COURSE CODE: BAC1200S
COURSE NAME: BUSINESSACCOUNTING lB
SESSION: NOVEMBER 2023
PAPER: THEORYAND CALCULATIONS
DURATION: 2 HOURS
MARKS: 100
FIRST OPPORTUNITY EXAMINATION PAPER
EXAMINER
MRS Z. VAN DERWALT
MODERATOR:
MR. S. NGHIWILEPO
• Answer ALL the questions on the answer sheet
• Read all the questions carefully before answering .
• This paper consists of 60 questions .
• All questions count for one mark unless otherwise indicated
• There is only one correct option, the shading of more than one
option will be marked as incorrect
• Make sure to shade your student number correctly
THIS PAPER CONSISTS OF 14 PAGES (Including this front page)
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Section A: Introduction to Cost Accounting (Theory) (3 marks)
1. Which item is not a primary function of cost accounting?
a. Product costing
b. Planning
c. Controlling
d. Profit sharing
e. None of the above
2. Which one of the following statements is incorrect?
a. Financial Accounting is not governed by any specific body or organisation.
b. Financial Accounting uses historical information.
c. Financial Accounting produces statements for external users.
d. A cash flow statement is part of a set of financial statements.
e. None of the above.
3. Which one of the following statements is incorrect?
a. Reports generated by the financial accountant are mainly useful to external
users.
b. NamRA (Namibia Revenue Agency) is an external stakeholder.
c. Reports generated by the financial accountant are specific to a certain
department.
d. Reports generated by the financial accountant use historical data.
e. None of the above.
Section B: Cost Classification (Theory and Calculations) (10 marks)
4. Costs that can be charged to a specific product are called?
a. Product cost
b. Period cost
c. Fixed Cost
d. Sunk cost
e. None of the above
5. Which one of the following is incorrect when classifying costs according to
behaviour?
a. Step
b. Variable
C. Fixed
d. Period
e. None of the above
6. When classifying costs by nature, the classification is:
a. Manufacturing
b. Marketing costs
c. Period
d. Administrative costs
e. All of the above
7. Which of the following is the cost object when selling cups of coffee?
a. Milk
b. Sugar
c. Coffee granules
d. The cup of coffee
e. The cup
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8. The term "variable cost" can best be described as:
a. The costs that are likely to respond to the amount of attention devoted to them by
a specific manager
b. All costs associated with marketing, shipping, warehousing, and billing activities
c. All costs that do not change in total for a given period of time and relevant range
but become progressively smaller on a per unit basis as volume increases
d. Costs that may be eliminated if economic activity is decreased
e. None of the above
9. The term "sunk cost" refers to:
a. Past costs that are now irrecoverable
b. Costs that the unit manager cannot influence directly
c. Costs that should be incurred in a specific production process
d. Costs that may be eliminated if economic activity is decreased
e. None of the above
10. Which of the following is a variable cost?
a. Interest payments
b. Raw materials costs
c. Property taxes
d. All of the above are variable costs
e. None of the above are variable costs.
11. When the production level is zero
a. Fixed cost will be zero
b. Fixed cost will be negative
c. Fixed cost will be positive
d. None of the above
e. The information is insufficient
12. The total cost of 10 units is N$55. The fixed cost is N$5. The variable cost per unit
is? (2 marks)
a. N$5
b. N$25
c. N$50
d. N$11
e. None of the above
Section C: Materials and inventory control (Theory, application in the accounting
records and calculations) (29 marks)
13. A written request to a supplier for specified goods is called a:
a. Purchase requisition.
b. Receiving report.
c. Materials requisition form
d. Purchase order
e. None of the above.
14. Continuous stock-taking is also known as
a. Annual stock-taking
b. Perpetual Inventory
c. Periodic Inventory
d. First In, First Out Inventory
e. The Weighted Average Inventory
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This information relates to Questions 15, 16 and 17. You are required to round all
amounts to the nearest N$ throughout the calculation process
Month
Total Cost per Month
Units (Books)
January
N$2,800
70
February
N$1,580
30
March
N$1,900
41
April
N$1,360
25
May
N$1,440
28
June
N$600
10
15. Using the high/low method, which one of the following options is the variable cost
per unit (2 marks)?
a. N$37.00
b. N$23.00
c. N$31.00
d. N$23.00
e. None of the above
16. Assume a variable cost of N$35.00 per unit; which one of the following options is
the total fixed cost at the lowest level? (2 marks)
a. N$200.00
b. N$180.00
c. N$250.00
d. N$100.00
e. None of the above
17. Which of the following is not a recognised method to calculate the variable cost
portion included in the mixed cost?
a. High/Low method
b. Least Square method
c. Scatter Graph method
d. Simple square method
e. All options are recognised methods
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The following information relates to Question 18. You are required to round all
amounts to the nearest N$ throughout the calculation process
The following details relate to the Chocoholic CC inventory.
EOQ - 14,000 units
Lead time - 9 to 11 days
Minimum usage - 600 units
Average usage - 750 units
Maximum usage - 900 units
18. Which one of the following is the normal re-order level?
a. 5,000 units
b. 6,750 units
c. 7,500 units
d. 8,250 units
e. None of the above options is correct.
The following information relates to Questions 19 and 20. You are required to round
all amounts to the nearest N$ throughout the calculation process
Toys CC manufactures radio control cars. One of the materials is a transmitter. The
production manager uses an Economic Order Quantity decision-making model to determine
the size and frequency of transmitter orders.
Toys CC's annual demand for transmitters is 3000. The transmitters are purchased in a box
containing 10 units. Each box costs N$1500. The controller estimates that placing and
receiving an order costs N$45.00. The holding cost is calculated as 15% of the purchase
price. Suppose the controller orders 30 boxes each time.
19. Which one of the options below is the total ordering cost per annum? (2 marks)
a. N$50
b. N$450
c. N$4,500
d. N$5,000
e. None of the options are correct
20. Suppose the cost per order is N$50, and the annual holding cost is N$18 per unit;
then the economic order quantity (EOQ) will be? Choose the correct option below.
(3 marks)
a. 69 units
b. 135 units
c. 129 units
d. 47 units
e. None of the options above are correct
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This information relates to Questions 21 and 22. A business had an opening
inventory of 300 units valued at $4.50 per unit on 1 September. The following
receipts and issues were recorded in October: What is the value of issues
during the month using the FIFO method?
7/10/2023
Received
500 Units at N$4.80 each
13/10/2023
Issue
400 Units
20/10/2023
Received
500 Units at N$5.00 each
28/10/2023
Issue
450 Units
21. What is the value of the issue on 13 October using the FIFO method? (2 marks)
a. N$1,830
b. N$1,800
C. N$1,920
d. N$2,000
e. None of the above
22. What is the value of the issue on 13 October using the AVCA method? (3 marks)
a. N$1,830
b. N$1,920
c. N$1,876
d. N$2,000
e. None of the above
The following information relates to Questions 23-28. ABC Bakery bakes birthday
cakes. The following transactions took place during October 2023.
Bought raw materials and paid with EFT, N$100,000
Paid normal wages of N$20,000 and general overtime of N$5,000.
Issue raw materials to the production process, N$50,000.
Transferred work in progress with a production cost of N$30,000 to finished goods.
Sold goods costing N$10,000 for N$30,000 to a cash customer.
23. Which one of the following options is correct for purchasing raw materials? (2
marks)
a. Debit Direct materials, credit suppliers
b. Debit supplier, credit direct materials
c. Debit bank, credit purchases
d. Debit direct materials, credit bank
e. None of the above
24. Which one of the following options is correct for allocating normal wages? The
payment of wages was already recorded. (2 marks)
a. Debit wages control and credit direct labour
b. Debit direct labour, credit indirect labour
c. Debit direct labour, credit wages control
d. Debit direct labour, credit period costs.
e. None of the above
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25. Which one of the following options is correct for allocating general overtime? The
payment of wages was already recorded. (2 marks)
a. Debit direct labour, credit wages control
b. Debit manufacturing overheads, credit wages control
c. Debit direct labour, credit bank
d. Debit bank, credit direct labour.
e. None of the above
26. Which one of the following options is correct for transferring direct materials to
production (work in progress)? (2 marks)
a. Debit production, credit finished goods
b. Debit direct materials, credit production
c. Debit manufacturing overheads, credit direct materials.
d. Debit production, credit direct materials
e. None of the above
27. Which one of the following options are correct for transferring work in progress
(production) to finished goods? (2 marks)
a. Debit production, credit finished goods
b. Debit finished goods, credit direct materials
c. Debit finished goods, credit production
d. Debit direct materials, credit bank
e. None of the above
28. Assume an opening inventory of N$20,000 of raw materials; which one of the
options below is the closing inventory after the above transactions took place?
a. N$70,000
b. N$120,000
c. N$130,000
d. N$150,000
e. None of the options are correct
Section D: Labour Remuneration Methods (Theory and Calculations) (13 marks)
The following information relates to Questions 29-31.
A normal week is 40 hours. Anne worked 48 hours during the week and 5 hours on
Sunday. The overtime does not relate to a specific order or job. The normal hourly
rate is N$200. PC Toys applied the rate for overtime as stipulated in the Labour Act.
29. The following amount will be allocated to direct labour (3 marks)
a. N$8,000
b. N$9,600
C. N$10,600
d. N$12,400
e. None of the above
30. The following amount will be allocated to manufacturing overheads (2 marks)
a. N$800
b. N$1,000
C. N$1,800
d. Zero
e. None of the above
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31. Assume the overtime related to a specific order, the amount allocated to direct
labour will be (2 marks)
a. N$1,800
b. N$10,600
C. N$11,600
d. N$12,400
e. None of the above
The following information relates to Questions 32 to 34. Mary receives a housing
allowance of N$1,000 per week. Her normal hourly rate is N$150 per hour. She worked
the normal 40 hours for the week. Her pension fund contributions are 8%, and her
medical aid contributions are N$500 monthly. PAYE is calculated at 18% of taxable
income.
32. Specific terminology is used when calculating remuneration. You are required to
fill in the missing terminology (4 marks)
N$
Basic salary
Allowances
A
Less: B
C
Less: Deductions
Less: PAYE
Less:SocialSecuri~
D
a. A=Gross remuneration; B = Pension fund contributions; C = Taxable
Income: D = Nett Remuneration
b. A=Gross remuneration; B = Medical Aid Fund Contributions; C = Taxable
Income: D = Nett Remuneration
c. A=Taxable Income; B = Social Security Contributions; C = Net
Remuneration: D = Gross Remuneration
d. A=Taxable Income; B = Pension fund contributions; C = Gross
Remuneration: D = Nett Remuneration
e. None of the above options are correct
33. Assume a taxable income of N$5500.00, the income tax payable will be:
a. N$860.00
b. N$900.00
C. N$990.00
d. N$1200.00
e. None of the above
34. The pension fund contributions will be:
a. N$560.00
b. N$480.00
c. N$80.00
d. N$440.00
e. None of the above
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Section E: Manufacturing overhead control (Theory, application in the accounting
records and calculations) (15 marks)
35. Which definition best describes indirect costs?
a. Indirect costs are those costs which are not controlled directly by a manager.
b. Indirect costs are those costs which cannot be directly associated with a product
or service.
c. Indirect costs are always fixed.
d. Indirect costs are always manufacturing overhead costs.
e. None of the above
36. An overhead absorption rate is used to
a. Share out common costs over benefiting cost centres
b. Find the total overheads for a cost centre
c. Charge overheads to products
d. Control overheads
e. None of the above
37. The formula to calculate the predetermined overhead rate for the allocation of
overheads is:
a. Total actual overhead/total actual activity
b. Total estimated overhead/total estimated activity
c. Total estimated activity/Total estimated overhead
d. Total actual activity/Total actual overhead
e. None of the above
38. A company produces three types of products- product A, product B and 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 was (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
39. Identify the circumstances where under- or over-recovery of overhead will occur:
a. Actual overhead costs are different from budgeted overhead
b. The actual activity level is different from the budgeted activity level
c. Actual overhead costs and actual activity level differ from the budgeted costs
and level
d. All of the above
e. None of the above
40. An under-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
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This information relates to Questions 41 and 42. A company applied overheads using
machine hours as an a/location base. Machine hours were budgeted at 11250 with
overheads of N$258,750. Actual results were 10,980 hours with overheads of
N$254,692.
41. The predetermined overhead rate is (Round amounts off to the nearest N$).
a. N$24 per machine hour
b. N$22 per machine hour
c. N$23 per machine hour
d. N$25 per machine hour
e. None of the above options are correct
42. Choose the correct option below (2 marks):
a. Overheads were under-applied by N$2, 152
b. Overheads were over-applied by N$4,058
c. Overheads were under-applied by N$4,058
d. Overheads were over-applied by N$2, 152
e. None of the above
43. If overheads were over-applied, then the
a. Actual overhead costs exceed applied overhead.
b. Actual overhead costs exceed budgeted overhead.
c. Applied overhead exceeds actual overhead costs.
d. Budgeted overhead exceeds actual overhead costs.
e. None of the above options are correct.
44. An example of a production overhead would be:
a. Direct Material
b. Supervisory cost
c. Rent of administrative office
d. Direct Labour cost
e. None of the above is an example of a production overhead
45. An example of a production overhead would be:
a. Bad debts
b. Depreciation on printers used by the marketing staff
c. The wood used for the manufacturing of office desks
d. Wages of cleaning staff at the factory.
e. None of the above is an example of a production overhead
Section F: Manufacturing accounts (Theory, calculations and Application in the
accounting records) (20 marks)
46. The manufacturing cost of finished goods consists of various costs. Which one of
the following is incorrect?
a. Manufacturing overheads
b. Marketing expenses
c. Direct Material
d. Direct Labour
e. All of the above
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47. Carefully consider the following statements and choose the incorrect statement.
a. Prime cost consists of direct material and direct labour
b. Conversion cost consists of direct labour and manufacturing overheads
c. Manufacturing overheads consist of all costs other than direct material and
labour.
d. Conversion cost consists of direct labour and indirect labour
e. All of the above options are correct.
48. Direct materials used could be calculated as:
a. Opening inventory of raw materials, less purchasing raw materials, plus closing
inventory of raw materials.
b. Purchase of raw materials, less closing inventory of raw materials.
c. Opening inventory of raw materials, plus purchasing raw materials, less closing
inventory of raw materials.
d. Closing inventory of raw materials, plus purchasing of raw materials, less
opening inventory of raw materials
e. None of the above options are correct.
The information below relates to Questions 49-51. 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
Opening inventory
XXX
Plus: A
XXX
Raw materials available for use
XXX
Deduct: B
(xxx)
Raw materials used in production
XXX
Add: Direct Labour
XXX
C
XXX
Add:D
XXX
Total manufacturing cost transferred to work in process
XXX
Add:E
XXX
Deduct: Closing work in process inventory
(xxx)
F
XXX
Add: opening inventory of finished goods
XXX
G
XXX
Deduct H
(xxx)
I
XXX
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49. Replace the placeholders (A, B and C) with the correct terminology. Carefully
consider the statements below and choose the correct one (3 marks)
a. A = Purchases of raw materials; B = Closing inventory of raw materials; C =
Prime Cost
b. A = Closing inventory of raw materials; B = Purchases of raw materials; C =
Cost of goods sold
c. A = Opening inventory of finished goods B = Closing inventory of raw materials;
C = Cost of goods sold
d. A= Purchases of raw materials; B = Closing work in process inventory; C =
Cost of goods sold
e. None of the above options is correct
50. 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 = Prime Cost, F = Cost of goods sold
b. D = Total Manufacturing overheads; E = Opening Work in process inventory; F =
Cost of goods manufactured transferred to finished goods
= = c. D Opening Work in process inventory; E Cost of goods manufactured
transferred to finished goods; F = Cost of goods sold
d. D = Total Manufacturing overheads E = Goods available for sale; F = Cost of
goods sold
e. None of the above options is correct
51. Replace the placeholders (G, H and I) with the correct terminology. Carefully
consider the statements below and choose the correct one (3 marks)
a. G = Purchases of raw materials; H = Closing work in process inventory; I = Cost
of goods sold
b. G = Goods available for sale; H = closing work in process inventory; I = Prime
Cost
c. G = Goods available for sale; H = closing inventory of finished goods; I = Cost of
goods sold
= = d. G Opening Work in process inventory; H closing work in process inventory; I
= Cost of goods manufactured transferred to finished goods
e. None of the above options is correct
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This information relates to Questions 52 and 53. Balances obtained from the
company's records for the year ended 31 October 2023:
Raw material (1 November 2022)
90,000
Raw material (31 October 2023)
98,000
Work in process (1 November 2022)
35,000
Work in process (31 October 2023)
24,000
Finished Goods (1 November 2022)
40,000
Finished Goods (31 October 2023)
100,000
Raw Material purchased
250,000
Direct labour
100,000
Indirect labour
4,000
Supervisors' wages
8,000
Other Factory overheads
4,500
Indirect material used
3,000
Selling and administrative costs
13,800
52. From the information provided, calculate the prime cost (4 marks).
a. N$348,000
b. N$340,000
c. N$300,000
d. N$342,000
e. None of the above options is correct
53. From the information above, calculate the total manufacturing overheads.
a. N$19,500
b. N$4,500
C. N$11,500
d. N$7,000
e. None of the above options is correct
Section G: Cash budget (Theory, calculations and application in the accounting
records) (11 marks)
54. Choose the correct statement
a. A cash budget indicates 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.
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55. The following are reasons why a cash budget and profit or loss statement may
differ. Choose the incorrect option.
a. Depreciation is not included
b. Loans are not included
c. Dividends are not included
d. Cash sales is not included
e. None of the above options are incorrect.
56. A cash budget consists of certain elements. Choose the incorrect option.
a. Cash received from customers
b. Cash paid to customers
c. Cash paid for operating expenses
d. Cash paid for purchases
e. None of the above options are incorrect.
57. The following transactions will be shown as an outflow in the cash budget. Which
one of the options is incorrect?
a. Cash to credit suppliers (purchases)
b. Cash to cash suppliers (purchases)
c. Credit customers settle their accounts
d. Cash to operating expenses
e. All of the above options are a cash outflow
58. Net cash flow will be calculated as (3 marks)
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
59. 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.
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
60. Which Microsoft Office program could be used effectively to compile a cash
budget?
a. Microsoft word
b. Microsoft Excel
c. Microsoft Power Point
d. Microsoft One Note
e. None of the above is effective in compiling a cash budget
END OF THE EXAMINATION PAPER
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