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BAC1200S- BUSINESS ACCOUNTING 1B- 2ND OPP- NOV 2023 |
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nAm I BIA unIVERSITY
OF SCIEnCE TECHn OLOGY
FACULTYOF COMMERCEH, UMANSCIENCESAND EDUCATION
DEPARTMENTOF ECONOMICSA, CCOUNTINGAND FINANCE
COURSECODE:BAC1200S
COURSENAME: BUSINESSACCOUNTING 1B
SESSION:JANUARY 2024
PAPER:THEORYAND CALCULATIONS
DURATION: 2 HOURS
MARKS:100
SUPPLEMENTARYEXAMINATIONPAPER
EXAMINER
MRS Z. VAN DERWALT
MODERATOR: MR. S. NGHIWILEPO
INSTRUCTIONS
• Answer ALL the questions on the answer sheet
• Read all the questions carefully before answering .
• This paper consists of 59 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
THISQUESTIONPAPERCONSISTSOF 13 PAGES(Including this front page)
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Section A: Introduction to Cost Accounting (Theory) (4 Marks)
1. Which one of the following statements is incorrect?
a. Reports generated by the financial accountant are usually specific to a certain
departmenUsection.
b. Reports generated by the financial accountant use historical data.
c. Reports generated by the financial accountant are mainly useful to external users.
d. NamRA (Namibia Revenue Agency) is an external stakeholder.
e. None of the above.
2. The functions of cost accounting include? Which option is irrelevant?
a. Gather information.
b. Measure the information.
c. Compile a Profit or Loss Statement at the end of the financial year.
d. Take corrective actions when the estimated and actual results differ
e. None of the above.
3. When planning to develop a new mobile phone app, the business will typically
ask the following questions?
a. How many people have smartphones and can download the application?
b. What are the prospects in terms of short-term and long-term funding?
c. How will the business market the application?
d. What is the price difference between a Samsung phone and an iPhone?
e. None of the above.
4. Which one of the following statements is incorrect?
a. Nam RA (Namibia Revenue Agency is an external user of accounting information.
b. The management is an internal user of accounting information.
c. The bank is an internal user of accounting information.
d. Suppliers are external users of accounting information.
e. None of the above.
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Section B: Cost Classification (Theory and Calculations) (20 Marks)
5. 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.
6. When the production level is zero, fixed cost will. .. ?
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
7. A mixed cost is .... ?
a. Is fixed over a wider range of activity than a variable cost.
b. Is a fixed cost over the relevant range and a variable cost everywhere else.
c. Always increases on a per-unit basis.
d. Contains both fixed and variable components
e. None of the above
8. A profit centre is a centre ... ?
a. Where the manager has the responsibility of generating and maximising profits
b. Which is concerned with earning an adequate Return on Investment
c. Both of the above
d. Which manages cost
e. Where the manager oversees the staff.
9. Describe the cost unit applicable to the Bicycle industry:
a. Per part of a bicycle
b. Per bicycle
c. Per tonne
d. Perday
e. None of the above
10. 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. Depending on more factors
11. Which is not a fixed cost?
a. Monthly rent of N$1,000 contractually specified in a one-year lease
b. An insurance premium of N$50 per year, paid last month
c. An attorney's retainer of N$50,000 per year
d. A worker's wage of N$15 per hour
e. None of the above
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12. If you know that with eight units of output, the average fixed cost per unit is
$12.50 and the average variable cost per unit is N$81.25, then the total cost at
this output level is: (2 marks)
a. N$93.75
b. N$97.78
c. N$750
d. N$880
e. None of the above
13. When classifying cost into behaviour, costs can be classified as. Which one is
incorrect?
a. Variable
b. Fixed
c. Step
d. Period
e. None of the above
14. Fixed cost is a cost:
a. Which changes in total in proportion to changes in output
b. Which is partly fixed and partly variable in relation to the output
c. Which do not change in total during a given period despite changes in output
d. Which remains the same for each unit of output
e. None of the above.
15. Sunk costs are:
a. Relevant for decision-making
b. Not relevant for decision-making.
c. Cost to be incurred in future.
d. Future costs.
e. None of the above options describe "sunk costs".
This information relates to Questions 16 and 17. The following table shows the
cost for an entity.
Costs
Average cost per unit in N$
Direct materials
15.30
Direct labor
10.35
Variable manufacturing overhead
4.20
Fixed manufacturing overhead
10.50
Fixed selling expenses
1.80
Fixed Administrative expenses
1.35
Sales commission
1.05
Variable Administrative expenses
1.05
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16. Calculate the total production cost for 5,200 units (4 marks)
a. N$209,820
b. N$133,380
c. N$76,440
d. N$219,180
e. None of the above
17. What is the total amount of period cost to sell 5,200 units? (4 marks)
a. N$133,380
b. N$219,180
C. N$16,380
d. N$27,300
e. None of the above
Section C: Materials and Inventory Control (Theory, calculations and application in
the accounting records. (22 Marks)
18. A written request to a supplier for specified goods at an agreed-upon price is
called a:
a. Purchase order.
b. Purchase requisition.
c. Receiving report.
d. Materials requisition form
e. None of the above
19. The entry to record the purchases of raw materials from a supplier will be (2
marks):
a. Debit raw materials and credit bank
b. Debit raw materials and credit suppliers
c. Debit suppliers and credit raw materials.
d. Debit work in process and credit suppliers
e. None of the above
20. The entry to record the completion of products will 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
21. 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 Manufacturing Overheads.
d. Debit Materials Expense and Credit Raw Materials
e. None of the above
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22. Which entry is recorded when goods costing N$10,000 are sold for N$20,000
on credit? (4 marks)
a. Debit cost of sales, credit finished goods, debit sales, credit customers
b. Debit cost of sales, credit finished goods, debit customer, credit sales
c. Debit finished goods, credit cost of sales, debit customer, credit sales
d. Debit finished goods, credit cost of sales, debit bank, credit sales
e. None of the above
23. Which of the following is not a recognised method to calculate variable cost
when mixed cost is provided?
a. High/Low method
b. Least Square method
c. Scatter Graph method
d. Simple square method
e. All options are recognised methods
The following information relates to Questions 24 and 25. You are required to round
all amounts to the nearest N$ throughout the calculation process
Electronics CC manufactures security alarm systems. One of the materials is a PC Board;
each alarm system requires one PC Board. The production manager uses an Economic
Order Quantity decision-making model to determine the size and frequency of PC Board
orders. Electronics CC's annual demand for alarm systems is 1500. The PC Boards are
purchased in a box containing ten units. Each box costs N$2,000. The controller estimates
that placing and receiving an order costs N$50.00. The time to receive an order is 8-10 days.
The holding cost is calculated as 10% of the purchase price. Suppose the controller orders
ten boxes each time.
24. Which one of the options below is the total ordering cost per annum? (2
marks)
a. N$50
b. N$750
C. N$7,500
d. N$5,000
e. None of the options are correct
25. Which option below is the annual holding cost? (2 marks)
a. N$1,000
b. N$15,000
C. N$2,000
d. N$7,500
e. None of the options are correct
26. 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. 91 units
d. 33 units
e. None of the options above are correct
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This information relates to Questions 27 and 28. Company Buses the First in First Out
method to value their inventory. They recorded the following movements in their
inventory for December 2023.
1/12/2023
15/12/2023
18/12/2023
Opening inventory of 100 units at N$5.00 each
Bought 300 units at N6.00 each
Sold 200 units at N$13.00 each
27. Which one of the following amounts
on 18 December 2023? (2 marks)
a. N$1, 100
b. N$1,000
C. N$1,200
d. N$1,150
e. None of the above
28. Which one of the following amounts
inventory on 18 December 2023?
a. N$1,000
b. N$1,200
c. N$1,300
d. N$1,400
e. None of the above
below
below
represents the cost of goods sold
represent the value of the closing
Section D: Labour Remuneration Methods (Theory, calculations and application in
the accounting records)
(8 Marks)
A normal week is 40 hours. James worked 45 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$100. AC Manufacturers applied the rate for overtime as stipulated in the
Labour Act.
29. The following amount will be allocated to direct labour: (2 marks)
a. N$4,500
b. N$4,000
c. N$5,000
d. N$5,500
e. None of the above
30. The following amount will be allocated to manufacturing overheads (2 marks):
a. N$750
b. N$1,000
c. Zero
d. N$1,750
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$6,750
b. N$1,750
C. N$1,000
d. N$750
e. None of the above
32. Gross remuneration can be calculated as:
a. Basic wages plus overtime
b. Basic wages plus allowances
c. The sum of the basic wage, overtime and allowances
d. Basic wages less pension fund contributions
e. None of the above
33. Social Security for the administrative staff will be classified as:
a. Direct materials
b. Direct labour
c. Administrative expenses
d. Manufacturing overheads
e. Marketing and selling expenses
Section E: Manufacturing overheads (Theory, calculations and application in the
accounting records)
(16 Marks)
34. Which of the following cost is also known as overhead cost:
a. Cost of direct labour
b. Indirect expenses
c. Cost of direct material
d. Direct expenses
e. None of the above
35. An example of a production overhead would be:
a. Supervisory cost
a. Direct Material
b. Rent of admin office
c. Direct Labour cost
d. None of the above
36. To control costs it is essential to keep control on
a. Prime cost
b. Overheads
c. Indirect materials and tools cost.
d. All of the above
e. None of the above
37. What would be the most appropriate way of apportioning depreciation costs
across different manufacturing departments in a business?
a. Floor space
b. Numbers of personnel
c. Value of buildings and equipment
d. Administration costs
e. None of the above.
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38. 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 overheads for a cost centre
d. Control overheads
e. None of the above
This information relates to Questions 39-42. One of a Company's cost centres is
spare parts. The expected overhead cost for that centre was N$380,000 and the
expected activity was 50,000 spare parts. The actual overhead cost for the cost
centre was N$420,000 at an actual activity of 60,000 spare parts. The company uses
production units are a cost driver to allocate overheads.
39. 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.
40. The predetermined overhead rate using production units will be? (2 marks)
a. N$7.60 per unit
b. N$8.40 per unit
c. N$7.10 per unit
d. N$8.45 per unit
e. None of the above
41. The over/under applied overhead rate will be? (2 marks)
a. N$40,000 over allocation
b. N$40,000 under allocation
c. N$36,000 under allocation
d. N$36,000 over allocation
e. None of the above.
42. An under-allocation of overheads will be recorded in the general journal:
a. Debit manufacturing overheads and credit cost of sales
b. Debit cost of sales and credit manufacturing overheads
c. Debit manufacturing overheads and credit bank
d. Debit work in progress (WIP) and credit cost of sales
e. None of the above.
43. 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 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.
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44. 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
45. Identify the circumstances where under- or over-allocation of overhead will
occur:
a. Actual overhead costs are different from budgeted overheads
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. Actual overheads are not being settled (still outstanding)
e. A, Band C
Section F: Manufacturing accounts
(Theory, calculations and application in the accounting records)
(18 Marks)
46. The cost of manufactured goods transferred to finished goods could be
calculated as (3 marks)
a. Total manufacturing cost, plus opening balance in work in process account, less
closing work in process inventory
b. Total manufacturing overheads, plus opening balance in finished goods account,
less closing work in process inventory
c. Total prime cost, plus opening balance in the direct material account, less
closing work inventory in the direct material account.
d. Total conversion cost, plus opening balance in work in process account, less
closing work in process inventory
e. None of the above options are correct.
47. The cost of goods sold could be calculated as (3 marks)
a. Opening balance of raw materials, plus manufacturing overheads, less closing
inventory of work in process account.
b. Opening balance of finished goods, plus the cost of finished goods
manufactured, less closing inventory of finished goods
c. Opening balance of work in process, plus the cost of finished goods
manufactured, less closing inventory of work in process account
d. Opening balance of direct materials, plus the purchase of direct materials, less
closing inventory of work in process account.
e. None of the above options is correct.
48. Direct materials used could be calculated as (3 marks):
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.
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49. The total of all the direct costs is known as
a. Cost of production
b. Prime cost
c. Cost of sales
d. Works cost
e. None of the above.
The following information relates to Questions 50 and 51. These balances were
obtained from the company's records for the year ended 31 December 2023:
Raw material (1 January 2023)
190,000
Raw material (31 December 2023)
198,000
Work in process (1 January 2023)
135,000
Work in process (31 December 2023)
124,000
Finished Goods (1 January 2023)
140,000
Finished Goods (31 December 2023)
200,000
Raw Material purchased
350,000
Direct labour
200,000
Indirect labour
78,000
Factory Managers' salary
108,000
Other Factory overheads
104,500
Indirect material used
23,000
Selling and administrative costs
54,000
50. Use the above information and calculate the prime cost (4 marks)
a. N$542,000
b. N$550,000
C. N$416,000
d. N$510,000
e. None of the above
51. Use the above information and calculate the total manufacturing overheads (4
marks).
a. N$104,500
b. N$313,500
C. N$101,000
d. N$105,000
e. None of the above
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Section G: Cash budget
(Theory, calculations and application in the accounting records)
(12 Marks)
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.
• Company A purchases goods on credit. The company estimates to make
purchases of N$6,000 in January, N$7,000 in February, and N$8,000 in
March. The company has an agreement with the supplier to settle the
amount due in the following month.
52. Using the information above, the cash flow budget for January will display the
following amounts (2 marks)
a. N$8,000
b. N$10,000
c. N$3,000
d. N$5,000
e. None of the above
53. Using the information above, the cash flow budget for February will display the
following amounts (4 marks)
a. N$11,000
b. N$5,500
c. N$3,300
d. N$6,800
e. None of the above
54. Using the information above, the cash outflow for March will be?
a. N$6,000
b. N$7,000
c. N$8,000
d. N$15,000
e. None of the above
55. 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.
56. Choose the correct statement.
a. A cash budget states all the cash inflows and outflows for a certain period of time
b. A cash budget indicates the debtors' and creditors' outstanding balances
c. A cash budget is part of a set of financial statements
d. A cash budget is done to calculate profits
e. None of the above options are correct.
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57. 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
58. A cash budget is ...... in nature. Fill in the missing word.
a. Strategic
b. Short term
C. Mid-term
d. None of the above
e. All of the above
59. 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
d. All of the above
e. None of the above
END OF PAPER
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