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BAC521C-BUSINESS ACCOUNTING 1B-2ND OPP-JULY 2022 |
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r-
nAmlBIA unlVERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
CENTERFOR ENTERPRISEDEVELOPMENT{CED)
QUALIFICATION: DIPLOMA IN BUSINESSPROCESSMANAGEMENT
QUALIFICATIONCODE:06DBPM LEVEL:6
COURSECODE: BAC521C
COURSENAME: BUSINESSACCOUNTING 1B
SESSION:JUNE 2022
PAPER:THEORYAND CALCULATIONS
DURATION: 3 HOURS
MARKS: 100
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINERS L. Odada
MODERATOR H. Kangala
INSTRUCTIONS
1. This question paper is made up of four (4) questions.
2. Answer ALLthe questions and in blue or black ink. NO pencil
3. Start each question on a new page in your answer booklet and show all workings.
4. Work with four (4) decimal places in all your calculations and only round off only final
answers to two (2) decimal places unless otherwise stated.
5. Questions relating to this examination may be raised in the initial 30 minutes after the
start of the paper. Thereafter, candidates must use their initiative to deal with any
perceived error or ambiguities & any assumption made by the candidate should be
clearly stated.
PERMISSIBLEMATERIALS
1. Silent, non-programmable calculators
THIS QUESTION PAPERCONSISTSOF 5 PAGES(including this front page)
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QUESTION 1
[25 MARKS]
Monica Ltd is preparing its overhead budgets for a forthcoming period. The company has three production
departments A, Band C, and two service departments X and Y. The following figures have been produced:
Departments
Overhead cost
Machine hours
A
400 000
15 000
B
420 000
12 000
C
450 000
13 000
X
400 000
y
420 000
Overhead is absorbed on a machine hour basis.
It has been estimated that service department usage is as follows:
Departments
A
B
C
X
y
Department X
20%
30%
10%
40%
Department Y
30%
30%
20%
20%
REQUIREMENT
MARKS
a) Prepare a schedule of the overhead costs to be charged to departments A, B and C, 12
using the reciprocal/repeated distribution method to apportion the service department
costs to the production departments (work to the nearest N$). Stop allocation when the
overheads to be allocated are below N$100.
b) Calculate the overhead absorption rates for the period for departments A, Band C (work
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to decimal places).
c) Other than the repeated distribution method, identify the two other methods of
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reapportionment that could be used for the reapportionment of service department costs
across production departments
d) Explain why hourly rates are generally accepted to be the most appropriate method of
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overhead absorption, and comment upon other methods of absorption that may be used.
TOTAL
25
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QUESTION 2
(25 MARKS]
The following information relates to Wheat Ltd., a manufacturing business that is considering the
introduction of a piece-work incentive scheme in one of its departments, which has 6 employees.
Current Payroll
Basicworking week
38 hours
Over-time premium
20% of normal pay grade.
Normal grade A pay rate
N$22 per hour.
Normal grade B pay rate
N$18 per hour.
Employee
1
2
3
4
5
6
Normal hours
worked
41
44
40
38
38
45
Normal pay
grade
A
A
B
B
B
A
Normal units
produced
170
170
150
150
160
180
Piecework Incentive Scheme Proposal
Under the proposed incentive scheme, the standard time allowance would be 20 minutes per unit. The
piecework rate would be based on grade A labour rates, with a standard piecework incentive of 6% when
output exceeds standard. All employees would receive the same piecework rate.
REQUIREMENT
a) Outline the purpose of an incentive scheme.
b) Calculate the normal pay due to each employee based on the current payroll terms.
MARKS
3
10
c) Calculate the standard piecework rate on the basis of the proposed incentive
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scheme.
d) Calculate the normal pay due to each employee under the terms of the proposed
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incentive scheme.
TOTAL
25
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QUESTION 3
[25 MARKS]
The following are the operating details of Bunny Ltd for the year ended 31 December 2021. The company
uses job order costing system and the following related to one of its major client undertakings for the
year:
1.
Direct material:
On hand at 1 January 2021:
40 000 kg at N$2.50 per kg
Purchases:
180 000 kg at N$2.70 per kg
On hand at 31 December 2021:
20 000 kg
2.
Direct labour:
80 000 direct labour hours at N$4 per hour
3.
Manufacturing overheads:
Recovered at N$6 per direct labour hour
4.
Work in Progress:
On hand at 1 January 2021:
N$100 000
On hand at 31 December 2021:
N$ 80 000
5.
Finished goods:
On hand at 1 January 2021:
4 000 units at N$90 per unit
Manufactured during the year:
20 000 units
On hand at 31 December 2021:
?
6.
Sales:
18 400 units at N$200 per unit
7.
Marketing and administrative expenses
N$980 000
8.
Actual manufacturing overheads
N$464 000
9.
Inventory valuation method in use:
FIFO
10. Manufacturing overheads over or under applied must be charged to cost to sales
REQUIREMENT
Prepare journal entries to record the above transactions relating to Banny Ltd.'s major client
for the year ended 31 December 2021
TOTAL
MARKS
25
25
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QUESTION 4
[25 MARKS]
Windhoek Glass Manufacturers (WGM} is a company based in Windhoek that manufactures and sell
'green glass'. The term 'green glass' was coined in when the company adopted technology a few years
back that enables the company to produce glassthat has the ability to amplify the natural light that comes
into a room thereby leading to zero usage of electric lights during the day. As a result of this innovative
idea, the 'green glass' has managed to get great popularity in the market. The only challenge that WGM
faces is that the customers ordering this product are not standard customers. They come with different
specifications which means each customer's order is different. WGM therefore has implemented a
successful job costing system. WGM has recently got an order from a new customer that requires these
'green glass' panels for a new community library in Windhoek. WGM's accountant has given this job order
an identifiable number as Job A263. The accountant has also provided the following information:
Direct Materials:
WGM uses the weighted average cost system to price its issues of materials to production.
Beginning inventory at 1st April:
20 size Large glass panels @ N$400 each
80 type Big chrome fittings @ N$20 each
Purchases:
1st April: 50 size Large glass panels@ N$377.60 each
15th April: 90 type Big chrome fittings@ N$21.70 each
Issuesto production (Job A263}:
17th April: 15 size Large glass panels
19th April: 90 type Big chrome fittings
Direct Labour:
Assembly: 42 hours @ N$180 per hour
Finishing: 16 hours @ N$160 per hour
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The customer indicated that the construction of the community library is already lagging behind. As a
result, this order was supposed to be finished by the 20th of April. This lead to the company's assembly
department to work six of the assembly hours as overtime. Overtime at WGM is paid at a time and a half.
Overheads:
WGM absorbs manufacturing overheads on the basis of labour hours.
Assembly
Finishing
Total
Production overheads
N$3 361050
N$4 212 150
N$7 573 200
Direct labour hours
64 000
102 000
166 000
Machine hours
500
100
500
Pricing policy:
WGM adds a 25% margin to arrive at the selling price.
REQUIREMENT
a) Calculate the total cost of Job A263.
b) Determine the price charged by WGM to the customer.
c) Briefly explain the situations that favours job costing.
TOTAL
MARKS
20
2
3
25
END OF EXAMINATION QUESTIONPAPER
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