COST AND MANAGEMENT ACCOUNTING 1

Transcription

1 COSBUS1 NOVEMBER 2013 EXAMINATION DATE: 4 NOVEMBER 2013 TIME: 14H00 17H00 TOTAL: 100 MARKS DURATION: 3 HOURS PASS MARK: 40% (BUS-CA1) COST AND MANAGEMENT ACCOUNTING 1 THIS EXAMINATION PAPER CONSISTS OF 4 SECTIONS: SECTION A: CONSISTS OF: (i) 10 MULTIPLE-CHOICE QUESTIONS (10 MARKS) (ii) 5 TRUE OR FALSE QUESTIONS (10 MARKS) (iii) 10 MATCHING-STATEMENT QUESTIONS (10 MARKS) SECTION B: SECTION C: SECTION D: CONSISTS OF 3 SHORT QUESTIONS CONSISTS OF 3 LONG ANSWER QUESTIONS CONSISTS OF 2 INTERPRETATIVE QUESTIONS ANSWER ONE OF THE QUESTIONS (10 MARKS) (40 MARKS) (20 MARKS) INSTRUCTIONS: 1. Read the following instructions carefully before answering the paper, as failure to act upon them will result in a loss of marks. 2. Write your answers in your answer book, which is provided in the exam. 3. Ensure that your name and student number are clearly indicated on your answer book. 4. Write your answers in either blue or black ink in your answer book. 5. Read each question very carefully before you answer it and number your answers exactly as the questions are numbered. 6. Begin with the question for which you think you will get the best marks. 7. Note the mark allocations for each question give enough facts to earn the marks allocated. Don't waste time by giving more information than required. 8. You are welcome to use diagrams to illustrate your answers. 9. Please write neatly we cannot mark illegible handwriting. 10. Any student caught cheating will have his or her examination paper and notes confiscated. The College will take disciplinary measures to protect the integrity of these examinations. 11. If there is something wrong with or missing from your exam paper or your answer book, please inform your invigilator immediately. If you do not inform your invigilator about a problem, the College will not be able to rectify it afterwards, and your marks cannot be adjusted to allow for the problem. 12. This paper may be removed from the examination hall after the examination has taken place. NOTE: YOU MAY USE A NON-PROGRAMMABLE CALCULATOR. DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 1 OF 9

2 SECTION A (30 MARKS) (i) MULTIPLE-CHOICE QUESTIONS Choose the correct option for each of the following. Write only the question number and your chosen answer. For instance, if you think that the correct answer for number 1 is, then write it as Prime costs are equal to: Direct material costs + Manufacturing overheads Direct labour costs + Manufacturing overheads Direct material costs + Direct labour costs + Manufacturing overheads Direct material costs + Direct labour costs 2. For income tax purposes, what is the maximum allowable deduction of retirement funding income? R1 750 or 7,5% R1 570 or 5,7% R1750 or 5,7% R1 570 or 7,5% 3. Fixed price contracts are: contracts charging direct and indirect costs using a fixed percentage. contracts where parties agree on a fixed contract price with provision for cost escalation. contracts where the contractor is remunerated with a fixed percentage for all costs incurred. All of the above. 4. What is the primary function of cost and management accounting? maintaining internal control and planning systems providing organisations with historic information producing financial statements for use within and outside the organisation None of the above. 5. Wages paid for idle time is an example of a: fixed cost. semi-variable cost. semi-fixed cost. variable cost. DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 2 OF 9

3 6. Calculate the average stock on hand using the following figures: Minimum stock: 100 units EOQ: 150 units 250 units 50 units 175 units 125 units 7. The maximum lead time for material being delivered is 3 weeks. The maximum consumption per week is 50 units of material. Calculate the re-order level: None of the above. 8. The following information has been made available by the Cost Accountant of Mich Pty Ltd: Employee Number of Units Produced Mon Tues Wed Thurs Fri Sat Sun J Job C Car K Kelly Each unit is paid at a rate of R1,50 per unit. Calculate the gross wage of J Job using the piecework system. R750 R732 R634,50 R Calculate the gross wage of C Car using the piecework system. R750 R732 R634,50 R Calculate the gross wage of K Kelly using the piecework system. R750 R732 R634,50 R634 [10] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 3 OF 9

4 (ii) TRUE OR FALSE QUESTIONS Indicate whether the following statements are True or False. Motivate all your answers. 1. Total estimated profit is contract price plus estimated total costs. 2. Total variable costs remain constant for all production levels while variable costs per unit change in proportion to production changes. 3. Process costing is employed in those situations where large numbers of a single product is produced. 4. Process costing can be described as the apportionment of costs to products that are mass-produced and move continuously through numerous production processes. 5. Total fixed costs change with changes in production while fixed costs per unit remain constant for all production levels. [5 2 = 10] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 4 OF 9

5 (iii) MATCHING-STATEMENT QUESTIONS Match the statements in Column B to the terms in Column A. Write down the answers only, for example 1.. Column A Column B 1. uncertified work the cost of resources already acquired that cannot be changed 2. Economic Order Quantity the time the production processes cease to operate; these non-productive times are regarded as overhead 3. least square method technique for separating costs into fixed and variable elements 4. learning curve work that has already been done, but the architect has not yet issued a progress certificate for the work 5. period costs (e) incremental costs 6. high-low method (f) this is the re-order quantity that minimises the balance between carrying costs and ordering costs 7. retention monies (g) labour hours per unit decrease as units of output are increased 8. idle time (h) costs that relate to time rather than to production, for example, advertising and insurance 9. differential costs (i) money held back by the client till work is certified, as protection against defective work 10. sunk costs (j) mathematical method for estimating a linear relationship between volume and total costs [10] [30] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 5 OF 9

6 SECTION B: SHORT QUESTIONS (10 MARKS) QUESTION 1 What is the difference between Financial Accounting and Cost Accounting? [2] QUESTION 2 What is the formula for a predetermined overhead rate? [2] QUESTION 3 i. What does the abbreviation UIF stand for? (1) ii. Name one reason for resignations. (1) Spanner Productions have employees, which include 450 new engagements during the year as well as 70 terminations. There are two methods to determine staff turnover ratios. Use both methods to determine staff turnover. (4) [6] [10] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 6 OF 9

7 SECTION C: LONG ANSWER QUESTIONS (40 MARKS) QUESTION 1 Briefly describe the time based system as a method of determining remuneration. (5) List the advantages of using the time based remuneration system. (5) [10] QUESTION 2 Define activity based costing (ABC) and give the seven steps involved in ABC. [10] QUESTION 3 Define the following contract terms: i. Certified work (2) ii. Uncertified work (2) iii. Retention money (2) iv. Percentage of completion method (2) v. Completed contract method (2) The following information has been given to you as the Cost Accountant of Collins Contractors Ltd for the period 2012: R Material issued Material on hand Wages payable Wages prepaid Machinery issued to contract Value of machinery Direct overheads Head office overheads Subcontractors fees Tender price Total expected costs Work certified Payment received from client Draw up the contract account for the year ended 31 December 2012 using the percentage of completion method. (10) [20] [40] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 7 OF 9

8 SECTION D: INTERPRETATIVE QUESTIONS (20 MARKS) ANSWER ONE OF THE QUESTIONS QUESTION 1 Discuss the nature and classifications of overheads. (10) The following information was supplied to you: Preparation Department Cooking Department Packaging Department R R R Budgeted Manufacturing overheads Budgeted Direct labour hours Budgeted machine hours Budgeted direct materials cost Budgeted direct labour costs Overhead costs are allocated as follows: Preparation department per direct labour hour Cooking department per machine hour Packaging department per R material cost. You are required to: Calculate the overhead rates for the preparation, packaging and cooking departments. (10) [20] OR DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 8 OF 9

9 QUESTION 2 Jeb uses a job costing system to charge out costs for jobs completed. Job number 49 was completed on 28 April 2012 with 1500 units produced for customer M Gidy. Day 1: Material consumed per requisition 201A amounted to R400 Day 1: An artisan worked 4 hours Day 2: Material consumed per requisition 201B amounted to R300 Day 5: An artisan worked 6 hours Day 9: An artisan plus a labourer worked 3 hours Day 11: An artisan plus a labourer worked 8 hours Labour overheads of 35% are added to the total cost. Material overheads of 25% are added to the total cost. Artisan rate is R75 per hour. Labourer rate is R25 per hour. You are required to: Calculate the total job cost and the cost per unit. Present your answer in column form. [20] [20] Section A: 30 marks Section B: 10 marks Section C: 40 marks Section D: 20 marks TOTAL: 100 MARKS DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 9 OF 9