COURSE NAME: BUSINESS ACCOUNTING lb PAPER: THEORY

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1 nnmibin UI'IIVERSITY OF SCIENCE nnd TECHNOLOGY FACULTY OF MANAGEMENT SCIENCES DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE QUALIFICATION: VARIOUS PROGRAMMES QUALIFICATION CODE: VARIOUS LEVEL: 5 COURSE CODE: BAC1200 SESSION: NOVEMBER EXAMINATION 2017 COURSE NAME: BUSINESS ACCOUNTING lb PAPER: THEORY DURATION: 3 HOURS MARKS: 100 FIRST OPPORTUNITY EXAMINATION QUESTION PAPER EXAMINER(S) Simasiku, A., Kamotho, D, Mahindi, C., Toivo, E.S.T. and Sheehama, K.G.H. MODERATOR: Mushonga, E. PWP! INSTRUCTIONS This examination paper is made up of FIVE (5) questions Answer ALL the questions and in blue or black ink Start each question on a new page in your answer booklet & show all your workings 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. PERMISSIBLE MATERIALS 1. Examination question paper 2. Examination script 3. Non programmable calculator THIS QUESTION PAPER CONSISTS OF 6 PAGES (Excluding this front page)

2 QUESTION 1 (20 marks) Each question has only one correct answer and all questions are of equal value. Write down the answer in your examination script. 1. The BB Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on machine hours. At the beginning of the year, the company made the following estimates: Direct labour cost NSlOO 000 Manufacturing overhead N$ Prime cost N$ Machine hours N$ What predetermined overhead rates would be used? POP? N$1.50 of direct cost N$1.00 of prime cost N$2.50 per machine hour N$2.00 per machine hour 2. A Company has the following estimated costs for next year: Direct wages N$ Direct material Depreciation on motor vehicle Salary of factory security guards Indirect labour Office rent expense Depreciation on plant & equipment The company estimates that direct labour and machine hours will be worked during the year. If overhead is applied on the basis machine hours, the overhead rate per hour will be: POP? N$13.50 N$15.60 NSll.20 N$5.56

3 . N$4. N54 3. The following amount is determined at the ending of the accounting period: 90?? Predetermined factory overheads Budgeted factory overheads Predetermined factory overhead absorption rate Actual factory overheads 4. The following amount is determined at the beginning of the accounting period: A. Actual-absorbed overheads B. Under-absorbed overheads C. Budgeted factory overhead absorption rate D. Actual factory overhead absorption rate 5. Management of Helao CC has decided to apportion Machining and Assembly based on estimated area (square metre) Maintenance overheads cost to Department Estimated factory Estimated area (square overhead costs (N$) metres) Maintenance Machining Assembling Total The amount of Maintenance costs to be apportioned to the Assembling Department: A. B C. D N$ N$ Questions 6 and 7 are based on the following details: Budget Ltd is currently preparing its cash budget for Budgeted sales figures are as follows: January February March N$ N$ N$ Experience has shown that cash from sales is normally received as follows: 20% during the month of sales 50% during the following month 25% during the second month after sales 5% is irrecoverable

4 6. The amount to be received during February is: A N$ B NS C N$ D N$ The amount to be received during March is: A N$ B N$ C N$ D N The following details refer to questions 8 10: Prime cost representing 80% of total manufacturing cost amounts to N$ amounts to 60% of total manuafacturing costs. Direct labour 8. The manufacturing overheads cost is: A N B N$ C. N$ D N$17S The direct labour cost is: A N$ B N$ C. N$ D NSSZS The direct material cost is: POP? N$ NS N$ N$

5 QUESTION 2 (20 marks) Aweh-Aweh Babe is an employee at a manufacturing company. She has to work 8 hours per day from Monday to Friday and she is paid N$45 per hour. Normal overtime is remunerated at 11/2 and for Sundays and on public holidays she is remunerated at double the normal rate. She manufactured 10 units; and her time sheet for the past week revealed the following details: Day Hours worked Monday 10 Tuesday 8 Wednesday 9 Thursday 8 Friday 9 Saturday 3 Sunday 4 In addition she also receives a monthly transport and rental allowance of N$1 500 and NS1 200 respectively, but these allowances are taxable and proportionally paid on weekly basis. Assuming that there are four weeks in the month. Aweh-Aweh Babe contributes 0.9% of his normal/basic wage towards social security which is also taxable, 8% of her normal/basic wage towards the pension fund which is non taxable and PAYE (tax) is 25% of taxable income (gross/total earning after deduction of pension fund). REQUIRED: 1. Calculate Aweh-Aweh Babe s net earnings according to the time based method. QUESTION 3 (20 marks) The Storekeeper of a tyre manufacturing company has to plan the firm s inventory requirments for the valves used in the tyres. The annual demand is valves. The Storekeeper has reported that the cost to keep one valve in the storeroom for one year is NSS. The valves are supplied by a firm in Angola which normally delivers the valves between one month and two months after the order is placed. The cost to place an order is N550. The Storekeeper has asked you to assist him in calculating some of the inventory levels. No safety/minimum inventory is kept. You are required to advise on the following issues: 1. How many valves (EOQ) should the firm order to ensure that the total inventory costs are at their minimum? 2. How many orders should the firm places in a year? 4

6 P P PP" What is the average inventory level? How much will it cost to place all the orders in one year? How much will it cost to keep the inventory in the warehouse for one year? Refer to requirements in 4 and 5 above; do you agree that the company minimises the inventory costs? 7. What is the total annual inventory costs. QUESTION 4 (20 Marks) Use the following information to answer the requirements. On 31 May 2017 KK Co. has 40 units of inventory costing N$5.00 per unit on hand. During March, the following inventory purchases were made: Date Units June 2 60 June June Issue made to customers were as follow: 0 3 June: Dispatched 70 units June: Dispatched 110 units June: Dispatched 50 units. REQUIRED: 1. Record the above movement of the inventory in the store ledger card of KK Co. by using the weighted average method; and determine the closing inventory value. (17) 2. Calculate the gross profit of KK Co. Assume that the selling price is N$15 per.

7 QUESTION 5 (20 Marks) Poly Printers Ltd supplied the following information for the year ended 28 February 2017: Inventories 1 March February 2017 Indirect materials NS NS Raw materials NS NS Work in Progress NS NS Finished goods NS NS Additional information _fl$ Sales Sales discounts Raw material purchases Indirect material purchases Direct labour Costs paid/incurred during the year: Marketing costs Indirect labour Depreciation on factory building Factory rent paid Administrative costs Factory repairs and maintenance Depreciation on office building REQUIRED: Draw up a Statement of Cost of Goods Manufactured for the year ended 28 February END OF THE QUESTION PAPER

PWN! I'IFIITIIBIR UITIVERSITY. Sheehama, K.G.H. QUALIFICATION: COMMERCIAL ADVANCED TRAINING SCHEME (CATS) QUALIFICATION CODE: VARIOUS LEVEL: 5

PWN! I'IFIITIIBIR UITIVERSITY. Sheehama, K.G.H. QUALIFICATION: COMMERCIAL ADVANCED TRAINING SCHEME (CATS) QUALIFICATION CODE: VARIOUS LEVEL: 5 .. v I, I I. r 1... I. IIFIITIIBIR UITIVERSITY 0F SCIEIICE FIIID TECHI IOLOGY CENTRE FOR ENTREPRENEURIAL DEVELOPMENT QUALIFICATION: COMMERCIAL ADVANCED TRAINING SCHEME (CATS) QUALIFICATION CODE: VARIOUS