.. 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 LEVEL: 5 COURSE CODE: PRCleS SESSION: NOVEMBER EXAMINATION 2017 COURSE NAME: PRACTICAL COSTING 2A PAPER: THEORY DURATION: 3 HOURS MARKS: 100 FIRST OPPORTUNITY EXAMINATION QUESTION PAPER EXAMINER Sheehama, K.G.H. MODERATOR: Namwandi, H. PWN! 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. Test question paper 2. Test script 3. Non programmable calculator THIS QUESTION PAPER CONSISTS OF 7 PAGES (Excluding this front page)
QUESTION 1 (30 marks) Each question has only one correct answer and all questions are of equal value. Write down the answer in your examination script. 1. A machine cost that would normally form part of the prime cost of production is: moow> Repairs and maintenance of machines Petrol, oil and other lubricants Depreciation on machines Operator s cost None of the above 2. E00 seeks to achieve optimally balance, since placing a few large orders would result in... and placing many small orders would result in... F1905? high inventory ordering costs but in low inventory carrying costs. high inventory carrying costs but in high inventory ordering costs. A and B. B and A. None of the above 3. Which of the following states how a fixed cost behaves as volume changes? P1909? remains constant in total and remains constant per unit remains constant in total and changes per unit changes in total and remains constant per unit changes in total and changes per unit 4. Indirect materials are manufacturing overhead because ITS-709? it is easy to determine how much is used to make one product they are so insignificant that you don t have to use them to make the product they are difficult to track and a necessary cost to make the product they are expensed as incurred 5. The cost of windows to a homebuilder would be what type of cost? A period, direct materials B period, indirect materials C. product, direct materials D product, indirect materials E.
6. Prime costs to homebuilder would consist of F1909? wood in a table and the cleaner that makes the cleaning wood in a table and the cost of utilities at the plant the supervisors salary and the worker that makes the table the steel tubing in the table and the worker that makes the table 7. Thataone Ltd supplied the following information: LIE Direct labour 16 000 Factory supervisor s salary 7 000 Indirect labour 6000 Sales office expenses 1 000 Indirect material 2 000 Administrative office rent 3 000 Factory insurance 2 000 Depreciation of factory equipment 3 000 The amount of non-manufacturing/period cost was: A. N56 000 B. N$36 000 C. N34 000 D. N$20 000 E. 8. The BB Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on materials cost in Dept. A and on machine hours in Dept. B. At the beginning of the year, the company made the following estimates: LEM DEM Direct materials cost N$15 000 N$20 000 Manufacturing overhead 30 000 25 000 Direct labour hours 12 000 16 000 Machine hours 1 000 5 000 What predetermined overhead rates would be used in Dept A and Dept B, respectively? F1909? N512 and 110% 250% and N$5.00 150% and N$8.00 200% and N$5.00
9. Cake-makers Ltd has been using an overhead absorption rate per machine hour. At the beginning of the year, 60 000 machine hours estimated. During the year, the company incurred N5450 000 in actual manufacturing overheads and. Overhead costs applied to production was over-applied of N56 000. What was the amount of applied manufactured overheads for the period? F1909? N5444 000 N$456 000 N5438 000 N5456 000 10. A Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be N550 000 and direct labour hours would be 5 000. The actual figures for the year were N555 000 for manufacturing overhead and 5 250 direct labour hours. What was the amount of applied manufactured overheads for the period? W909? N55 000 N50 000 N52 500 N55 200 The following information refers to questions 1.11 and 1.12: Breyton Ltd supplied the following figures for the past month: Direct material used Direct labour paid Factory overheads absorbed Marketing and administrative costs paid Units sold Units produced N510 000 N520 000 N515 000 N520 000 9 375 units 10 000 units 1.11 The prime cost of the company for the past month was: 1719.09? N530 000 in total and N53.00 per unit N530 000 in total and N53.20 per unit N545 000 in total and N54.50 per unit N565 000 in total and N53.00 per unit 1.12 The amount of N535 000 for the past month represents the company s: A. Prime cost B. Conversion cost C. Cost of goods manufactured
D. Cost of goods sold E. None of the above 1.13 The following overheads should not be allocated on the basis of number of employees: Canteen costs P1530537? none Supervisory costs Light and heat costs Occupational health department costs of the above The following information refers to Questions 1.14 and 1.15: Production cost centres Service cost centre Details Cost centre 1 Cost centre 2 Cost centre 3 Staff Training Budgeted overheads N575 250 N528 960 N554 310 N520 000 Number of employees 23 27 30 12 Number of machine hours 30 000 28 000 22 000-1.14 When the secondary apportionment of the overheads of the service cost centre is done based on number of employees, the amount to be apportioned to Cost centre 1 is: W095? N55 000 N55 750 N57 500 N57 550 1.15 The manufacturing overhead absorption rate for Cost centre 1 is: {TMUCPUP N52.68 per machine hour N52.76 per machine hour N53.76 per machine hour N52.70 per machine hour
QUESTION 2 (17 Marks) Use the following information to answer the next questions. 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 10 100 June 17 70 Issues made to customers were as follow: 0 3 June: Dispatched 70 units. a 15 June: Dispatched 110 units. 0 18 June: Dispatched 50 units. REQUIRED: 1. Record the above movement of inventory in the store ledger card of KK Co. by using the FIFO method; and determine the closing inventory value. 2. Calculate the gross profit of KK Co. Assume that the selling price is N515 per. (12) (5) QUESTION 3 5 Steel 10 000 Wages of welders 50 000 Salary of factory supervisor 35 000 Commission paid to sales consultants 12 000 Wood 30 000 Cleaning material used in office building 8 000 Depreciation on plant and equipment 27 000 Wages of machine operators 60 000 Interest paid on bank overdraft 2 300 Depreciation of office building 5 000 (15 Marks) REQUIRED: Calculate the following: 3.1 Prime costs (5) 3.2 Conversion costs (5) 3.3 Total Period costs (5)
QUESTION 4 (16 marks) Karas CC supplied the following details regarding raw material F901/S: Normal usage per week Minimum delivery time Maximum delivery time 500 units 2 weeks 4 weeks Cost to place an order N$4O Purchase price per unit N$18 Carrying cost per unit per year N$2 Production weeks per annum 50 Reguired: Calculate the following inventory levels: 4.1 Economic order quantity (4) 4.2 Re-order level (3) 4.3 Minimum level (3) 4.4 Maximum level (3) 4.5 Average level (3) QUESTION 5 (22 marks) NamChina Ltd has two production cost centers: A and B, and one service cost center, Canteen. The budgeted overhead expenditure for the year to 31 December 2016 is as follows: TOTAL Cost centre A Cost centre B Canteen NS NS NS N$ Indirect Labour 290 000 120 000 140 000 30 000 Indirect material 76 000 24 000 32 000 20 000 Repair in Canteen equipments 24 000 Depreciation on building 60 000 Supervision s wages 48 000 Power 40 000 The following information is also available: Cost centre A Cost centre B Canteen Floor area (sq metres) 20 000 24 000 6 000 Value of Building NS 300 000 240 000 20 000 Number of employees 80 60 10 Kilowatt hours 9 000 8 000 1 000 Direct materials (NS) 100 000 50 0000 30 000 Direct labour cost (NS) 50 000 42 000 38 000 Maintenance hours 8 000 6 000 Direct labour hours 12 640 8 400 Machine hours 15 700
REQUIRED: 5.1 Prepare a statement showing the allocation of each overhead item between three departments. Show the basis of apportionment for each overhead. (16) 5.2 Re-allocate the service centre budgeted overheads cost to the production centres on the basis of budgeted direct material cost. (2) 5.3 Calculate the labour hour overhead absorption rate for the Cost Centre A and a machine hour overhead absorption rate for the Cost centre B. (4) END OF THE QUESTION PAPER