1. Ajitanrareje, an able Electrical Engineer, was informed that he
was going to
be promoted to Assistant Plant Manager.
Ajitanrareje was elated but uneasy. In particular, his knowledge of Accounting was sparse. He had taken one course in Financial Accounting but had not been exposed to the Management Accounting that his superiors found helpful.
Ajimatanrareje planned to enrol in Management Accounting course at Brits Links University as soon as possible.
Meanwhile, he asked Sogbae, an Assistant Financial Controller to state ten of the principle distinctions between Financial Accounting and Management Accounting using some concrete factors.
Ajitanrareje was elated but uneasy. In particular, his knowledge of Accounting was sparse. He had taken one course in Financial Accounting but had not been exposed to the Management Accounting that his superiors found helpful.
Ajimatanrareje planned to enrol in Management Accounting course at Brits Links University as soon as possible.
Meanwhile, he asked Sogbae, an Assistant Financial Controller to state ten of the principle distinctions between Financial Accounting and Management Accounting using some concrete factors.
As an
Assistant Financial Controller, prepare a written response to Ajimatanrareje.
2. (a) What do you understand by Cost-Volume-Profit
Analysis Technique?
(b) List five each usefulness and assumptions of
Cost-Volume-Profit Analysis
Technique.
(c) The following information has been summarised
from the records of Ajigbotoko
Limited.
Period
1 Period 2
N N
Sales 30,000 38,000
Profit 800 2,300
You are required to calculate using any assumption reasonable thought:
(i)
The
Profit/ Volume Ratio
(ii)
The
Loss when sales are 24,000
(iii)
The
Profit when sales are 60,000
(iv)
The
sales required to earn a profit of N4,000
(v)
The
Break-Even Point
(vi)
The
Margin of safety for period 1 and period 2.
3. (a) Enumerate five each merits and demerits of
the Standard Costing Techniques.
(b) List
six needs for Variance Analysis.
(c) For a
product, the following data are given by Foyegbe Nigeria Limited.
Standard details per unit of product:
Direct
material 4kgs at N0.75 per kg
Direct
labour 2hours at N1.60 per hour
Actual details for given financial period:
Output
produced in units 38,000
Direct materials:
Purchases
180,000kgs for N126,000
Issued to production 154,000kgs
Direct labour 78,000hours worked for N136,500.
There was not work-in-progress at the beginning or
end of the period.
As a student of Management and Business Studies, you
are required to calculate the following variances:
(i)
Direct
Material Cost
(ii)
Direct
Material Price based on issue to production.
(iii)
Direct
Material Usage
(iv)
Direct
wage Cost
(v)
Direct
Wage Rate
(vi)
Direct
Labour Efficiency
4. Wise-Up
Communications Limited which manufactures the “Campus” Radio Receiver commenced
trading on June 29th, 2017. The company`s budget for each four week period is
as follows:
N N
Sales (20,000 receivers) 400,000
Manufacturing costs of goods sold:
Variable Cost 240,000
Fixed Overhead 60,000 (300,000)
Gross Profit 100,000
Selling and distribution cost (fixed) (20,000)
Net Profit 80,000
The following date relates to the first two trading
periods:
Period
1 Period 2
Production 24,000 18,000
Sales 18,000 21,000
Required:
Prepare operating statement for each of the two
periods on each of the following bases:
(a)
Where
fixed manufacturing overhead is absorbed into product cost at the budgeted rate
and selling and distribution costs are treated as period costs.
(b)
Where
all fixed costs are treated as period costs. You may assume that the selling
price, fixed costs and unit variable costs for the two periods are in line with
budget.
5. (a) Write
short note on the following:
(i) Budget Committee
(ii) Zero-Based Budget
(iii) Flexible Budget
(b) Below is the budget of maintenance department of
Ajepeaiye Nigeria Limited
which is currently working at 80% capacity.
N`000
Variable Costs:
Direct Labour 60,000
Direct Materials 48,000
Other direct expenses 56,000
Mixed Costs:
Indirect labour 30,000
Maintenance 24,000
Other supplies 32,000
Discretionary fixed costs:
Training cost 15,000
Committed fixed costs:
Depreciation 15,000
280,000
In addition to the above information, you are to
note the following:
Indirect labour 60%
fixed
Maintenance Expenses 50%
fixed
Other supplies 40%
variable
You are required to prepare a flexible budget at
60%, 70% and 100% capacities.
6. Alashela Nigeria
Limited manufactures the following, with the standard labour hours.
Products:
A 20
minutesB 45 minutes
C 30 minutes
D 25 minutes
The following information were further provides:
Product Budgeted output (units) Actual
output (units)
A 45,000 48,000
B 70,000 62,000
C 53,000 58,000
D 64,000 53,000
Actual
hours recorded was 100,000 direct labour hours.
Required
to complete:
a.
Activity ratio
b.
Efficiency
ratio
c.
Capacity
ratio
7. Aseye Nigeria Limited has provided below its
operating and maintenance costs for the last
four
months:
Months/year Production(Units) Cost (N)
June 2017 12,000 194,000
July 2017 14,000 220,000
August 2017 15,000 222,000
September 2017 16,000 230,000
You are required to use High and
Low Method to calculate:
a.
Variable
cost per unit and the fixed cost for the period.
b.
Express
the company`s operating and maintenance costs in linear equation form:
Y
= a + bx
c.
What
is the expected costs for the last three months of 2017 when the planned
activity
level were:
October
2017 17,200
November
2017 25,500
December
2017 37,400
8. Perosayemi Nigeria Limited produces and sells Red Soft
Drinks. The standard direct cost per crate is as follows:
Material:
100 litres
of concentrated juice at N2.00 per litre.
200 litres
of carbonated water at N2.50 per litre
10 labour
hours at N9.00 per hour.
The
budgeted monthly production and sales is 500 crates and the selling price is
N1,000
per crate.
The
following details relate to October 2017, when 510 crates of Red Soft Drinks
were
produced and sold:
N
Sales 506,500
Materials
used:
Concentrated
juice- 51,600 litres 102,500
Carbonated
water- 101,500 litres 258,800
Labour:
5,000 hours
cost 45,750
Required:
a.
Compute
the price and usage variance for each material.
b.
Calculate
the wage rate and efficiency variances.
c.
Comment
briefly upon the information revealed by each of the variances you have
computed.
9. Brits
Nigeria Limited manufactures local bread, using two chemical pounds Mang and
Dang. The standard materials usage and cost of unit of bread are as follows:
N
Mang 6kg @
N3 per kg 18
Dang 12kg @
N4 per kg 48
66
At
particular period, 100 units of bread were produced from 700kg of Mang and
1,140kg of Dang.
Required:
Calculate
the materials usage, mix and yield variances.
10. (a) what is Budget?
(b) List five benefits of budgeting.
(c) Briefly explain what you understand by the
following terms as used in cost accounting:
(i) Zero-Based Budgeting (ii) Budgetary Control (iii) Flexible Budget
11. (a)
Distinguish between Budgeting and Budgetary Control.
(b) State
any five importance of budgeting.
(c) Explain
the following types of budgets:
(i) Fixed Budget
(ii) Flexible Budget
(iii) Rolling Budget
12. The opening balance on 1 January was expected to be
N360, 000. The
Budgeted
sales and purchases were as follows:
Sales Purchases
N N
November 960,000 -
December 1,080,000 720,000
January 900,000 660,000
February 900,000 540,000
March 960,000 660,000
Notes:
(a)
Analysis of record shows that debtors settle
according to the following pattern: 60% within the month of sales, 25% in the
month following and remaining 15% the next month.
(b)
All purchases are on credit and past
experience shows that 90% are settled in the month of purchase and the balance
settled the month after.
(c)
Wages of N180, 000 and overheads of N240, 000
(including N60, 000 depreciation) are settled monthly.
(d)
Taxation of N96, 000 has to be settled in
February and the company will receive insurance claim of N300, 000 in March.
You are required to prepare a cash budget for
January, February and March.
For more questions and enquiries call Patriot Odunaro B.J on 08038454008
Knowledge is power!
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