ACC 415 -MANAGMENT ACCOUNTING 1 REVIEW QUESTIONS

1. .(a) State five roles of the Management Accountant.

    (b) Accounting can be classified into Management Accounting, Financial

        Accounting and so on.

Differentiate between Management accounting and Financial Accounting in

 tabular form, state at least ten factors.

2. Efura 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:

i.                   Variable cost per unit and the fixed cost for the period.

ii.                 Express the company`s operating and maintenance costs in linear equation form:

Y  = a  +  bx

iii.              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

3.  Asela Nigeria Limited has provided below its operating and maintenance costs for the last

four months:

          Months/year                  Production(Units)                    Cost (N)

          January 2017                 14,000                                     220,000

          February 2017               16,000                                     230,000

          March 2017                   15,000                                     222,000

          April 2017                      12,000                                   194,000

    You are required to use High and Low Method to calculate:

i.                   Variable cost per unit and the fixed cost for the period.

ii.                 Express the company`s operating and maintenance costs in linear equation form:

Y  = a  +  bx

iii.              Cost expected in the month of May 2017 to August 2017 when units to be produced

        are expected to be:

      May 2017                          17,200

      June 2017                           18,000

      July  2017                          19,100

        August  2017                   23,000

4. (a)  (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.

5.  (a) Enumerate ten stages in decision making process.

    (b) List five merits of Corporate Planning and three demerits of Corporate

          Planning.

    (c ) Write short note on:

i.                   Planning                            ii.  Control

6. Aseye 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.

7. The corporate planning manager of Aiyedade Nigeria Limited is in the process of preparing the 2016 plan for his organisation, just having obtained the requisite import licence. The following data have been gathered:

Finished Goods:
Products		Opening Stock	Closing Stock		Sales
X		8,000	6,000		30,000
Y		18,000	10,000		20,000
Labour Requirement:
Products		Hours per unit	Rate per unit
X		5	3.20
Y		3	6.00
Materials:
	Usage in production			Rate per unit
Type	Price			X		Y
1	3.00			3		1
2	2.00			4		-
3	2.50			-		6
4	4.00			5		-
5	1.00			-		7

Production overhead is applied at the rate of  N3 per direct labour hour.

You are required to prepare:

(a)  Production budget

(b) Direct materials purchase budget

(c)  Direct labour budget

(d) The cost of finished goods

(e)  If a profit of  1/3  of the selling price is desired, for how much should each unit be sold?

8. (a) What do you understand by cash budget?

     (b) Enumerate four benefits to be derived from the preparation of detailed

           cash budget.

     (c ) Foyegbe Nigeria Limited is operating a system of flexible budgetary

            control.

          The budget for the year 2016 is as follows:

                                                                             Level of Activity

                                                       80%                90%                       100%

                                                    800Units        900Units            1,000Units

        Prime Cost                          16,000               18,000                  20,000

        Variable Selling Overhead   2,400                  2,700                    3,000

                                                    18,400               20,700                  23,000

         Selling Variable Selling Overhead:

         Distribution                       3,600                    3,800                    4,000  

         Other Fixed Overhead        5,000                  5,000                    5,000

         Total Cost                          27,000                29,500                  32,000

You are required to present the above to the management, separating the semi-variable overhead to variable and fixed, and also include the cost of attaining 120% level of activity. Fixed costs remain unchanged.

9.  .  Emioga Nigeria  Limited Operate a standard absorption costing system to control the manufacturing cost of single product. The following standards have been set.

                                                N/Unit

Direct Materials 2kg @ N6/kg          12

Direct Labour 1 hour @ N7/hr                    7

Variable overhead 1 hour@ N9/hr      9

Total production cost                         28

The fixed overhead standard cost per unit is based on a budgeted monthly production of 4,000 units actual results for most recent month were:

Production                               4,300 units

Direct material cost                 N56,000 for 9,000kgs

Direct labour cost                    N32,800 for 4,600hrs

Variable overhead                    N35,000

Only 4,000 hrs were worked

No material inventory held

Required: Calculate the variances as follows:

(i) Direct Material Cost Variance

 (ii) Direct Material Price Variance

(iii)  Direct Material Usage Variance

 (iv) Direct Labour Cost Variance

(v)  Direct Wage Rate Variance

 (vi) Direct Labour Efficiency Variance

 (vii)  Variable Overhead Cost Variance

10.  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.

11. Alashela Nigeria Limited manufactures the following, with the standard labour hours.

Products:

A       20 minutes

B       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:

(i) Activity ratio   (ii) Efficiency ratio         (iii) Capacity ratio

12. (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 Alajeju

           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.

13. (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

14.  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.

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