1. (a)Distinguish between job costing and contract costing on the basis of their features.(4 marks)
2. (b)The following balances were extracted from the cost ledger of Best Foods Ltd at the beginning of May, 2017.
3. 13,500kg of assorted raw materials were in stock at beginning of May, 2017. Material purchases and finished product deliveries made during the month were as follows:

Dr 'Shs'

Cr 'Shs'

Raw material stock control account

67,500,000

Finished product control account

11,575,200

Financial Ledger control account

15,916,800

Date

Purchases

Rate

Finished product deliveries

Kg

Shs

Kg

2

13,500

9

22,700

5,000

11

19,800

13

23,500

5,500

A weighted average price per kg is used to value finished product deliveries. A new average price is determined after each material purchase and deliveries are charged out in total.

The cost of labour and overheads incurred during the month was Shs 15.3 million; production of the company's assortment of finished product was 25,000 kg.

Stock of finished product was 8,000 kg and 11,450 kg at beginning and end of May respectively.

Transfers from finished product stock on sale are made on first in first out basis.

Required:

Prepare the

1. (i)raw material stock control account.
2. (ii)finished product control account for the month.

Question

1. (a)Sparkels Investment Ltd (SIL) manufacturers a single product, 'Multiple liquid soap' with a weekly budget of producing 5,000 litres. Information relating to cost and sale per litre is as follows:
2. Fixed overheads 900,000
3. Required:
4. Determine the:
5. (i)Contribution per unit.
6. (ii)Breakeven point in sales.
7. (iii)Margin of safety percentage if 500 litres are to be sold.
8. (iv)Using the results in (a) (i) above construct a volume - profit graph
9. given the following levels of output for a month.
10. (5 marks)
11. (b)Sparkels Investment Ltd (SIL) applies a marginal costing method in decision making. It has received a special order to deliver 8,500 litres of soap to Royal Palm Academy at a price of Shs 2,200 per litre. Additional cost of hiring extra equipment at Shs 50,000 will be incurred as the order is above their production capacity.
12. Required:

(i) Prepare profitability statement and advise whether Sparkels Ltd should accept the offer.

(8 marks)

(ii) Outline any two differences between absorption costing and

marginal costing.