1. (a)Explain the following terms as used in cost accounting.
2. (i)Standard costing.
3. (ii)Standard cost.
4. (b)Explain any five necessary steps that must be followed by an organisation
5. in order to have an efficient standard costing system. (5 marks)
6. (c)Kyakuwa Ltd is a manufacturer of blankets, which require the following
7. standard unit costs:
8. Cotton: 20 kg at Shs 1,000 per kg. Polyester: 5 metres at Shs 2,500 per metre.
9. Direct labour per unit:
10. 2 workers each working for 3 hours at a rate of Shs 10,000 per hour. Variable overheads Shs 20,000.
11. Selling price Shs 150,000 per unit.
12. The company planned production of blankets in a month is 150. All units produced are sold and therefore the company has no closing inventory at any time.
13. During the month of January, 2017 actual results were as follows:

Required:

Compute the following variances:

1. (i)Direct material price.
2. (ii)Direct material usage.

(iii)Direct labour rate.

(iv) Direct labour efficiency.

(d) Identify any three ethical responsibilities of a management accountant.

Shs

Shs

Sales 120 blankets

17,040,000

Direct materials

Cotton 2,520 kg each at Shs 900

2,268,000

Polyester 720 metres each at Shs 2,480

1,785,600

Direct labour 8 hours at Shs 8500 per hour

8,160,000

Variable overheads

2,400,000

(14,613,600)

Contribution

2,426,400

Question

1. (a)Describe the following source documents as used in material purchasing control.
2. (i)Debit note. (2 marks)
3. (ii)Purchase order. (2 marks)
4. (b)Explain any three reasons why an organisation may prepare goods received note.
5. (3 marks)
6. (c)Distinguish between the following terms relating to material storage and usage.
7. (i)Bin card and stores ledger. (2 marks)
8. (ii)Continuous stocktaking and periodic stocktaking. (2 marks)
9. (d)Explain any two advantages and two disadvantages of periodic stocktaking.
10. (4 marks)
11. (e)Describe the accounting treatment of the following material losses.
12. (i)Defectiveness.
13. (ii)Abnormal spoilage.
14. (iii)Normal loss.

Question

1. (a)Explain the following terms as used in accounting for overhead costs.
2. (i)Actual overhead rate. (2 marks)
3. (ii)Blanket overhead rate. (2 marks)
4. (b)Klean Company Ltd is a laundry firm that absorbs its production overheads using a percentage of direct labour cost in the ironing department and a machine hour rate in the washing department.
5. The following estimates were made at the beginning of the accounting period that ended 31 December, 2016.

Department

Washing

Ironing

Direct labour cost (Shs)

7,500,000

22,500,000

Production overheads (Shs)

18,450,000

15,525,000

Direct labour hours

80,000

690,000

Machine hours

720,000

30,000

During the month of December 2016, they got a specific job to clean decorating materials for Events Management Ltd. The following cost data relate to the job.

The company incurred actual production overheads of Shs 18,640,000 and Shs 15,202,000 in the washing and ironing departments respectively for the year ended 31 December, 2016.

Required:

1. (i)Calculate the overhead absorption rates for the two departments.
2. (4 marks)
3. (ii)Determine the total production overheads charged on the cleaning of decorating materials for Events Management Ltd.
4. (3 marks)
5. (iii)Determine the over/under absorbed overheads for each department and the company as a whole for the year ended 31 December, 2016 assuming that actual direct labour cost and machine hours worked were as originally estimated.
6. (5 marks)
7. (iv)Describe the accounting treatment of over/under absorbed overheads in the final accounts.
8. (1 mark)

(c) Explain the following terms as used in determination of overhead rates.

1. (i)Practical capacity.
2. (ii)Maximum capacity.
3. (iii)Normal capacity.