1. (a)(i) Distinguish between management accounting and financial accounting. (4 marks)
2. (ii) Explain any two ethical challenges faced by management accountants.
3. (2 marks)
4. (b)Discuss any two merits and two demerits of the following stores
5. management systems:
6. (i) Centralised stores. (4 marks) (ii) Decentralised stores. (4 marks)
7. (c)Describe how the weighted average cost (WAC) method is used in inventory valuation.

(d) Explain any four principles of a good incentive scheme. Question 3

1. (a)Distinguish between the following costs:
2. (i)opportunity cost and replacement cost.
3. (ii)product cost and period cost.
4. (b)Explain any two merits of an integrated accounting system.

(c) Fresh Bakery Ltd (FBL) produces and sells delicious cakes and bread at Shs 3,000 and Shs 4,500 per unit respectively. FBL's standard production cost card for the month of September 2018 is as follows:

Item Cakes

Direct materials per unit

Direct labour (Shs 500 per hour) per unit Variable overheads per unit

Bread Shs '000' Shs '000' 1,000 1,200 625 1,250 500 800

FBL has only 100,000 direct labour hours and expects to sell 30,000 units of cakes and 30,000 units of bread during the month. Normally FBL incurs monthly fixed costs of Shs 38,750,000 and does not maintain inventory.

(2 marks)

Required:

Determine, for the month of September 2018, the:

1. (i)production mix.
2. (ii)expected net profit.

Question 4

(a) (b)

1. (i)Describe any four features of process costing.
2. (ii)Identify two industries that use process costing.

(c)

Magala Enterprises Ltd (MEL) produces millet flour and has been using absorption costing in the previous years. MEL's board recently resolved to adopt the marginal costing method that it provides more analysed information for decision making. The following data was extracted from MEL's books of account for the 4th quarter ended 30 June, 2018:

Tubonge Furniture Workshop (TFW) was awarded a contract to supply 150

office chairs and 80 office contract:

Tables Shs '000' Direct labor 20,000 Direct materials 35,000

tables. The following cost data relates to the

Chairs Shs '000' 32,000 68,000

Production overheads are charged at 30% on labour costs and information relating to other overheads is given below:

Budgeted overheads (Shs '000') Budgeted labour hours

Actual labour hours

Tables Chairs 6,000 7,500 2,000 3,000 2,000 1,800

The cost of adding special designs was 10% and 20% of the prime costs for chairs and tables respectively. Selling expenses were Shs 60,000 per chair and Shs 80,000 per table. TFW prices its products using full cost plus mark-up and the mark-up on chairs was 5% and tables was 10%.

Required:

Determine the selling price for the chairs and tables.

(7 marks)

Details

Sales

Opening inventory Closing inventory

kg 100,000 300,000 400,000

MEL produces a single product based on a normal activity level of 250,000 kg per quarter. During the quarter under review, total direct material costs amounted to Shs 145 million and Shs 350 million related to direct labour. Fixed administrative overheads amounted to Shs 20 million while production overheads were Shs 330 million of which a third were fixed. MEL sells the flour at Shs 4,500 per kg.

Required:

Prepare, for MEL for the quarter ended 30 June, 2018 a profit statement using the marginal costing method.

Question 5

1. (a)Explain any two advantages and two disadvantages of standard costing. (4 marks)
2. (b)Axel Publishers Ltd (APL) publishes Chika Magazine which is released on a monthly basis. APL planned to sell all the published copies of the magazine at Shs 20,000 during the month of July 2018. The following
3. information relates to the month of July 2018:

Details

Budgeted

Actual

Copies of magazines

3,000

2,850

Costs

Shs '000'

Shs '000'

Direct materials

21,000

20,640

Direct wages

10,500

9,452

Indirect labour costs (60% variable)

5,500

6,350

Other Overheads (70%fixed)

2,620

2,540

Selling price per copy

20,000

19,600

Required:

1. (i)Prepare APL's flexed budget for the month of July 2018.
2. (ii)Compute the sales "price" and "volume" variances.

(11 marks)

1. (a)Explain the steps involved in the activity-based costing (ABC) system.
2. (4 marks)
3. (b)Gomba Farmers Ltd deals in livestock and has three service departments, i.e. Dips, Feeds and Finance and three production departments i.e. Breeding, Bull Fattening and Diary. Total overhead costs for the year ended 30 June, 2018 was as follows:

Required:

(i) Using the elimination method, apportion service department overheads to production departments.

(9 marks)

(ii) Using the step method and appropriate bases of apportionment, apportion service departments to production departments.

(7 marks)