Question 01

Classify following items as current assets, fixed assets, intangible assets, long-term liabilities, current liabilities, revenue, and expenses

Electricity

Purchases

Interest received

Creditors

Debtors

Bank overdraft

Wages and salaries

Goodwill

Land and building

Accrued salary expenses

Bad debt

Sales

Prepaid electricity expense

Bank loan (payable for within 5 years)

Inventory

Discount allowed

Mortgage loan

Patent

Motor vehicle

Depreciation for motor vehicle

(1/2 marks*20 =10 marks)

Question 02

A manufacturing company produces 6000 mobile phones to the market. Their presenting following budgeted overheads for

Department

Budgeted overheads ()

Overhead absorption base

Assembling

24000

3000 Labor hours

Programing

65000

3000 Labor hours

Machining

60000

5000 Machine hours

packing

85000

1000 Labor hours

They are paying 40% on the selling and administration cost based on the factory cost

For the material company spend 6000

Labor hours

600hrs of Assemble 6.00 per hour

800hrs of Programing 7.25 per hour

100hrs of machining 3.75 per hour

150hrs of packing 6.50 per hour

800 paid as testing cost of the phone. Company booked 1000 Program Hours and 200 machine Hours in the production facility for the manufacturing process.

Calculate the total cost of the batch and the unit cost

If there is a selling price of 70 what is the profit/ loss per unit and what is the total profit/ loss of the production

(10 Marks)

Question 03

An Eagle corporation is a company that sells computer software to financial corporations.

They are selling computer software to the buyers on credit sales base.

For the upcoming months expected sales as follows:

October $ 100,300 / November $ 120,500 / December $ 115,000

Company given the credit term to buyers as follows

45% as the final settlement, 33% as the 2nd payment and 20% on the day buyers purchase items form the company

When company buys materials from the suppliers, they agree to give 2 months credit term to the company. Purchase of the company as follows:

October $ 40,000 / November $ 65,000 / December $ 45,000

Expected opening balance for October 1st is $ 90,000

Following information is given:

Debt of August $ 140,500 / September $ 112,000

Purchase of July $ 51,000 / August $ 60,000 / September $ 55,000

6.5% of sales receipt pay as income tax every month

Company expect to take loan of $75,000 in month of October and plan to pay equal amount in 3 months to cover the loan with the interest of 13% for the value remain for each period

Wages has been considered as a variable cost of the company and pay 12% of sales receipt after tax reduction

Over heads estimated as a $ 30,500 for every month and 4% of the overheads consider as a depreciation expense

During the month of October company allocate $ 15,000 for the petty cash for cash payments they have to do and each and every month they increase that amount by 2%

Prepare the cash budget for October / November and December for the Eagle Corporation and provide the necessary calculations done on the receipts and payments

(20 Marks)

Question 04

Following data relate to the budget and actual result of a "Cosmo" firm that makes and sell a single product and that employs standard marginal costing

BudgetActual

Production10,000unitsProduction10,500units

Sales10,000unitsSales10,500units

$$

Sales130,000Sales190,200

(Less)

Standard Marginal CostActual Marginal Cost

-Materials10,000-Materials11,000

-Labor40,000 -Labor63,500

-Var. Overhead40,00090,000-Var. Overhead83,500158,000

=Contribution40,000=Contribution 32,200

(Less)

Fixed Costs15,000Fixed Costs15,800

Budgeted Profit25,000Actual Profit16,400

The standard cost card for the product is as follows

$

Material 5Kgs at 20cnt/Kg1.00

Labor 4hrs at $1.00/hour4.00

Var. Overhead 4hrs at $1/hour4.00

=Standard Marginal Cost9.00

Standard contribution4.00

Standard Selling price13.00

During the period material usage was 50,000kgs and 40,000 labor hours were needed to finish the product

Calculate

1. Operating Profit Variance
2. Direct Material Variance, Direct Labor Variance, Variable Overhead Variance, Fixed Overhead Variance
3. Prepare summery of cost variance
4. Calculate sales variance and overall variance by using cost and sales variance
5. Prepare a statement to show the change from budgeted to actual Profit by using variances
6. Based on the answers you receive from the calculations of above organization explain how this organization can improve their performance for next year

(20 Marks)

Question 05

Star limited manufactures one product. The budget sales for period 6 are for 10,000 units at a selling price of $100 per unit. Other details are follows

Two components are used in manufacture of each unit

Component NumbersUnit cost of each component ($)

XY51

WZ30.50

Stocks at the beginning of the period are expected to be follows:

4000 units of finished goods at a unit cost of $52.50

Component XY: 16000 units at a unit cost of $ 1

Component WZ: 9600 units at a unit cost of $ 0.50

Two department of employees are used in the manufacture of each unit:

EmployeeHours per UnitLabor rate per hour ($)

Production45

Finishing27

Factory overhead is absorbed into unit costs based on direct labor hours

The budgeted factory overhead for the period is estimated to be $ 96,000

The administration, selling and distribution overhead for the period has been budgeted at $ 275,000

The company plans to reduce 50% in the quantity of finished stock at the end of the period 6 and increase of 25% of the quantity of each component

Prepare the following budgets for period 6

i.Sales

ii.Production Quantity

iii.Material usage

iv.Material purchase

v.Direct Labor

vi.The budgeted Profit and loss account