Question 1 (a) i)Explain the steps involved in decision making under single limiting factor analysis? (5 marks) ii)Zambaali Textiles Ltd (ZTL) deals in the production and sale of textile products in Iganga district. ZTL is the leading producer and supplier of school uniforms in the area. A set of uniform for a primary school pupil is sold at Shs100, 000. The average cost for production of a full set has been provided as below: Particulars Direct Materials Direct labour Direct expenses Production Overheads Total Shs 30,000 20,000 15,000 20,000 85,000 Labeling (per set) General administration Designing school badge Shs 4,500 1,000,000 1,200,000 Introduction to Management Accounting - Paper 6 20% of the total production overheads are variable. ZTLhas received an order from rise and shine primary school for 450 sets at Shs85,000 per set. Costs in relation to the order: ZTLhas got spare capacity to meet the order needs and no other costs will be affected by the decision taken.

Required: Determine the profit/ loss accruing to ZTL as a result of accepting the order

(c) Bumba Ltd (BL) deals in the production of flower pots using clay as the main raw material. BL has received an order from Star Land Hotel (SLH) to supply 2.500 flower pots by the end of June 2019. It is BL's policy to charge customers at full cost plus 25% markup. The production manager has provided the following information relating to the cost re- uirements for the order: Im_-_ IEBIE_ IM BL absorb fixed overheads basing on the number of units. Required: Calculate the BL's selling price for a flower pot. (5 marks) (Total 20 marks) (b) FLOKA Limited (FL) located in Nakawaindustrial area manufactures protection gears mainly for factory workers. It is company policyto preparemanagement accounts on a monthly basis for decision making purposes. The FL's management accountant has provided the following cost information relatingto one of its products for the month of May 2019: Shs '000' Material purchases 360,000 Material transport expenses 7,000 Direct labour 105,000 Other direct costs 75.000 Additional Information: . Factory overheads are 25% of prime costs. . Administrative overheads are 5% of total factory costs. Raw materials Work in progress Shs '000' Shs \"000' Opening stock 45.000 52,500 Closing stock 50.000 72,000 FLsells its products within the country and also exports to neighboring countries. Based on the previous performance, FLmade a profit of 25% on sales and the same trend is expected to apply. Required: Prepare FLs cost sheetshowing the total cost of production for the month of May 2019. (9 marks) (Total 20 marks) Question 5 (a) (i) Distinguish between standard costs and budgeted costs. (2marks) (ii) Explain any four merits of standard costing in an organisation. (4marks) (iii) Kyeswa loaf limited (KLL) produces bread and other confectionaryproducts for sale in the suburbs of Kawempe and the surrounding areas. It's the KLL's policy to prepare budgets and conduct reviews on a quarterly basis for effective decision making. The following information relates to the first quarter of the financial year 2019: Original budget Actual results Particulars Units (kg) Amount Units (kg) Amount Shs '000' Shs '000' Sales 120,000 600,000 123,000 608,850 Raw materials (180,000) (180,810) Direct labour (144,000) (148,830) Direct expenses (156,000) (160,515) Variable overheads (36,000) (34, 440) Fixed overheads (24,000) (25,000) Profit 60,000 59,255 Required: Prepare a flexible budget for KCL showing the respective variances. (8marks) (b) Mackenzie Ltd (ML) produces carpets for sale within the East African region. Production goes through two processes before a final product is produced. At the beginning of May 2019, raw materials amounting to 600,000 square meters at Shs 20,500 each were introduced to the first processand an output of 582,000units was achieved at the end. MLalso incurred other conversion costs as shown below: Particulars Shs '000 Other materials 6,300,000 Direct labour 8,700,000 Direct expenses 3,000,000 Additional information: . The company absorbs production overheads at 30% of the total variable costs