QUESTION 2: Kabwe Martin Company (KMC) Ltd is a large sized mining firm domiciled in Mumbwa of central province of Zambia KMC Ltd is owned by Graduates of the University of Zambia who after working for Mopani Copper Mine (MCM) Ltd and Kafilonda Copper Mine (KCM) Ltd on the copper belt decided to set up business in Mumbwa district. KMC Ltd exports 3 types of copper products namely the explosives, cathodes and blisters to outside markets both in Africa and Asia. Data below relates to a typical production cycle of KMC Ltd: 1. There was no opening inventory for the latest period 2 Variable Production cost is K35 per unit and fixed production costs of K30,000 per period are recovered on the basis of the normal capacity of 5000 units per period 3. The selling price per unit of copper cathodes is K60 4. Fixed administration, selling and distribution overheads are K19, 000 per period REQUIRED Calculate the following 1 State five (5) Advantages of marginal costing (3marks) 2 State five (5) limitations of absorption costing (2 marks) 3. Calculate the profit reported for sales of 5000 units last period for production volumes of 5000 units, 6000 units and 7000units using 4. Absorption costing (10 marks) 5. Marginal Costing (10 marks) QUESTION 2: Kabwe Martin Company (KMC) Ltd is a large sized mining firm domiciled in Mumbwa of central province of Zambia KMC Ltd is owned by Graduates of the University of Zambia who after working for Mopani Copper Mine (MCM) Ltd and Kafilonda Copper Mine (KCM) Ltd on the copper belt decided to set up business in Mumbwa district. KMC Ltd exports 3 types of copper products namely the explosives, cathodes and blisters to outside markets both in Africa and Asia. Data below relates to a typical production cycle of KMC Ltd: 1. There was no opening inventory for the latest period 2 Variable Production cost is K35 per unit and fixed production costs of K30,000 per period are recovered on the basis of the normal capacity of 5000 units per period 3. The selling price per unit of copper cathodes is K60 4. Fixed administration, selling and distribution overheads are K19, 000 per period REQUIRED Calculate the following 1 State five (5) Advantages of marginal costing (3marks) 2 State five (5) limitations of absorption costing (2 marks) 3. Calculate the profit reported for sales of 5000 units last period for production volumes of 5000 units, 6000 units and 7000units using 4. Absorption costing (10 marks) 5. Marginal Costing (10 marks)
