QUESTION Kampoyu Lid manufactures and sells a single product at a unit price of K25. In...
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QUESTION Kampoyu Lid manufactures and sells a single product at a unit price of K25. In constani-pricelevel terms, its cost structure is as follows: Variable costs For several years, Kampuya has operated a system of marginal costing for management accounting purposes. It has been decided to review the system and to compare it management accounting purposes with an absorption costing systems As part of the review, you have been asked to prepare estimates of Kampoy's profits in constant price-level terms over a three- year period in the different hypothetical situations, and to compare the two types of systems generally for management accounting purposes (a) In each of the following three sets of hypothetical circumstances, calculate Kapuyu's profit in each of the three year 2017, 2015 and 2019, and also in total over the three year period 2017 so 2019, using first a marginal costing system and then a fall-cost absorption costing system with fixed cost recovery based on a normal production level of 1,000 per Stable unit levels of productim, sales and inventory 2017 2018 2019 Stable unit level of sales, but fluctuating unit levels of production and inventory 2017 2018 2019 Stable unit level of production, but facing unit levels of sales and inventory 2017 2018 2019 (b) Write a shon comparative evaluation of marginal and absorption costing systems for management accounting purposes, paying particular attention to profit masurement and using your answer to (a) to illustrate your arguments if you wish (marks) Total (20 QUESTION 3 (a) Define the meaning of the term 'cost object' and provide three examples of cost objects (2 marks) (b) Distinguish between a direct and indirect cost (2 marks) (c) Explain the meaning of the terms: (i) Prime Cost (ii) Overheads (iii) Cost allocations (3 marks) (d) Distinguish between product costs and period costs (3 marks) (e) Explain the relationship between cost accounting and management accounting (8 marks) (f) Explain standard coting and marginal costing (2 marks) (Total =20 marks) QUESTION Kampoyu Lid manufactures and sells a single product at a unit price of K25. In constani-pricelevel terms, its cost structure is as follows: Variable costs For several years, Kampuya has operated a system of marginal costing for management accounting purposes. It has been decided to review the system and to compare it management accounting purposes with an absorption costing systems As part of the review, you have been asked to prepare estimates of Kampoy's profits in constant price-level terms over a three- year period in the different hypothetical situations, and to compare the two types of systems generally for management accounting purposes (a) In each of the following three sets of hypothetical circumstances, calculate Kapuyu's profit in each of the three year 2017, 2015 and 2019, and also in total over the three year period 2017 so 2019, using first a marginal costing system and then a fall-cost absorption costing system with fixed cost recovery based on a normal production level of 1,000 per Stable unit levels of productim, sales and inventory 2017 2018 2019 Stable unit level of sales, but fluctuating unit levels of production and inventory 2017 2018 2019 Stable unit level of production, but facing unit levels of sales and inventory 2017 2018 2019 (b) Write a shon comparative evaluation of marginal and absorption costing systems for management accounting purposes, paying particular attention to profit masurement and using your answer to (a) to illustrate your arguments if you wish (marks) Total (20 QUESTION 3 (a) Define the meaning of the term 'cost object' and provide three examples of cost objects (2 marks) (b) Distinguish between a direct and indirect cost (2 marks) (c) Explain the meaning of the terms: (i) Prime Cost (ii) Overheads (iii) Cost allocations (3 marks) (d) Distinguish between product costs and period costs (3 marks) (e) Explain the relationship between cost accounting and management accounting (8 marks) (f) Explain standard coting and marginal costing (2 marks) (Total =20 marks)
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