Project management

KENYA METHODIST UNIVERSITY
END OF 1st TRIMESTER 2012 EXAMINATIONS

SCHOOL

:

BUSINESS AND ECONOMICS

DEPARTMENT

:

ACCOUNTING & FINANCE

UNIT CODE

:

ACCT 219

UNIT TITLE

:

COST ACCOUNTING

TIME

:

2 HOURS

Instructions: Answer Question ONE and any other THREE Questions.
Question One (Compulsory) 30 Marks

(a) A business firm which is engaged in manufacturing should adequately control materials used in the production process from the point of procurement up to the point the materials are issued to production.

Required:

Clearly explain how a business firm would reasonably achieve this objective.
(10 Marks)
(b) Manufacturing company produces TWO Products P & Q.

Two types of

Materials X and Y are used in producing the two products. The following information is also available.

Page 1 of 7

(i)

Budgeted sales

Product

Price

P

18,000

65

Q

(ii)

Qty

20,000

80

Materials used:

X
P

3

6

Q

5

4

6

Quantify used:

Y

3

Unit used:
There were the following stocks:
Product:

Opening

Closing

P
Q

3,000
2,000

1,500
2,500

5,000
2,000

6,000
3,000

Materials:
X
Y
Required:
Prepare the following budgets:
(i)

Sales budget

(2 Marks)

(ii)

Production budget

(2 Marks)

(iii)

Material usage in quantity budget

(2 Marks)

(iv)

Material purchases in quantity & value

(4 Marks)

Question Two

Manyumba company commenced its operations in January 2011. During the year, it won a tender to build an airport at a price of Shs. 100 million. The trial balance as at 31.12.2011 was as follows.
Page 2 of 7

Shs ‘000’

Share Capital

Shs ‘000’

20,000

Creditors

2,000

Cash received on contract (80% of work certified)
Land & buildings

8,000

Bank balance

4,800

Materials charged on Contract

18,000

Plant (Original cost 1.1.2011)

40,000

5,000

Wages

25,000

Expenses