CPA › Management accounting › December 2024

CPA Management accounting – December 2024 Past Paper & Answers

Unit: Management accounting

12 Questions

Download Complete Period

Get all questions and answers for "December 2024" in a single PDF file

Join the community! 550+ students upgraded in the last 24 hours. Limited Discount Seats Available

Questions

Download CPA Management accounting December 2024 past paper with detailed answers and marking scheme. This paper is based on KASNEB examination standards and is ideal for revision and exam preparation.

Access the full paper online, download the PDF, or study offline. Each question includes step-by-step solutions to help you understand key concepts in Management accounting.

Other Management accounting Past Papers

1a
Costing terms and concepts
​ ​​Define the following types of costs as used in decision making: 

(i) Controllable costs. 

(ii) Discretionary costs
Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
1b
Cost accumulation
​ ​ ​ ​ ​ ​ ​​Maroon Paints Ltd. makes and sells high quality paints. The company has two departments namely; Mixing and Blending and uses a single production overhead absorption rate based on direct labour hours. The budget and actual data for the month of October 2024 are given below:

Budget
Mixing
Blending
Total
Budgeted direct wages (Sh.)
2,400,000
7,000,000
9,400,000
Budgeted direct labour hours
40,000
100,000
140,000
Budgeted machine hours
120,000
10,000
130,000
Budgeted production overheads (Sh.)
18,000,000
10,000,000
28,000,000

During the month of October 2024, a batch of product “Cyan Paint” was made and had the following costs: 

Direct material cost per batch is Sh.630,000

Direct wages (Sh.)
Labour hours
Machine hours
Mixing
   726,000
1,200
4,600
Blending
2,490,000
4,150
   380
3,216,000
5,350
4,980

The Management Accountant has proposed that appropriate departmental overhead absorption rates per department be applied, that is, machine hours in mixing department and labour hours in blending department. 

Required:
(i)
The cost of the batch of Cyan Paint using a single company-wide overhead absorption rate.
(ii)
Departmental overhead absorption rates.
(iii)
The cost of the batch of Cyan Paint using management accountant proposal.
(iv)
During the month of October 2024, the actual overheads and other relevant data was as follows:
(iv)
Actual
Mixing
Blending
Total

Actual direct wages (Sh.)
3,000,000
5,950,000
8,950,000
Actual direct labour hours
50,000
85,000
135,000
Actual machine hours
140,000
8,000
148,000
Actual production overheads (Sh.)
20,000,000
9,500,000
29,500,000
(iv)
Using the management accounting proposal, calculate the over/under absorption of overhead per department.

Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
2a
Product costing methods
​ ​​Distinguish between “joint products” and “by-products” as used in the costing methods.
Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
2b
Marginal and absorption costing
​ ​​The following information relates to the unit manufacturing costs of product “TM” made by Timua Ltd.:

Sh.
Sh.
Selling price 
200
Less:
Variable production costs
120
Variable selling cost
10
130
Contribution
70

Additional information:
1
The budgeted fixed production cost is Sh.4,200,000 per annum for a normal production of 140,000 units
2
Budgeted fixed selling and administrative overheads are Sh.2,800,000 per annum.
3
The budgeted fixed costs are incurred evenly during the year.
4
There are two periods in a year, each of 6 months.
5
During the latest financial year, the following results were achieved:
Period 1
Period 2
5
Production (units)
75,000
65,000
Sales (units)
60,000
70,000
6
There was no opening inventory at the beginning of the year.
7
Fixed production costs and selling and administrative costs incurred during the year were equal to the budget.

Required: 
Prepare profit or loss statements for each of the two periods using each of the following presentation methods: 

(i) Marginal Costing. 

(ii) Absorption Costing.

Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
3a
Costing terms and concepts
​​Explain the following terminologies as used in business decision making: 

(i) Opportunity cost.

(ii) Opportunity savings.
Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
3b
Cost accumulation
​ ​ ​ ​​Savanna Supermarket currently orders 1,000 units of stock item “Zedo” at a time. The management of Savanna Supermarket has decided that it may be better to use the Economic Order Quantity method to establish an optimal reorder quantity. 

Information regarding stocks is given below:
o
Annual demand
12,000 units
o
Purchase price 
Sh.15 per unit
o
Fixed cost per order 
Sh.200
o
The cost of holding an item “Zedo” in stock for a year is made up of the following percentages:
o
Obsolescence
3%
Perpetual audit
1.5%
Opportunity cost 
2%
Insurance
1%
Storage
0.5%
The current annual total inventory costs are Sh.183,000, being the total of the purchasing costs, ordering costs and holding costs of stock item “Zedo”. 

Required: 

(i) Using appropriate calculations, show how annual demand of stock item “Zedo” amounts to Sh.12,000 units. 

(ii) Calculate the Economic Order Quantity. 

(iii) Using your answer in (b) (ii) above, calculate the revised annual total inventory costs of stock item “Zedo” and establish any cost gap/cost saving from pursuing the optimal policy.
Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
3c
Product costing methods
​ ​​T-shirt Ltd. is a company that manufactures games kits for secondary schools which are embossed with the school logo. A school has ordered a batch of 600 games kits. The following is the direct production batch cost of 100 games kit:

Sh.
Direct materials 
60,000
Direct labour
20,000
Machine setup cost
6,000
Design and logo
30,000
Prime cost
116,000

Additional information: 
1. T-shirt Ltd. absorbs production overheads at a rate of 20% of direct wages cost. 

2. 5% is added to the total production cost of each batch to allow for selling, distribution and administrative overheads. 

3. T-shirt Ltd. requires a notional profit margin of 25% on sales. 

Required: 
Calculate the selling price per unit for the 600 games kit.
Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
4a
Budgetary control
​​The effectiveness of an organisation’s budgetary control system relies significantly on having a well-designed budget that allocates resources efficiently and monitors expenditures consistently. 

Required: 
With reference to the above statement, discuss FOUR conditions for an effective budgetary control system.
Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
4b
The context of management accounting
​​Explain TWO ways in which advancements in technology could enhance the effectiveness of management accounting practices.
Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
4c
Budgetary control
​ ​ ​​Alto Ltd. manufactures a single product branded “PQ”. The following data relates to its operations for the month of October 2024:

Budget
Units
Actual
Units
Sales
30,000
29,000
Production
30,000
30,000

Sh.“000” 

Sh.“000” 
Sales
420,000
411,800
Direct materials 
120,000
123,000
Direct labour
150,000
144,000
Fixed overheads
67,500
70,000
Net income
82,500
74,800

Required: 
A flexible budget for the month of October 2024 for the actual sales of 29,000 units. 
Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
5a
Standard costing and variance analysis
​​Variance analysis is the process of investigating the cause of differences between the actual amount of material, labour, sales and overheads and the expected budgeted amount. This results in either favourable variances or adverse variances. 

Required: 
(i) Identify FOUR causes of favourable material price variances. 

(ii) Explain FOUR remedies to adverse material price variances.
Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
5b
Cost-volume profit analysis (break-even analysis)
​ ​​Maya Ltd. produces two products namely; Product M and Product Y. The following budget applies for the year ended 30 June 2024.

Product M
Sh.
Product Y
Sh.
Selling price
6
12
Variable costs
2
4
Contribution margin
4
8

Fixed costs (Sh.)

96,400,000

200,000,000
Units sold (bags)
70,000,000
30,000,000

Required: 
(i) The break-even points at current sales mix. 

(ii) The break-even point at a proposed sales mix of 1:1. 

(iii) Current margin of safety. 

(iv) Sales units required to earn a profit of Sh.299,000,000 at current sales mix
Want to join the discussion?

Log in to post comments and interact with tutors.

Login to Comment
All Periods
August 2025
April 2025
December 2024
August 2024
April 2024
December 2023
August 2023
April 2023
December 2022
August 2022
April 2022
December 2021
Pilot December 2021
September 2021
May 2021
November 2020
November 2019
May 2019
November 2018
May 2018
November 2017
May 2017
November 2016
May 2016
November 2015
Pilot September 2015
Success!

Comment posted! We'll give you feedback soon.