KASNEB Management accounting - Question 3a

Distinguish between “marginal costing” and “absorption costing”.... [Click to view full question and step-by-step solution]

KASNEB Management accounting - Question 4a

Mapo Ltd. operates manufacturing processes in which inventory of work in progress are never held.The following information relates to process 1 for th... [Click to view full question and step-by-step solution]

CPA Management accounting December 2025 Past Paper with Answers (PDF)

1a

Costing terms and concepts

The analysis of total cost into its behavioural elements is essential for effective cost and management accounting.

Required:

Citing relevant examples, explain THREE types of cost behaviour.

View Similar Exam Questions

1b

Cost accumulation

Uzi Ltd. manufactures a special product which requires component “BX”. The following particulars are calculated for the year 2025:

1.	Annual demand of omega	8,000 units
2.	Cost of placing an order	Sh.200 per order
3.	Cost per unit of omega	Sh.400
4.	Carrying cost per unit per annum	20% of the purchase price per unit

The company has been offered a quantity discount of 4% on the purchase of BX provided the order size is 4,000 components at a time.

Required:

By comparing the total cost without and with a 4% discount, advise whether the quantity discount offer should be accepted.

View Similar Exam Questions

1c

Introduction to cost estimation

Get Well Hospital would like to establish the cost estimation formula in the form Y = a + bx, linking the number of X-rays scans taken and X-ray costs over the last eight months:

Months	X-Rays scans	X-Ray Costs (Sh.)
January	1,800	147,000
February	1,900	152,000
March	1,700	137,000
April	1,600	140,000
May	1,500	143,000
June	1,300	131,000
July	1,100	128,000
August	1,500	146,000

Required:

(i) Using the high-low method, formulate the cost function in form of Y = a +bx.

(ii) Calculate and comment upon, the break-even X-ray scans of the process operation in (c) (i) above, based upon the fixed and variable costs identified and assuming a charge out discounted price of Sh.125 per X ray scan.

View Similar Exam Questions

2a

Cost accumulation

Ushindi Ltd. operates two production departments; Black and White and three service departments; Small, Medium and Big. Overhead costs have been allocated and primary apportionment carried out to these centres as follows:

		Sh.“000”
Production cost centre:	Black	40,000
	White	65,000
Service cost centre:	Small	6,000
	Medium	10,000
	Big	14,000

Additional information:

1.

Inter-service reapportionment between the production centres and service centres were as follows:

	Production department		Service department
	Black	White	Small	Medium	Big
By Small	40%	50%	-	-	10%
By Medium	50%	20%	20%	-	10%
By Big	60%	40%	-	-	-

2.

Information concerning production requirements in the two production centres is as follows:

	Black	White
Units produced	2,500 units	3,000 units
Machine hours	4,903 hours	1,400 hours
Labour hours	2,600 hours	7,912 hours

Required:

(i) Reapportion the overheads using step-wise method and calculate the total overhead cost for production centres Black and White.

(ii) Using the most appropriate basis, calculate the overhead absorption rate (OAR) for production centres Black and White.

View Similar Exam Questions

2b

Marginal and absorption costing

Lenga Lenga Ltd. manufactures hockey sticks. It sells the products at Sh.500 each and makes a profit of Sh.125 on each stick. The company is producing 5,000 sticks annually by using 50% of its machinery capacity.

The cost of each stick is as follows:

	Sh.
Direct material	150
Direct labour	50
Production (60% variable)	125
Selling expenses (25% variable)	50

Additional information:

1.	The anticipation for the next year is that cost will increase as follows: • Fixed costs 10% • Direct labour 20% • Direct material 5%
2.	There will be no change in selling price.
3.	Lenga Lenga Ltd. has received a special order to supply 2,000 hockey sticks to form one students of Masomo High School.

Required:

Advise on the lowest price that should be quoted so that Lenga Lenga Ltd. can earn the same profit as it has earned in the current year.

View Similar Exam Questions

3a

Marginal and absorption costing

Distinguish between “marginal costing” and “absorption costing”.

View Similar Exam Questions

3b

The context of management accounting

A business firm requires complete, accurate and updated data from cost accounting records in order to utilise management accounting information. A combination of both cost accounting and management accounting is essential for achievement of accounting goals and objectives of the firm.

Required:

Explain THREE reasons why cost accounting is considered a subset of management accounting.

View Similar Exam Questions

3c

Standard costing and variance analysis

Kiboko Ltd. manufactures a single product using standard absorption costing system. The standard costs for producing a unit of its product is as follows:

Standard cost statement per unit:

	Sh.
Direct material B (5 kg per unit)	200
Direct material F (4 kg per unit)	240
Direct labour (10 hours per unit)	800
Production overheads:
Variable	50
Fixed	20
Standard unit cost	1,310

Additional information:

1.

Production overheads are absorbed on the basis of direct labour hours.

2.

In the month of March 2025, Kiboko Ltd. had budgeted to produce 1,000 units. However, only 800 units were actually produced and the costs incurred were as follows:

	“Sh.”	“Sh.”
Direct material cost:
Material B (4,200 kg)	174,300
Material F (3,000 kg)	180,000	354,300
Direct labour (7,900 hours)		711,000
Production overheads:
Variable	647,800
Fixed	192,200	840,000
Total cost		1,905,300

Calculate the following total variances indicating whether they are favourable (F) or adverse (A):

(i) Material price variance for material B.

(ii) Material usage variance for material F.

(iii) Labour efficiency variance.

(iv) Labour rate variance.

(v) Variable overhead efficiency variance.

View Similar Exam Questions

4a

Product costing methods

Mapo Ltd. operates manufacturing processes in which inventory of work in progress are never held.

The following information relates to process 1 for the month of March 2025:
Raw material input	90,000 litres at a total cost of Sh.4,500,000
Actual loss incurred	4,800 litres
Conversion costs incurred	Sh.2,160,000

Additional information:

1. In process 1, joint products Prod1 and Prod2 are produced in the ratio of 2:1 by sales volume from the raw materials input.

2. A normal loss of 4% of the raw materials input is expected in process 1. Losses have a realisable value of Sh.50 per litre.

3. The joint costs of the process are apportioned to the joint products using the sales value basis and credited to process account.

4. At the end of process 1, Prod1 and Prod2 can be sold for Sh.250 and Sh.400 per litre respectively.

Required:

(i) Prepare the process 1 account for the month of March 2025 using sales value basis to allocate joint costs.

(ii) The company could further process product Prod1 in process 2 to create product XP1 at an incremental cost of Sh.30 per litre input. Process 2 is an existing process with spare capacity.

In process 2, a normal loss of 8% of input is incurred which has no value. Product XP1 could be sold for Sh.300 per litre.

Required:

Based on financial considerations only, determine, with supporting calculations, whether product Prod1 should be further processed in process 2 to create product XP1.

View Similar Exam Questions

4b

Cost-volume profit analysis (break-even analysis)

Xalo Ltd. produces three products namely; A, B and C from the same manufacturing facilities. The cost and other details of the three products are as follows:

	A	B	C
Selling price per unit (Sh.)	200	160	100
Variable cost per unit (Sh.)	120	120	40
Maximum production per month (units)	5,000	8,000	6,000
Maximum demand per month (units)	2,000	4,000	2,400

Additional information:

1. Total hours available for the month are 200 and cannot be increased during the month.

2. Fixed costs during the month amounted to Sh.276,000.

Required:

(i) Compute the most profitable product mix.

(ii) Determine the profit arising from the production mix computed above.

View Similar Exam Questions

5a

The context of management accounting

Explain THREE benefits that could accrue to an organisation that operates a management accounting system.

View Similar Exam Questions

5b

Budgetary control

Magneta Ltd. manufactures school uniforms for both primary and secondary schools in the county. The sales vary seasonally with peak periods expected when schools are about to open for new school terms. The management of the company wishes to prepare a cash budget for the month of April, May and June.

The following information is provided:

Month	Actual sales	Month	Estimated sales
	Sh.“000”		Sh.“000”
January	180,000	April	150,000
February	110,000	May	130,000
March	180,000	June	110,000

Additional information:

1.

Credit sales are 75% of total sales.

2.

The 60% of credit sales are collected after one month, 30% after two months and 10% after three months.

3.

Cost of goods manufactured is 75% of sales. 80% of this cost is paid after one month and the balance is paid after two months of the cost incurrence.

4.

Fixed operating expenses are Sh.25 million per month. Variable operating expenses are 10% of sales each month.

5.

Half yearly interest on a 24% per annum, Sh.250 million loan is paid in June.

6.

The firm is expected to invest Sh.41 million in fixed assets in April, but payment is due in May.

7.

The opening cash balance as at 1 April was Sh.130 million.

8.

The following overheads are paid or provided for monthly:

	Sh.“000”
Production overhead	10,000
Rent	24,000
Depreciation	10,800
Salary	22,000
Sales commission	1% of monthly sales

9.

Preliminary expenses of Sh.12.7 million will be paid in May and second-hand furniture disposed of in June for Sh.91 million.

Required:

Prepare a cash budget for the month of April, May and June.

View Similar Exam Questions

CPA Management accounting – December 2025 Past Paper & Answers

Download Complete Period

Questions

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

CPA Management accounting – December 2025 Past Paper & Answers

Download Complete Period

Questions

Other Management accounting Past Papers

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?

Want to join the discussion?