Unit: Management accounting
12 Questions| Sh. | Sh. | |
| Sales | 1,150,000 | |
| Value added tax (VAT) | (150,000) | |
| Net sales | 1,000,000 | |
| Cost of goods sold | 500,000 | |
| Wages and casual labour | 120,000 | |
| Rent including the down payment | 100,000 | |
| Rates, heating, lighting and insurance | 130,000 | |
| General expenses | 20,000 | (870,000) |
| Net profit | 130,000 |
| Month May June July August September October November December | Number of patients admitted 1,800 1,900 1,700 1,600 1,500 1,300 1,100 1,500 | Admission department's Cost "Sh." 14,700 15,200 13,700 14,000 14,300 13,100 12,800 14,600 |
| (i) | Using the high-low method, estimate the fixed and variable components of admission costs. |
| (ii) | Using the least squares method, estimate the relationship between number of patients admitted and the admission costs in the form of Y = a + bx |
| (iii) | Using the relationship obtained in (b) (ii) above, estimate the admission costs incurred in January 2018 if admission was 2,000 patients |
| Computer hours | 85,000 |
| Fixed manufacturing overhead costs | Sh. 1,275.000 |
| Variable manufacturing overhead per computer-hour | Sh.3.0 |
| Computer hours | 60,000 |
| sh. | |
| Manufacturing overhead costs | 1,350,000 |
| Cost of goods sold | 2,800,000 |
| Inventories at the year-end: | |
| Raw materials | 400,000 |
| Work-in-progress | 160,000 |
| Finished goods | 1.040.000 |
| (i) | Compute the company's predetermined overhead absorption rate for the year. |
| (ii) | Compute under-applied or over-applied overhead cost for the year. |
| (iii) | It is the policy of the company to allocate any under or over-applied overheads to cost of goods sold. Determine the cost of goods sold to be charged to the income statement. |
| Units | |
| Sales | 7,000 |
| Opening inventories finished goods | 500 |
| Closing inventories finished goods | 700 |
| 1 | The number of suites of each type are: |
| Standard | 100 | |
| Deluxe | 30 | |
| Luxury | 20 |
| 2 | The rent of Deluxe suite is to be fixed as 1½ times the standard suite and that of Luxury as twice the standard suite. |
| 3 | The occupancy level for each suite is as follows: |
| Peak season | Off peak season | ||
| Standard suites | 90% | 50% | |
| Deluxe suites | 80% | 20% | |
| Luxury suites | 60% | 20% |
| 4 | The expenses are as follows: |
| o | Room attendant wages per day when occupied: | |||
| Suite | Peak season Sh. | Off peak season Sh. | ||
| Standard | 20 | 30 | ||
| Deluxe | 30 | 45 | ||
| Luxury | 40 | 60 | ||
| o | Lighting, heating and power for full month, when occupied is as follows: |
| Suite | Lighting (Sh.) | Power (Sh.) | ||
| Standard | 400 | 200 | ||
| Deluxe | 600 | 300 | ||
| Luxury | 800 | 400 |
| o | Other costs (annual): | ||
| Staff salaries | 2,200,000 | ||
| Repairs and renovations | 420,000 | ||
| Linen and laundry | 450,000 | ||
| Interior decorations | 500,000 | ||
| Sundries | 315,500 | ||
| o | Annual depreciation is charged on a straight line basis as follows: |
| Asset | Cost of asset (Sh.) | Rate per annum (%) | ||
| Building | 14,000,000 | 5 | ||
| Furniture and fixtures | 1,000,000 | 10 | ||
| Air conditioners | 2,000,000 | 10 |
| 5 | Peak season is assumed to be 7 months and off-peak season 5 months in a year. One month is taken to have 30 days. |
| 6 | Profit including interest on investment is 25% on cost. |
| Materials | 1 kg at Sh.4 per kg per unit |
| Labour | 25 hours (100 units) at Sh.8 per hour |
| Variable overheads | Sh.48,000 for budget period |
| Fixed overheads | Sh.120,000 for budget period |
| Output | 24,000 units |
| Materials issued | 2,000 kgs at Sh.3.50 per kg |
| Actual production | 1,800 units |
| Actual wages | 480 hours at Sh.8.50 per hour |
| Actual variable overheads | Sh.4,000 |
| Actual fixed overheads | Sh.10,600 |
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