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CPA Management accounting – November 2018 Past Paper & Answers

Unit: Management accounting

11 Questions

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Questions

Download CPA Management accounting November 2018 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
Budgetary control
​​ "A budgetary control system could prove successful only when certain conditions and essentials exist".
With reference to the above statement, highlight six conditions and essentials for an effective budgetary system
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1b
Cost accumulation
​​Nduro Ltd. has two production departments; MM and NN and two service departments; PP and QQ. For the month of August 2018, the budgeted hours and costs were as follows:

Department
Hours
Cost (Sh.)
MM
1,800
45,000
NN
5,400
54,000

Additional information:
1
The service department costs are apportioned to the production departments as follows:
             Department

PP
QQ
MM
50%
40%
NN
20%
40%
PP
-
20%
QQ
30%
-
2
The overheads of the production departments are absorbed into product cost using a rate per hour.
3
During the month of August 2018, the actual activity levels and costs were as follows:
Department
MM
NN
PP
QQ
Hours
1,980
6,120
-
-
Costs (Sh.)
43,200
52,200
10,800
  7,200

Required:
(i).  The overheads to be charged to the production departments. 
(ii). The amount of under or over absorption in each production department. 
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2a
Cost-volume profit analysis (break-even analysis)
​​Explain four assumptions of break-even analysis.
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2b
Cost-volume profit analysis (break-even analysis)
​​Kuni Limited are distributors of two cooking gas cylinders; "Meko" and "13C". "Meko" weighs 6 kgs while "13C" weighs 13 kgs.

The following information relates to the company's projection for the year ending 30 June 2019:

Product "Meko"
Sales (43,800 units)
49,056
Fixed costs
(9,811.2)
Variable costs
(29,433.6)
Operating profit
2,811.2
Product "13C"
Sales (71,175 units)
142,350
Fixed costs
(79,716)
Variable costs
(42,705)
Operating profit
19,929

Required:
(i) Determine the break-even point of "meko" and "13C" in both units and shillings. 

(ii) Given that customers refill "meko" three times for every two times they refill "13C", compute the composite unit contribution margin. 

(iii) Determine the break-even sales in shillings assuming that "meko" and "13C" are normally purchased in the ratio of one to one.
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3
Cost accumulation
​ ​ ​​ Kiz Ltd. manufactures a single product branded "zuri" whose standard cost card is given below:

Sh.
Selling price per unit
100
Direct materials
7 kilogrammes at Sh.2 per kilogramme
14
Direct labour
2 hours at Sh.8 per hour
16
Fixed overheads
2 hours at Sh.16 per hour
32
Total cost
62

Additional information:
1
 As at I October 2018, the opening balances for the cost ledgers were as follows:
Sh.
Direct materials
15,000
Work-in-progress
120,000
Finished goods
72,000
2
The following transactions took place during the month of October 2018:
Sh.
Direct material purchases
89,000
Materials issued to production
90,000
Direct labour paid
102,000
Indirect labour paid
56,000
Production overhead cost incurred
159,000
Sales (6,500 units)
650,000
Goods transferred to finished goods stock
385,000
3
As at 31 October 2018, closing stock balances were as follows:
Sh.
Direct materials
14,000
Work-in-progress
135.000
Finished goods
54,000

Required: 
(a) Direct materials control account. 

(b) Work-in-progress control account. 

(c) Finished goods control account. 

(d) Production overheads control account. 

(e) A statement showing profit or loss. 
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4a
Standard costing and variance analysis
​​ Engtech Ltd. manufactures castings which are transferred to the machine shop of the same company at standard prices.

A standard costing system is applied. Basic standards in regard to materials stock are as follows:

1
Standard mixture
70% 
Ingredient Y
30% 
Ingredient X
2
Standard prices
Ingredient X
Sh.480 per kg.
Ingredient Y 
Sh.130 per kg.
3
Opening and closing stock of ingredients X and Y for the month of October 2018 are as follows:
Opening stock
Ingredient X
100 kgs
Ingredient Y
60 kgs
Closing stock
Ingredient X
110 kgs
Ingredient Y
50 kgs
4
Total purchases for ingredients X and Y are as follows:
Ingredient X 
 300 kgs at Sh.146,500
Ingredient Y
 100 kgs at Sh.12,500
5
The mixtures melted amounted to 400 kgs while castings produced were 375 kgs.
6
Standard loss is 10% of input.

Required: 
(i) Material price variances. 

(ii) Material mix variances. 

(iii) Material yield variances.

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4b
Product costing methods
​ ​ ​​The following information was obtained from the books of Brickmast Ltd., a company making bricks for sale to contractors in the construction industry:

1
Materials: 
M
1,800 tonnes at Sh.40 per ton.
N
Sh.45,640
2
Labour: 
Direct
Sh.25,560
Indirect 
Sh.8,640
3
Overheads:      Works 25% of direct costs
Office 20% of prime cost and works overhead cost
4
Sales Sh.7,400,000. Sales per brick amount to Sh.400.
5
Royalties are paid at the rate of Sh.0.5 per 1,000 bricks.
6
The production is in batches of 1,000 bricks.
7
Stock of finished bricks:
Opening 800,000
Closing 600,000

Required: 
(i) Batch cost statement. 

(ii) Profit per 1,000 bricks.
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5a
The context of management accounting
​ ​​​​​Evaluate four benefits that might accrue to an organisation from using computers in cost and management accounting
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5b
Budgetary control
​​Summarise four functions of a budget committee.
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5c
Introduction to cost estimation
​​(i) Explain the term "industrial engineering method" in relation to cost estimation. 

(ii) Highlight three circumstances under which the use of industrial engineering method of cost estimation is appropriate.
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5d
Cost accumulation
​​Production overhead is also known as factory overhead or manufacturing overhead. 

With reference to the above statement, outline six examples of production overheads.
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