17TH July, 2017

BAC 814: MANAGEMENT ACCOUNTING

Coursework Assessment Test

Question1

A company manufactures one product which are identical in every aspect. The following data
relates to the months of April and May, 2016.

1 Budgeted costs and Selling prices; April May

Variable manufacturing costs per unit sh. 2 2.20

Total fixed manufacturing cost based on per month

Output of 25,000 units 40,000 44,000

Total fixed marketing cost based on per month

Output of 25,000 units 14,000 15,400

Selling price per unit 5.00 5.50

2. Actual Production and Sales:

Production 24,000 24,000

Sales 21,000 26,500

3 Actual costs incurred corresponded to those budgeted for each month.

Required: Calculate the relative effect on the monthly operating profits applying the
Absorption and Marginal costing techniques (20marks)

Question 2

With suitable and logical illustrations discuss why Management Accounting is thought to be the
ears and eyes of Management (20 marks)