COLLEGE OF BUSINESS EDUCATION

DAR ES SALAAM CAMPUS

TNC/TFC OCTOBER 2016 BACC II

TEST ONE

SUBJECT: ADVANCED COST ACCOUNTING

PAPER CODE: ACB 07403

DATE: 17.12.2017

Time Allowed: 3 HOURS

Instructions:

a) This paper consists of FIVE questions, attempt all questions

b) Do not write or draw on the question paper
c) Cellular phones are not allowed in the examination room
d) All questions carry equal mark

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Question One
a) Cost classification involves the separation of group of expenses into different categories. A
classification system is used to bring management’s attention certain costs that are considered
more crucial than others.
Required:
Discuss at least five different classification of costs. (10 marks)

b) Discuss concepts of cost units, cost objects, unit costs, cost centres and costing methods.
(10 marks)
Question Two
Rosee Ltd has three Department – Processing, Assembly and Finishing. The following costs relate to 2015.
Total Processing Assembly Finishing
Tshs Tshs Tshs Tshs
Indirect materials 250,000 120,000 70,000 60,000
Indirect labour 400,000 260,000 80,000 60,000

Light & heat 90,000

Rent & rates 54,000

Machine maintanance 24,000

Plant depreciation 60,000

Factory canteen 45,000

The following information relates to the three departments:

Total Processing Assembly Finishing

Floor space in sq.meters 12,000 8,000 3,000 1,000

Volume in cubic meters 36,000 18,000 12,000 6,000

Plant book value (Tshs.) 500,000 300,000 120,000 80,000

Machine hours 50,000 25,000 20,000 5,000

Number of employees 80 40 30 10

Labour hours 120,000 60,000 45,000 15,000

Job No. 320 has just been completed. The details are:
Direct Direct Machine Labour
Materials Labour Hours Hours
Tshs. Tshs.
Processing 8,000 1,000 40 30
Assembly 1,800 3,200 20 60
Finishing - 600 4 10

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You are required to:
a) Calculate the overheads to be absorbed by each Department stating clearly the basis of
apportionment used. (10 marks)
b) Calculate the suitable overhead absorption rate for each Department. (5 marks)
c) Compute the selling price of Job no. 320 (5 marks)

Question Three
Speedy Printers is a small print company, which performs small printing jobs for a variety of customers.
The company has received an order from the Accountancy department of CBE for 4000 examination
booklets and 2,300 graph paper booklets.
Direct material
Examination Booklets Tshs. 40 per 100 Booklets
Graph Paper Booklets Tshs. 20 per 100 Booklets

Machine Printing Time

Examination Booklets 30 minutes per 100 Booklets
Graph Paper Booklets 15 minutes per 100 Booklets

Direct Labour Tshs. 12 per machine hour

Production Overheads Tshs. 16 per machine hour

Set up costs
Examination Booklets Tshs. 1000
Graph Paper Booklets Tshs. 500
Requirement:
(a) Compute the total costs of the printing job and the unit cost per booklet.
(b) Compute the unit cost for Examination booklets if the order is for 6000 booklets.

Question Four
UNICO construction ltd, is engaged in two contracts, A and B during the year. The following information is
available at the year end.
Particulars Contract A Contract B
Date of commencement April 1st September 1st
Tshs. Tshs.
Contract Price 600,000 500,000
Materials delivered directly to site 120,000 50,000
Materials issued from store 40,000 10,000
Materials returned to store 4,000 2,000
Materials on site Dec. 31st 22,000 8,000
Direct Labour payments 140,000 35,000
Direct expenses 60,000 30,000
Architect fees 2,000 1,000
Establishment charges 25,000 7,000
Plant installed at cost 80,000 70,000
Value of plant - 31st December 65,000 64,000
Accrued wages 31st December 10,000 7,000
Accrued expenses 31st December 6,000 5,000
Cost of work not certified 23,000 10,000
Value of work certified 420,000 135,000
Cash received from contractee 378,000 125,000

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During the period, materials amounting to Tshs. 9,000 have been transferred from contract A to contract
B.
You are required to:
Prepare contract accounts.

Question Five:
From the following information relating to MKSS co. Ltd. Prepare Process Cost Account for Process III for
the year 2015.

Opening Stock in Process III 5000 units of Tshs.36,000

Transfer from Process II 213,000 units of Tshs. 827,000
Direct Material added in Process III Tshs. 401,000
Direct Wages Tshs. 198,100
Production Overheads Tshs. 99,050
Units Scrapped 11,000 units
Transferred to Process IV 189,000 units
Closing Stock 18,000 units

Degree of completion:
Opening Closing
Stock Stock Scrap
Material 70% 80% 100%
Labour 50% 60% 80%
Overheads 50% 60% 80%

There was a normal loss of 5% of production and

units scrapped were sold for Tshs. 1.50

You are required to:

a) Prepare the statement of equivalent units using FIFO approach. (10 marks)
b) Prepare Process III a/c and all other supporting accounts for Process III (10 marks)