University of the Poonch Rawalakot

(FACULTY OF MANAGEMENT SCIENCES)

TERMINAL EXAM :

PAPER: Cost Accounting MB-434 MARKS 70

TIME: 2 HOURS

Question 1
The following expense have been identified:
a)
b)
c)
d)
e)
f)
g)
h)

Advertising
Salaries
Maintenance of plant and machinery
Indirect materials
Salary of factory managers
Depreciation of plant and machinery
Rent of factory building
Factory salaries and wages

Required
You are required by the management accountant to classify the above as either variable, fixed semivariable or semi-fixed.
(10)
Question 1
The following balances appeared in the books of Dodgson stores at 31 December 2013

Sales
Purchases
Debtors allowances
Creditors allowances
Stock
Freight on sales
Railage inwards
Landing charges

R
755 482
398 800
8 782
3 500
162 200
5 500
2 500
3 500

Additional information
Cost of sale has always averaged 60% of net sales
Required
Calculation of the value of closing stock at 31 December 2013.

Question 2
Arthur dealers launched a new perfume on 1 January 2013. It is envisaged that the mark-up on turnover
will be 30%. The gross profit method is to be used to estimate the value of closing stock on 31 December
2013. For the first year of trading ending 31 December 2013, the following figures we generated:
R
Sales
402 650
Purchases
276 250
Freight on sales
28 887
Railage on purchases
14 600
Returned outward
4 650
Harbour duties on purchases
13 860
Returns inwards
6 250
Required
Calculation of the closing stock figure at 31 December 2013

{25}

Question 3
Drummore PLC imports casks of Brandy from France at R7500 (all inclusive of import duties landing
charges and railage) each a standards cask contains 752 litres of Brandy is sold at R25 per bottle.
Additional information
a) An average loss in bottling of two litres of Brandy per cask can be expected. This normal loss
must be borne by the good units sold.
b) For the year ended 31 December 2013, the following information is important:
Number of casks imported
Bottles of old reserve Brandy sold
Bottles
Railage on sales to wholesalers
Commission to sales persons
Promotion and advertising
Miscellaneous administration

75 units
68 000 units (750ml)
R150 000
R76 000
R2 per litre of Brand sold
R3 per litre of Brandy sold
R600 500

Required
Compilation of an income statement for year ended 31 December 2013.

{25}

Question 4
The following information is given for Index 1B manufacturing cc
Unit sales price
R30
Variable cost per unit
R18
Total fixed costs
R150 000

Required
Determine the following:
a) Contribution margin per unit
b) Contribution margin ratio
c) Break-even sales in Rand
d) Sales in units required to achieve a net income of R18 000
e) Sales in units required to achieve a net income on sales.
{5}
f) Question 4
g)
h) The following information is given for Nitrosoft Ltd:
i)
j) Unit selling price
R500
k) Variable cost per unit
R200
l) Fixed costs
R56 000
m) Tax rate
35%
n)
o) Required
p) Determine the number of units that should be provided and sold to achieve an after tax income
q) of R6 500
(5)