MINISTRY OF EDUCATION AND TRAINING MANAGERIAL ACCOUNTING

NATIONAL ECONOMICS UNIVERSITY

Mode of study: Full time. Intake: 59

School of Advanced Education Programs Exam place: A2

Exam date: 15/05/2019 Exam time: 9.00

Note: Closed book

You must submit workings for all numerical questions attempted; otherwise they will not be
marked. Credit will be given for your logic/method as well as the results of your calculations.

Question 1 (4 marks)
A production worker is paid a salary of $800 per month, plus an extra 10 pence for
each unit produced during the month.
How is this type of labour cost best described?
Question 2 (6 marks)
The following data relates to the overhead expenditure of a contract cleaner at two
activity levels.
Square metres cleaned 13,500 15,950
Overheads $84,865 $97,850
What is estimated overheads if 18,300 square metres are to be cleaned?
Question 3 (4 marks)
Which of the following are normally classed as manufacturing overheads?
1. Storekeeper’s wages
2. Depreciation of forklift trucks in the factory
3. Maintenance forklift truckcs in the factory
4. Wages paid to production line employees
Question 4 (6 marks)
A production cost center charged budgeted overheads to cost units using a machine
hour rate based on the following estimates:
Total machine hours 1,000
Total oveheads $15,000
A total of 982 machine hours were used and overheads incurred were $15,160.
Calculate the amount of over- or under-applied overhead for the period?

1
Question 5 (10 marks)
Keyline Ltd. Makes three products, budgeted details of which are given below:
Q X Z
Selling price $160 $200 $180
Machine hours per unit 2 4 2
Variable cost per unit $60 $80 $90
Fixed cost $20,000
Expected sales (units) 100 500 400
Machine time available for the period is restricted to 2,000 hours.
1. Compute contribution per machine hour for each product (5 marks).
2. Compute the optimum profit for the Company (5 marks).
Question 6 (10 marks)
Selling price per unit $32
Variable cost per unit 20
Fixed costs for period $45,000
Budgeted sales for period 15,000 units
1. Compute the margin of safety % (5 marks).
2. Compute the profit at the budgeted level of activity (5 marks).
Question 7 (20 marks)
Shakespear Book Ltd has been formed to open a book shop in NEU.
1. Sales for 2020 are expected to be as follows: January $40,000, February $50,000,
March $70,000.
2. 90% of sales are for cash, the remainder of sales are on credit terms and collected
1 month later.
3. Inventory purchases are estimated to be 40% of sales each month purchased as
sales are made. Suppliers are paid one month in arrears.
4. 2 staff members will be employed at a cost of $5,000 a month which is paid in the
month incurred. Overheads are forecast to be $3,000 per month and paid one
month in arrears.
5. Rent is $36,000 per year payable annually in advance.
6. The Shop require minimum cash balance of $20,000. Assuming the beginning
cash balance of February is $22,000.
Prepare a cash budget for February, 2020.
Question 8 (10 marks)
Last year Fallon Company expected to sell 2,000 units. Budgeted variable selling
costs are sales commisions $12,000, traveling $6,000 and delivery $4,000. Fixed
selling expenses will consist of sales salaries $35,000, depreciation on delivery
equipment $7,000 and insurance on delivery equipment $1,000.
The actual sales last year were 1,950 units and selling expenses incurred last year by
Fallon Company are sales commisions $11,000, travel $5,100, delivery $3,450, sales
salaries $36,000, depreciation $7,000 and insurance $1,000.
Prepare a flexible budget performance report for last year.
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Question 9 (20 marks)
Eban Wares is an investment center of a major corporation. The following anticipated
data are for the next year of operations:
Per unit
Total
Direct materials $14
Direct labor $22
Variable manufacturing overhead 30
Fixed manufacturing overhead $4,500,000
Variable selling and administrative expenses $20
Fixed selling and administrative expenses 2,500,000
The anticipated production and sales volume 800,000
units
The company wants to earn 40% return on its unit product cost.
1. Compute the total cost per unit. (5 marks)
2. Compute the target selling price. (5 marks)
3.The corporation’s minimum required rate of return on investment is 16% and the
average operating assets of this division is $40,000,000. Assuming Eban Wares’
actual production and sales volume was 10,000 units less than budgeted volume.
a. Compute return on investment (5 marks).
b. Compute residual income (5 marks).
Question 10 (10 marks)
Presented below are data for Harmon Electrical Repair Shop for next year.
Time charge Material loading charge
Total repair-technicians’ wages $130,000 -
Fringe benefits 30,000 -
Overhead 20,000 80,000
The desired profit margin per labor hour is $10. The material loading charge is 40% of
invoice cost of parts and materials. Harmon estimates that 8,000 labor hours will be
worked next year.
1. Calculate the labor rate (5 marks).
2. If Harmon repairs a TV that takes 4 hours to repair and uses parts of $50,
compute the bill for this job (5 marks).