Baf2202 management accounting i take away cat 3
BAF2202-MANAGEMENT ACCOUNTING CAT 1&2
ANSWER ALL QUESTIONS
QUESTION 1
The following information has been assembled by Sancross Products Ltd which manufactures
and retails products A and B. The details given below relate to the year commencing 1 July
2000:
Standard
Product
Price per kg
A kg
g
Direct material – M1
Sh 4
15
20
M2
Sh 5
14
12
Standard
Product
Rate per hour
Direct labour – L1
L2
A hours
B hours
Sh 8
20
15
Sh 10
22
24
Fixed production overhead is applied on direct labour basis. Administration, selling and
distribution expenses are recovered at the rate of 20% of production cost and profit loaded at
25% of standard production cost.
Product
A
Projected sales for the year
B
Sh ‘000’
Sh ‘000’
12,033
10,053
Finished goods stock position valued at production cost is expected to be as follows:
Product
A
B
Sh ‘000’
Sh ‘000’
1 July 2000
3,000
2,000
30 June 2001
5,000
4,000
Direct material stocks valued at standard prices are as follows:
Material
M1
M2
Sh ‘000’
Sh ‘000’
1 July 2000
200
250
30 June 2001
220
270
For the year to 30 June 2001, fixed production overhead has been estimated at
Sh 1,800,000 and direct labour at 1,200,000 hours.
No opening or closing work-in-progress is anticipated.
Required:
a) Production budget in units.
b) Direct materials cost budget.
c) Purchases budget in value.
d) Direct labour cost budget.
QUESTION 2
You are in charge of making forecasts and preparing budgets. You have been supplied with
cost and revenue forecasts and details of payment as follows:
1. Forecast of revenue and costs for the quarter ending 31 March 2001
January
Shs.
February
March
Shs.
Shs.
112,000
100,000
135,000
90,000
80,000
100,000
Production
34,000
32,000
40,000
Administration
22,000
20,000
27,000
Selling and distribution
13,000
11,000
18,000
360,000
350,000
440,000
Direct
Materials (purchases)
Wages
Overhead
Sales
2. Forecast of revenue and costs for the quarter ending 30 June 2001
April
May
June
Sh.
Sh.
Sh.
Materials (purchases)
90,000
67,000
79,000
Wages
72,000
54,000
63,000
Production
45,000
36,000
40,000
Administration
22,000
25,000
27,000
Selling and distribution
13,000
11,000
16,000
Sales
350,000
360,000
360,000
Direct
Overhead
Cash balance on 1 April 2001
Sh. 90,000
Other details
• Period of credit allowed by suppliers averages two months.
• Debenture to the value of Shs. 125,000 are being issued in May 2001 and the amount is
expected to be received during the month.
• A new machine is being installed at the end of March 2001 at a cost of Sh 150,000 and
payment is promised in early May 2001.
• Sales commission of 3% is payable within one month of sales.
• A dividend of Sh 100,000 is to be paid in June 2001.
• There is a delay of one month in the payment of overheads. There is also a delay in payment
of wages averaging a quarter of a month.
• Twenty per cent of the debtors pay cash, receiving a cash discount of 4% and 70% of debtors
pay within one month and receive a cash discount of 2 ½%. The other debtors pay within two
months.
Required:
A cash budget on a monthly basis from the second quarter of the year 2001.
Deadline 21st February 2022
Name:
Description:
…
