UNIVERSITY OF GUJRAT

SPRING 2020 SEMESTER FINALTERM EXAMINATION

Course Code: COMM-314/BCM-310/M.COM-402 Course Title: Managerial Accounting
Time Allowed: 150 Minutes Marks: 50
Name:______________________ Roll No: ______________

Note:All Questions carry equal marks (2.5 marks each)

Question No. 1: Does the showing of revenue from by-products on the income statement influence the
unit cost of the main product?

Question No. 2: Why is the market value method for joint cost allocation so often used by industry?

Question No. 3: What is the chief difference between the quantitative unit method and the average unit
cost method of joint cost allocation?

Question No. 4: A department’s equivalent production schedules show 10,000 units of article X and
8,000 units of article Y. Both articles are made from the same raw materials, but a unit of article X and
article Y require estimated quantities of materials in the ratio of 3:2, respectively. Both articles pass
through the same conversion process, but the article X and article Y require estimated production times
per unit in the ratio of 5:4, respectively.
Instructions: A comparison of the unit materials and conversions costs for each product if the total costs
are: materials $92,000; conversion cost $41,000.

Question No. 5: Factory overhead constitutes a much larger proportion of total manufacturing cost today
than in the past, and is expected to continue to do so. Why?

Question No. 6: Name five bases used for applying factory overhead. What factors must be considered in
selecting a particular basis?

Question No. 7: How does the selection of normal or maximum capacity affect operating profit in setting
the factory overhead rate?

Question No. 8: Over or underapplied overhead can be analyzed into parts called variances. Name these
variances, state the reason(s) for their titles, and show their computations.

Question No. 9: A company’s normal capacity is 10,000 units per year. At this capacity fixed factory
overhead is estimated to be $15,000 and variable factory overhead is estimated to be $35,000. During
August, the company produced 700 units. What is the idle capacity variance?

Question No. 10: The Speedo Company shows the following data: idle capacity variance $2,532
favorable; spending variance $1,558 unfavorable; and applied factory overhead $32,468.
Instructions: (1) Budgeted allowance based on capacity utilized, (2) Actual factory overhead.

Question No. 11: What is the significance of the average gross profit figure of the base or standard year?
Whose task is to see the planned gross profit is met?

Question No. 12: What important information is revealed by a gross profit analysis on a product basis?
Question No. 13: The following data for the Broome Corporation are available for 2019.
BUDGET ACTUAL
Product A Product B Product A Product B
Quantity 200 units 400 units 400 units 250 units
Sales price $100 $80 $98 $84
Cost $50 $60 $52 $50

Instructions: Compute Sales mix variance.

Question No. 14: Why should semi-variable expenses be separated into their fixed and variable
elements?

Question No. 15: Differentiate between (a) theoretical capacity, (b) practical capacity, and (c) normal
capacity. Is it possible to attain the theoretical capacity? Why or why not?

Question No. 16: Levis Garments Company is producing order No. 657 which called for 200 dresses.
Following costs are incurred in connection with this order.
Materials $240 per dress
Labor $165 per dress
Factory overhead $135 per dress
Instructions: Journal entries if
(a) Loss is charged to Job.
(b) If loss is charged to entire production of the period.

Question No. 17: What is the accounting treatment of defective production and how does it differ from
spoiled production?

Question No. 18: Enumerate some social responsibilities of which management should be aware.

Question No. 19: Suppose you are working as a production manager, what important factors might you
keep in mind?

Question No. 20: What you have learned after studying the Managerial Accounting as a subject? Make a
bulleted list.