END OF SEMESTER EXAMINATION

ELEMENTS OF COST ACCOUNTING

ACC 203
ANSWER QUESTION 6 AND ANY OTHER THREE QUESTIONS

1a. Define cost accounting

b. State two objectives of cost accounting
c. State two limitations of cost accounting

2a. State four essentials of a good costing system

b. State three differences between cost accounting and financial accounting
c. Define cost

3a. Define cost unit and cost centre

b. State the main types of cost centres
c. State the elements of cost.

4a. Explain the following:

I. Marginal cost
II. Out of pocket cost
III. Sunk cost
IV. Opportunity cost
b. List three items to be ignored when preparing cost sheet

5a. Define cost sheet

b. Calculate the following:
I. Calculate the prime cost and factory cost for the following data:
#
Cost of Direct Materials 200,000
Direct Wages 50,000
Direct Expenses 10,000
Wages of Foreman 5,000
Electric Power 2,000
Lighting of the Factory 4,000
Storekeeper’s Wages 2,500
Oil and Water 1,000
Rent of the Factory 10,500
Depreciation in Plant 1,000
Consumable Store 5,000
Repairs and Renewal Plant 7,000
II. Calculate Production Cost.

Office Rent 6,000

Office Lighting 1,250
Office Depreciation 3,500
Director’s Fees 2,500
Manager’s 10,000
Salary
Office Stationery 1,000
Telephone Charges 500
Postage and Telegrams 250

III. Calculate the cost of sales and sales

Salesman’s 10,500
Salary
Travelling 1,00
Expenses 0
Carriage Outward 750
Advertising 3,500
Warehouse 1,000
Charges
Profit margin 48,900

6. Using both methods calculate the prime cost, factory cost, cost of production, cost of sales
and profit margin
# #
Direct materials 200,000 Office stationery 1,000
Direct wages 50,000 Telephone charges 250
Direct expenses 10,000 Postage and telegrams 500
Wages of foreman 5,000 Salesmen’s’ salaries 2500
Electric power 1,000 Travelling expenses 1,000
Lighting: Factory 3,000 Repairs and renewal plant 7,000
Office 1,000 Office premises 1,000
Storekeeper’s wages 2,000 Carriage outward 750
Oil and water 1,000 Transfer to reserves 1,000
Rent: Factory 10,000 Discount on shares written 1,000
off
Office 5,000 Advertising 2,500
Depreciation Plant 1,000 Warehouse charges 1,000
Office 2,500 Sales 379,000
Consumable store 5,000 Income tax 20,000
Managers’ salary 10,000 Dividend 4,000
Directors’ fees 2,500