SD DOMBO UNIVERSITY OF BUSINESS AND INTEGRATED

DEVELOPMENT STUDIES

SCHOOL OF EDUCATION AND LIFE-LONG LEARNING

CENTRE FOR DISTANCE EDUCATION AND LIFE-LONG LEARNING

DEPARTMENT OF BUSINESS EDUCATION

END OF SECOND TRIMESTER EXAMINATION: MAY, 2023

2022/2023 ACADEMIC YEAR

COURSE CODE AND TITLE:

MAB 512: MANAGEMENT ACCOUNTING

Credit Hours: 3 Time Allowed: 2:30 Mins

INSTRUCTION: ATTEMPT ANY THREE (3) QUESTIONS IN THE ANSWER BOOKLET

PROVIDED.

DO NOT OPEN THIS BOOKLET UNTILL YOU ARE TOLD TO SO. YOU WILL BE
PENALISED WHEN CAUGHT IN LOOKING UNTO THE NEXT PAGE WITHOUT
BEING TOLD.

1
QUESTION ONE

World vision organization is constructing its budget for the coming year. It makes three
products: Alpha, Beta and Gamma. Sales forecasts for the year as follows:

Alpha Beta Gramma

Northern region (in units) 3,000 5,000 4,000
Southern region (in units) 5,000 7,000 6,000
8,000 12,000 10,000
Selling prices are as budgeted
Alpha GH₵60
Beta GH₵110
Gamma GH₵90
You are given the following standard cost data to make one unit:

Alpha Beta Gramma

Material X (in kilos) 2.00 3.00 2.5
Material Y (in kilos) 3.00 4.00 1.5
Labour hours Department 1 0.75 1.25 2.0
Department 2 1.50 2.00 2.5
Machine hours Department 1 1.00 1.50 2.5
Department 2 2.00 2.00 3.0
You are told:
X Y
i) Material cost per kilo (GHC) 3 2
Dept 1 Dept 2
Labour rate per hour (GHC) 4 3
ii) Production overheads are: Dept 1 Dept 2

GH₵415,000 GH₵567,200

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Overheads in Dept 1 are absorbed on a labour basis and in Dept 2 on a machine basis.
iii) Administration overheads are GH₵350,950 and are to be absorbed on the basis of labour
cost.
iv) Opening and Closing stocks are budgeted as follows:
In units In Kilos
Alpha Beta Gramma X Y
Opening stock 1,000 1,200 1,500 5,000 7,500
Closing stock 1,200 1,000 1,800 8,000 10,000

Required:
Prepared the following budgets:
i. Sales budget in revenue [5 Marks]
ii. Production budgets in unit for each product [5 Marks]
iii. Materials purchase budget [5 Marks]
iv. Departmental Labour cost budgets [5 Marks]

QUESTIONS TWO

A. Pokua Farms located in Kasoa produces 60% of fowls and 40% of guinea fowls on her
farms incurring GH₵ 10 and GH₵ 9 as variable cost per bird respectively. The market
price of both fowls and guinea fowls have dropped as a result of low demand to GH₵20
and GH₵15 respectively.

The following fixed costs are incurred annually:

GH₵

Staff cost 48,000

Rent 12,000

Electricity 6,000

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 Depreciation 8,000

Other overheads 4,000

Required;

i. Calculate the number of fowls and guinea fowls to be purchased to

breakeven. [6 Marks]
ii. If the profit target is GH₵30,000, how many birds should be provided to
meet target? [6 Marks]
B. Explain the following variances with TWO (2) relevant possible causes each;
i) Material usage variance [4 Marks]
ii) Materials price variance [4 Marks]

QUESTIONS THREE

A. Shahill Pure Water Manufacturing Company Ltd, producers of sachet pure water for
residents within Wa Municipality commenced business on 1 st January, 2022 making accounts to
31st December each year. The Company has recorded the following costs in the past six months:

Month Activity Total Cost

Units of Output GH₵

January 14,000 98,700

Febuary 12,600 91,700

March 15,300 103,350

April 14,900 101,450

May 16,100 107,080

June 16,000 107,080

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 Required; Using high/low analysis, prepare an estimate of total costs in August if
output is expected to be 15,000 units. [10
Marks]

B. Explain what is meant by basic standards and ideal standards and their effect on
employee motivation. [6
Marks]
C. Outline any TWO (2) fundamental weakness in the traditional annual budgeting
approach that exist regardless of the budgeting method that is used.
[4 Marks]

QUESTION FOUR

A. Madam Bee Ltd produces a local drink called “Solabonbeka” in Wa by mixing three
ingredients: ‘biri’, ‘kuoɔng’, and ‘sikiri’ in the proportions of 5:3:2 respectively. The
production process does not always mix the ingredients in theses proportions, but the
drink can be sold if the mixture is within certain limits. The standard cost for the
ingredients are as given below:

biri GH₵2.40 per litre

kuoɔng GH₵2.00 per litre

sikiri GH₵2.88 per litre

There is a normal loss during the process, so that the expected yield is 90%.
During the last period, 186,000 litres of “Solabonbeka” was produced.

The actual inputs were as follows:

92,000 litres of biri @ GH₵2.52 per litre

68,000 litres of kuoɔng @ GH₵1.88 per litre

42,000 litres of sikiri @ GH₵2.92 per litre

Required: Calculate the following variances:

5
 i. Material mix variance [5 Marks]
ii. Material yield variance [5 Marks]
iii. Material usage variance [5 Marks]

B. Good decisions do not only emanate from good decisions makers but also the quality of
information used in the decision –making process.

Required;

Explain TWO (2) qualities of good management accounting information [5

Marks]

QUESTIONS FIVE

The following information relates to product Jupiter, produced by Wusa field limited during
January. This presents the information that remains after a fire in the premises destroyed most of
the accounting records.

Variances GH₵

Selling price 50,000F

Materials price 28,500F

Materials Usage 7,500A

Labour rate 18,700F

Labour efficiency 20,400F

Actual data

Sales (2,500 at GH₵10) 25,000

Materials costs (112,500kg at GH₵1.20) 135,000

Labour cost (75,000 hours at GH₵1.9) 142,500

There was no opening or closing inventories

6
Required

Calculate the following;

i) Standard selling price per unit

ii) Standard cost of materials per kilogram
iii) Standards kilograms of materials required per unit
iv) Standard labour rate per hour
v) Standard hours of labour required per unit.
vi) Prepare the standard cost card per unit of product Jupiter. [ 20 Marks]

END OF PAPER