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NATIONAL OPEN UNIVERSITY OF NIGERIA
UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF MANAGEMENT SCIENCES
JULY 2018 EXAMINATION
Course Code: ACC 306 Cost Accounting
Credit unit: 3
Time Allowed: 3 Hours
Instructions: i). Attempt question number one (1) and any other (3) questions.
ii). Question number 1 carries 25 marks, while the other three (3) questions carry 15 marks each.
iii). Present all your points in coherent and orderly manner
Q1
Abudu Company Ltd makes 200 Ox Fans each month and its costs are as follows:
Direct materials N8,000
Direct labour N10,000
Production overheads N10,000
Investigations into the behaviour of costs have revealed the following information:
• Direct materials are variable costs
• Direct labour is a variable cost
• Of the production overheads, N4,000 is a fixed cost, and the remainder is a variable cost. The selling price of each Ox Fan is N200.
Requirements:
As a Cost Accountant at the Abudu Company Ltd, you are asked to:
i) Calculate the marginal cost of producing each Ox Fan
ii) Show the expected contribution per Ox Fan
iii) Prepare marginal costing and absorption costing statements to show clearly the total contribution and the total profit each month. (25 Marks)
Q2.
Define Cost Accounting and explain the differences between it and Financial Accounting. (15 Marks)
Q3
Write short note on the following:
- Marginal Cost
- Marginal Costing
- Absorption Costing
- Contribution
- Variable cost
(15 Marks)
Q4
The stores officer of NOUN has forecast the following data in respect of examination papers.
(i) Maximum Consumption = 400 units per day
(ii) Minimum Consumption = 240 units per day
(ii) Normal Consumption =320 units per day
(iv) Reorder period = 20-25 days
(v) Reorder quantity = 3,200 units
(vi) Normal reorder period = 20 days.
Requirements
- From the above information, calculate minimum stock level, maximum stock level and re-ordering level. (10 Marks)
- What are the advantages of operating central stores as compared with sub-stores?(5 Marks)
Q5
Outline how ABC system is developed and used in an organization. State its advantages to an organization. (15 Marks)
Q6.
List the methods of ascertaining actual costs and explain them.
