UNIVERSITY OF MANAGEMENT AND TECHNOLOGY
SCHOOL OF SOCIAL SCIENE
DEPARTMENT OF: ACCOUNTING
MODULE: AFD112 COST ACCOUNTING II
2022/2023 ACADEMIC YEAR
TIME: 3HOURS
SECTION A
INSTRUCTIONS: [Attempt all questions. Each question carries 1 mark. There is
no negative mark for incorrect answers 20%.]
Q.1. which of these is not an objective of Cost Accounting?
A. Ascertainment of Cost
B. Determination of Selling Price
C. Cost Control and Cost reduction
D. Assisting Shareholders in decision making
Q2.Cost Unit is defined as:
A. Unit of quantity of product, service or time in relation to which costs may be
ascertained or expressed
B. A location, person or an item of equipment or a group of these for which
costs are ascertained and used for cost control.
C. Centres having the responsibility of generating and maximising profits
D. Centres concerned with earning an adequate return on investment
Q3.Fixed cost is a cost:
A. Which changes in total in proportion to changes in output
B. which is partly fixed and partly variable in relation to output
C. Which do not change in total during a given period despise changes in output
D. which remains same for each unit of output
Q4.Calculate the prime cost from the following information:
Direct material purchased: Le 1, 000,000
Direct material consumed: Le 90,000
Direct labour: Le 60,000
Direct expenses: Le 20,000
Manufacturing overheads: Le 30,000
A. Le 1,80,000
B. Le 2,00,000
C. Le 1,70,000
D. Le 2,10,000
Q5.Total cost of a product: Le10,000
Profit: 25% on Selling Price
Profit is:
A. Le 2,500
B. Le 3,000
C. Le 3,333
D. Le 2,000
Q6.Calculate value of closing stock from the following:
Opening stock of finished goods (500 units): Le 2,000
Cost of production (10000 units): Le 50,000
Closing stock (1000 units)?
A. Le 4,000 B. Le 4,500 C. Le 5,000
D. Le 6,000
Q7. Bin Card is a
A. Quantitative as well as value wise records of material received, issued and
balance;
B. Quantitative record of material received, issued and balance
C. Value wise records of material received, issued and balance
D. A record of labour attendance
Q8. Stores Ledger is a:
A. Quantitative as well as value wise records of material received, issued and
balance;
B. Quantitative record of material received, issued and balance
C. Value wise records of material received, issued and balance
D. A record of labour attendance
Q9.Economic order quantity is that quantity at which cost of holding and carrying
inventory is:
A. Maximum and equal
B. Minimum and equal
C. It can be maximum or minimum depending upon case to case.
D. Minimum and unequal
Q10.Which one out of the following is not an inventory valuation method?
A. FIFO B. LIFO C. Weighted Average D. EOQ
Q11. In case of rising prices (inflation), FIFO method will:
A. provide lowest value of closing stock and profit
B. provide highest value of closing stock and profit
C. provide highest value of closing stock but lowest value of profit
D. provide highest value of profit but lowest value of closing stock
Q12. In case of rising prices (inflation), LIFO will:
A. provide lowest value of closing stock and profit
B. provide highest value of closing stock and profit
C. provide highest value of closing stock but lowest value of profit
D. provide highest value of profit but lowest value of closing stock
Q13.Calculate Re-order level from the following:
Consumption per week: 100-200 units
Delivery period: 14-28 days
A. 5600 units B. 800 units C.1400 units D.200 units
Q14.Calculate EOQ (approx.) from the following details:
Annual Consumption: 24000 units
Ordering cost: Le10 per order
Purchase price: Le 100 per unit
Carrying cost: 5%
A. 310 B. 400 C. 290 D. 300
Q15.Calculate the value of closing stock from the following according to FIFO
method:
1st January, 2023: Opening balance: 50 units @ Le 4
Receipts:
5th January, 2023: 100 units @ Le 5
12th January, 2023: 200 units @ Le 4.50
Issues:
2nd January, 2023: 30 units
18th January, 2023: 150 units
A. Le 765 B. Le 805 C. Le 786 D. Le 700
Q16.Calculate the value of closing stock from the following according to LIFO
method:
1st January, 2023: Opening balance: 50 units @ Le4
Receipts:
5th January, 2023: 100 units @ Le 5
12th January, 2023: 200 units @ Le 4.50
Issues:
2nd January, 2023: 30 units
18th January, 2023: 150 units
A. Le 765 B. Le 805 C. Le 786 D. Le 700
Q17.Calculate the value of closing stock from the following according to Weighted
Average method:
1st January, 2014: Opening balance: 50 units @ Le 4
Receipts:
5th January, 2014: 100 units @ Le 5
12th January, 2014: 200 units @ Le 4.50
Issues:
2nd January, 2014: 30 units
18th January, 2014: 150 units
A. Le 765 B. Le 805 C.L e786
D. Le700
Q18.If overtime is resorted to at the desire of the customer, then the overtime
premium:
A. should be charged to costing profit and loss account;
B. should not be charged at all
C. should be charged to the job directly
D. should be charged to the highest profit making department
Q19.In ‘make or buy’ decision, it is profitable to buy from outside only when the
supplier’s price is below the firm’s own ______________.
A. Fixed Cost
B. Variable Cost
C. Total Cost
D. Prime Cost
Q20. In element-wise classification of overheads, which one of the following is not
included —?
A. Fixed overheads
B. Indirect labour
C. Indirect materials
D. Indirect expenditure
SECTION B
INSTRUCTIONS: You are require to answer any three questions in section “B”
total marks = [50%]
Q1. As part of the responsibility of NEC the president of the republic of sierra
Leone has ordered the commissioner of NEC to come up with this plan on how to
run the election on the 24th June 2023, without any problem throughout the country
one of the issue brought forward is the on the availability of the ballot papers. In a
bid fulfilled its objectives, the procurement department is about to procure the
materials that would be needed by NEC. The procurement department had place
order for the ballots papers to be distributed nationwide. The following information
relates to the purchase of the ballot papers:
 As 5,000 ballot papers are required for the year and are procured in a
minimum quantity of 500 ballot papers at a cost of Le 2 each. The usage of



a.
b.
c.
these materials is on a regularly basis and on average, half of the amount of
materials or ballot papers purchased is held in inventory for distribution.
The cost of storage of the materials is 25% of the value of the inventory of
the inventory of the materials.
The average cost of placing one order is estimated at Le 12.5
The head of procurement department MR. A.S.K has asked the accountant
Bundu to review the presence of procurement process and consider possible
ways of savings cost.
You are required:
To tabulate the cost of storage and ordering the ballots papers for each level
of orders from 4 to 12 placed per year.
Ascertain from the tabulation the number of orders that should be placed in a
year to minimize this cost.
Using the formula method to ascertain the number of orders that must be
placed in order to minimize the total cost of the ballot papers by
NEC.[20Marks]
Q2. DR. PUK Ltd has two production departments 1&2 and two ancillary service
departments x and y.
The following are the expected overhead cost for the next six months.
OVERHEAD
TOTAL
Le
Depreciation of equipment
20,000
Depreciation of factory buildings
24,000
Factory heating
8,000
Factory cleaning
4,000
Factory canteen
5,400
The following information relates to the production and services departments of
the factory:
PRODUCTION
SERVICE
Dept1:
Dept2:
Dept1:
Dept2:
1000
2000
600
400
Floor area in square metres
800
600
400
200
Number of employees
140
100
70
50
Book value of equipment
10,000
15,000
9,000
6,000
4,000
1,000
Volume in cubic meters
Machine hours
0
0
You are required to:
(i)
(ii)
(iii)
(iv)
Calculate the overhead to be absorbed by each department stating clearly
the basis of apportionment used.
Transfer the service department costs to production department 1&2 on
the basis of machine hours.
Calculate a machine hour overhead absorption rate for departments 1 &2.
Explain why it is necessary to transfer service department costs to
production department 1&2. [ note show all workings clearly] [15Marks]
Q3.Ten employees work as a group. When production of the group exceeds the
standard – 200 pieces per hour – each employee in the group is paid a bonus for the
excess production in addition to wages at hourly rates.
The bonus is computed thus: the percentage of production in excess of the standard
quantity is found, and one half of the percentage is regarded as the employees’
share. Each employee in the group is paid as a bonus this percentage of a wage rate
of Le5.20 per hour. There is no relationship between the individual worker’s
hourly rate and the bonus rate.
The following is one week’s record:
Hours worked
Monday 90
Production
24,500
Tuesday 88
20,600
Wednesday90
24,200
Thursday 84
20,100
Friday 88
20,400
Saturday 40
10,200
480
120,000
During this week, MR THOMAS worked 42 hours and was paid $3 per hour basic.
Complete the following:
(1) The bonus rate for the week was Le?
(2) The total bonus for the group for the week was Le?
(3) The total pay for MR THOMAS for the week was Le? [15Marks]
Q4.The following information related to the performance of three employees of
Professor Kamara Enterprises for the month of April, 2023.
Name of Employees
BAMBA
SAMICO
THOMAS
Actual hours worked
600
450
500
Actual production per unit
4,000
4,800
6,000
Standard time in minutes per unit
8
6
4
Actual Labor hour rate
$4.00
$5.00
$2.50
Additional Information:
A personal bonus payment of 60% standard hour is made to each worker and it is
paid at the actual labour hour worked.
Required: To calculate the followings:
A. standard hour produced
B. Standard hour saved
C. Bonus Paid
D. Total wages paid [15Marks]
Say No to Malpractice, Wish you Good Luck!