INTRODUCTION TO MANAGEMENT ACCOUNTING
TIME 2 HOURS:
QUESTION ONE
The below information relates to manufacturing company
Month Units Produced Total Cost(Kes)
Jan 800 93,000
Feb 1100 114,000
Mar 1200 119,000
April 950 103,000
May 1300 126,000
June 1250 124,000
July 1000 115,000
August 1050 110,000
Sep 1000 115,000
a. Using High Low Method estimate the cost of producing 1350 units in October.
(5Marks)
b. What are the advantages and disadvantages of using this method? (5 Marks)
c. Explain regression analysis and its advantages as a technique of cost
estimation. (5 Marks)
QUESTION TWO
a. Distinguish between marginal costing and absorption costing
(3 Marks)
b. Explain process costing and ABC costing (3 Marks)
c. A manufacturing company produced a single product. During the year ended
31st Dec 2014, 30,000 units were produced. There was no opening inventory.
The costs of manufacturing were as follows:
Costs Amount in Kes
Direct Material 720,000
Direct Labour 200,000
Variable Manufacturing overheads 60,000
Fixed Manufacturing overheads 300,000
Variable selling and administration costs 180,000
Fixed selling and administration costs 270,000
TIME 2 HOURS:
QUESTION ONE
The below information relates to manufacturing company
Month Units Produced Total Cost(Kes)
Jan 800 93,000
Feb 1100 114,000
Mar 1200 119,000
April 950 103,000
May 1300 126,000
June 1250 124,000
July 1000 115,000
August 1050 110,000
Sep 1000 115,000
a. Using High Low Method estimate the cost of producing 1350 units in October.
(5Marks)
b. What are the advantages and disadvantages of using this method? (5 Marks)
c. Explain regression analysis and its advantages as a technique of cost
estimation. (5 Marks)
QUESTION TWO
a. Distinguish between marginal costing and absorption costing
(3 Marks)
b. Explain process costing and ABC costing (3 Marks)
c. A manufacturing company produced a single product. During the year ended
31st Dec 2014, 30,000 units were produced. There was no opening inventory.
The costs of manufacturing were as follows:
Costs Amount in Kes
Direct Material 720,000
Direct Labour 200,000
Variable Manufacturing overheads 60,000
Fixed Manufacturing overheads 300,000
Variable selling and administration costs 180,000
Fixed selling and administration costs 270,000
