EXAMINATION PAPER
SEMESTER ONE
MODULE TITLE: MANAGEMENT ACCOUNTING
DATE: DECEMBER 21, 2016
TIME ALLOWED: 2 HOURS 15 MINUTES
, SECTION A. Answer ALL THREE questions (60 marks).
Question 1 (20 marks)
Pass&Co produces two types of products: Standard and Deluxe. Following table
provides production and direct cost information for January, 20X7:
Standard Deluxe
Units Produced 10 000 8 000
Total Direct Material $ 90 000 $ 96 000
Direct Labor Hours 8 000 8 800
Indirect costs of production for the same period were as follows:
Activity Volume
Indirect Costs Activities Standard Delux Cost Incurred
e
Machine Costs Machine Hours 1 800 1 400 $ 64 000
Set Up Costs Number of Production Runs 16 20 $ 54 000
Design and Engineering Production Orders 12 8 $ 50 000
Pass&Co currently pays $10/hour for direct labor and uses only direct labor hours to allocate
indirect costs to products.
Required
1. Calculate unit costs for both products of Pass&Co under Traditional and Activity-
Based Costing Methods for given period. (15 marks)
2. Define Cost Object, Direct Costs and Indirect Costs. Explain cost assignment to cost
objects. (5 marks)
Question 2 (20 marks)
DoNotFail Inc. produces custom made jerseys and shorts for sports fans, which are
sold at $60 and $45 respectively. Company’s estimates its beginning inventory and first two
month sales volume for next 20X7 as follows:
Inventory as of January February
Products Sales Sales
01/01/20X7
Page 2 of 12
SEMESTER ONE
MODULE TITLE: MANAGEMENT ACCOUNTING
DATE: DECEMBER 21, 2016
TIME ALLOWED: 2 HOURS 15 MINUTES
, SECTION A. Answer ALL THREE questions (60 marks).
Question 1 (20 marks)
Pass&Co produces two types of products: Standard and Deluxe. Following table
provides production and direct cost information for January, 20X7:
Standard Deluxe
Units Produced 10 000 8 000
Total Direct Material $ 90 000 $ 96 000
Direct Labor Hours 8 000 8 800
Indirect costs of production for the same period were as follows:
Activity Volume
Indirect Costs Activities Standard Delux Cost Incurred
e
Machine Costs Machine Hours 1 800 1 400 $ 64 000
Set Up Costs Number of Production Runs 16 20 $ 54 000
Design and Engineering Production Orders 12 8 $ 50 000
Pass&Co currently pays $10/hour for direct labor and uses only direct labor hours to allocate
indirect costs to products.
Required
1. Calculate unit costs for both products of Pass&Co under Traditional and Activity-
Based Costing Methods for given period. (15 marks)
2. Define Cost Object, Direct Costs and Indirect Costs. Explain cost assignment to cost
objects. (5 marks)
Question 2 (20 marks)
DoNotFail Inc. produces custom made jerseys and shorts for sports fans, which are
sold at $60 and $45 respectively. Company’s estimates its beginning inventory and first two
month sales volume for next 20X7 as follows:
Inventory as of January February
Products Sales Sales
01/01/20X7
Page 2 of 12
