MANAGERIAL ACCOUNTING BUSINESS AND ECONOMICS ACCOUNTING, FINANCE AND INVESTMENT
REVISION QUESTIONS ACCT 321 MANAGERIAL ACCOUNTING BUSINESS AND ECONOMICS ACCOUNTING, FINANCE AND INVESTMENT
a)	Distinguish between the “breakeven point” and the “cost indifference point” as used in cost volume profit C-ve analysis. 			(4mks)
b)	Outline the purpose of budgeting in an organization. 	(4mks)
c)	The following data related to the products activities of Mambo ltd for the financial year ended 31st December 2007:
Unit cost (shs.)
Direct materials 							22.50
Direct wages 							6.00
Variable overhead 						1.50
Fixed factory overhead (sh) 					1,620,000 per annum
Fixed selling and administration overhead (sh).		1,020,000 per annum
Capital employed in fixed assets (sh) 			1,800,000
(i)	Capital employed on current assets
(ii)	The annual sales amounted to 800,000 units.
Determine the selling price per unit required to yield a 20% return on capital employed. 								(8mks)
d)	Management accounting approaches differ among different organization. In this regard, the contingency theory approach advocates that the design of management accounting information systems should depend upon the contigent variables.
Discuss the contingent variables that influence the design of management accounting information systems. 						(10mks)
e)	Describe the key considerations that should be applied in presenting information for product mix decision when capacity constraints exist. 													(4mks)
a)	State the advantages of using standard costs in the manufacturing industry. 									(8mks)
b)	Ufundi furniture ltd. Manufactures a wide range of home furniture. Recently the company added to tis range a side board. The standard cost specification for each side board is given below:
Material L	 	Timber (sh. 280 per kg) 			6kg
Varnish. (sh. 300 per litre) 		0.5 litres
Labour 		(sh. 60 per hour) 				8 hours
During the month of September 2004, 620 side boards were manufactured. The actual quantities and costs incurred were as follows:
Materials Timver ksh 	4,500			1,125,000
Varruish 	290			364,000
Labour hours 		5,200			364,000
The abnormal idle hours were recorded as 4800 hours
(i)	Materials price variance (for both materials)		(2mks)
(ii)	Materials usage variance (for bot materials) 		(2mks)
(iii)	Labour rate of pay variance. 					(2mks)
(iv)	Labour efficiency variance 					(2mks)
(v)	Idle time variance 							(2mks)
(vi)	Suggest possible causes of the materials variances. 	(2mks)
a)	Outline four standards of ethical conduct for management accountants. 												(4mks)
b)	Wawera ltd produces a wide range of electronic components. The company is preparing budgets for the financial year 2013. The management accountant has obtained the following data on components X a key element in the Master budget.
Year 	2009	2010	2011	2012
Sales revenue (shs)
Variable cost (shs) 	150,000
Sales for the year 2013 have been estimated at 260,000 units.
(i)	Using linear regression, project the trend and estimated the contribution for the year 2013.
(ii)	Calculate the 95% confidence interval of the contribution forecast for the year 2013 in (b) (i) above, given that the standard error of the forecast is sh. 14,500 and the t-value is 4.303 interpret your answer. (6mks)
(iii)	Comment briefly on the appropriateness of using linear regression of forecast. 								(4mks)
You are a management accountant of Wananchi consultants ltd, a firm engaged in organizing workshops and service on the implementation of public sector policies. Recently, the firm worn a major training contract that will involve organizing workshops in eight towns in the country. The workshops will be organized on a weekly business in all the eight towns throughout the year.
As part of the preparations for the workshops, the firm intends to enter into a one year contract with Mikutano properties ltd which owns workshop facilities in each of the eight towns.
Facility 	Capacity (no of participants) 	Cost per worships.
A 	100	600,000
B	200	1,080,000
C	300	1,440,000
D	400	1,600,000
(i)	Under the terms of the contract with Mikutano properties ltd, only one type of facility can be selected to bear all the workshops.
(ii)	Wajuzi consultant’s ltd will charge a standard fee of sh. 8000 per workshop participants.
(iii)	Facilitators for the workshops will be drawn from Wananchi consultants ltd, the central and country governments. From the past examples, the number of worshop participants will depend on whether the workshop is facilitated by Wananchi consultants ltd, the county government or the country government. The proportion of worshop to be facilitated by each of the three entries and the expected number of participants is as follows
Facilitator	% of Workshop to facilitate	Expected no of participants per workshop
wananchi consultant ltd
Central government 	30	400
County government 	50	200
Assume a 52 week year
a)	Using the expected value (EV) criteria, advise Wananchi consultants ltd on the workshop facility to select the contract with Wananchi properties ltd. 												(10mks)
b)	Assess whether your decision in (a) above would change if the following criteria were used
(i)	Maxmin 	criteria						(5mks)
(ii)	Minimax criteria						(5mks)
Write explanatory notes on each of the following
a)	Just in Time production (JIT)					 (3mks)
b)	 Equivalent units in process costing. 				(3mks)
c)	Activity based costing. 						(4mks)
d)	Learning curve theory. 						(3mks)
e)	Set up time. 								(3mks)
f)	Product costing.							 (3mks)