MAC2601
PRINCIPLES OF MANAGEMENT ACCOUNTING
PAST EXAM PACK QUESTIONS AND ANSWERS
(2020 – 2014)
2020 MAY/JUNE EXAM QUESTIONS AND ANSWERS
2020 SUMMARISED NOTES
DISCLAIMER: Extreme care has been used to create this document, however the contents are provided “as is” without any
representations or warranties, express or implied. This document is to be used for comparison, research and reference
purposes ONLY. Directly submitting and/or reselling/ distribution / reproduction any part of this document is not permitted.
,Mac2601 may /june
First paper
Q1 absorption costing
Sales (162*105 000) 17010 000
Cost of sales (13942011)
Opening inventory (10 000*146,22) 1462 200
Direct materials (30 *98000) 2940 000
Direct labour (38*98000) 3724 000
Man overheads (50 *98000) 4900 000
Fixed man overheads(5.50*98000) 539 000
Closing inventory(3000*13565200/108000) (376811)
Gross profit 3067989
Other costs (1287 000)
Selling costs (12*105 000) 1260 000
Admin costs ( 27 000
Net profit 1780989
b)reconciliation of profits
profit under absorption costing method 1780989
c)under /over absorption
applied fixed man overheads (5.50*90 000) 495 000
actual fixed man overheads ( 560 000)
under absorption 65 000
Q2
Total machine hours used =100*550+150*800
=175000hrs
Number of set ups =150
Adventure =550/5=110
Power=800/20= 40
Number of inspections =1100*10+40*40
, =1100+1600
=2700 total inspections
NB It is 10 and 40 per every run ,so to produce 550 and 800 they were 110and 40 production runs
Cost pool Cost driver Cost/driver
Machining costs Machine hours 1750 000/175000=10/Hr
Assembly costs Number of cars 1500 000/1350=1111.11/car
Quality inspections Number of inspections 3510 000/2700=1300/insp
Stores receiving Number of parts deliverd 1740 000/696=2500/part
Stores issues Number of issues 2750 000/5500=500/issue
Allocation of costs
Details Adventure power
Machining costs (10*55000,10*120 000) 550 000 1200 000
Assembly costs (1111,11*550,1111.11*800) 611 111 888 888
Quality insp (1300*1100,1300*1600) 1430 000 2080 000
Stores receiving (2500*246,2500*450) 615 000 1125 000
Stores issues (500*2000,500*3500) 1000 000 1750 000
total 4206111 7043888
Cost per unit
Adventure =4206111/550=7647,47/car
Power =7043888/800=8804.86/car
b) ABC uses multiple activity rates while traditional method uses a single overhead rate when
apportioning overheads to products
Q3
Material price variance =(actual price –std price )actual qnty
=(58-60)295800/58
=10200 (F)
Material quantity variance=(actual qnty –std qnty)std price
=(2.5*2000-5100)60
=6000(A)
PRINCIPLES OF MANAGEMENT ACCOUNTING
PAST EXAM PACK QUESTIONS AND ANSWERS
(2020 – 2014)
2020 MAY/JUNE EXAM QUESTIONS AND ANSWERS
2020 SUMMARISED NOTES
DISCLAIMER: Extreme care has been used to create this document, however the contents are provided “as is” without any
representations or warranties, express or implied. This document is to be used for comparison, research and reference
purposes ONLY. Directly submitting and/or reselling/ distribution / reproduction any part of this document is not permitted.
,Mac2601 may /june
First paper
Q1 absorption costing
Sales (162*105 000) 17010 000
Cost of sales (13942011)
Opening inventory (10 000*146,22) 1462 200
Direct materials (30 *98000) 2940 000
Direct labour (38*98000) 3724 000
Man overheads (50 *98000) 4900 000
Fixed man overheads(5.50*98000) 539 000
Closing inventory(3000*13565200/108000) (376811)
Gross profit 3067989
Other costs (1287 000)
Selling costs (12*105 000) 1260 000
Admin costs ( 27 000
Net profit 1780989
b)reconciliation of profits
profit under absorption costing method 1780989
c)under /over absorption
applied fixed man overheads (5.50*90 000) 495 000
actual fixed man overheads ( 560 000)
under absorption 65 000
Q2
Total machine hours used =100*550+150*800
=175000hrs
Number of set ups =150
Adventure =550/5=110
Power=800/20= 40
Number of inspections =1100*10+40*40
, =1100+1600
=2700 total inspections
NB It is 10 and 40 per every run ,so to produce 550 and 800 they were 110and 40 production runs
Cost pool Cost driver Cost/driver
Machining costs Machine hours 1750 000/175000=10/Hr
Assembly costs Number of cars 1500 000/1350=1111.11/car
Quality inspections Number of inspections 3510 000/2700=1300/insp
Stores receiving Number of parts deliverd 1740 000/696=2500/part
Stores issues Number of issues 2750 000/5500=500/issue
Allocation of costs
Details Adventure power
Machining costs (10*55000,10*120 000) 550 000 1200 000
Assembly costs (1111,11*550,1111.11*800) 611 111 888 888
Quality insp (1300*1100,1300*1600) 1430 000 2080 000
Stores receiving (2500*246,2500*450) 615 000 1125 000
Stores issues (500*2000,500*3500) 1000 000 1750 000
total 4206111 7043888
Cost per unit
Adventure =4206111/550=7647,47/car
Power =7043888/800=8804.86/car
b) ABC uses multiple activity rates while traditional method uses a single overhead rate when
apportioning overheads to products
Q3
Material price variance =(actual price –std price )actual qnty
=(58-60)295800/58
=10200 (F)
Material quantity variance=(actual qnty –std qnty)std price
=(2.5*2000-5100)60
=6000(A)
