THE UNIVERSITY OF THE WEST INDIES j ‘Semester! [] semester! C] suppiementa'Summer Schoo! L] | | Examinations of December ( /April/May [1 /July © 2014/2012 Originating Campus: Cavett = Mona st Augustine Mose: Oncampus Cl By Distance Z Course Code and Tite: MS25E/ACCT2017 Management Accounting Date: Wednesday July 18, 2012 Time: 4:00 - 6:00 p.m Duration’ = 2 Houre. Paper No: Materials required Anewor booklet: Normal D speciat OF Not required Cl Calculator: Programmable [] Non Programmable CI (where applicable) O12 O 1-100 0 Multiple Choice answer sheets: numerical alphabet Auxiliary/Other material(s) ~ Please specify: items to their desks: Pencil or pen, Ruler, ID card, Instructions to Candidates: This paper has 4 pages & 5 questions Students are required to do question one (1) and any other two (2) questions Candidates are reminded that the examiners shall take into account the proper use of the English Language in determining the mark for each response. ‘SUMMER SCHOOL 2011/2012 The UniQuestion 1 (a)The balanced scorecard is constructed on four important concepts. Discuss these concepts. (18 marks) (b) How can these concepts be applied to the Jamaican Public Sector? (12 marks) Question 2 Toy Country Corporation produces children’s toys using a liquid plastic formula and a continuous production process. In the company’s work cell, the plastic is heated and fed into a molding machine. The molded toys are then cooled and trimmed and sent to the packaging work cell. All direct materials are added at the beginning of the process. In ‘November, the beginning work in process inventory was 420 units, which were 40 percent complete; the ending balance was 400 units, which were 70 percent complete. During November, 15,000 units were started into production. The Work in Process Inventory account had a beginning balance of $937 for direct materials costs and $370 for conversion costs. In the course of the month, $35,300 of direct materials were added to the process and $31,760 of conversion costs were assigned to the work cell. Toy Country Corporation uses the weighted average method. Required: (i) Prepare the following: (a) A physical flow schedule (2 marks) (b) A schedule of equivalent units 3 marks) (c) Cost per equivalent unit (2 marks) (d) Cost of goods transferred out and ending work in progress (2 marks) (©) A cost reconciliation (2 marks) (ii) Define equivalent production. (6 marks) (ii) Under the weighted average method, how are prior ~period costs and output treated? How are they treated under the FIFO method? (4 marks) Question 3 Delille Company manufactures both traditional toothpaste and gel toothpaste, with each type of toothpaste produced in separate departments. The three support departments which are: Power, General Factory and Personnel support the two producing departments.. Budgeted data on the five departments are as follows: ‘Support Departments Producing Departments Power General Personnel ‘Traditional Gel Factory Overhead $90,000 $300,000 $120,000 $137,500 $222,500 Square feet 3,600 : 2,400 10,800 7,200 Machine hours - 1,403 1,345 8,000 24,000 Number of Employees 8 13, 7 18 14 su! 112012Required: (i) Allocate the overhead costs to the producing departments using the direct method (4 marks) (ii) Using machine hours compute departmental overhead rates. (3 marks) Gii) Allocate the overhead costs to the producing departments using the sequential method. (4 marks) (iv) Explain why it is better to allocate budgeted support service costs rather than actual support service costs (3 marks) (¥) Why is it important to identify and use causal factors to allocate support service costs? (2 marks) (vi) The reciprocal method of allocation is more accurate than either the direct or sequential methods. Do you agree? (4 marks) Question 4 Jurgens Tailoring is a costume company located in Bridgetown. Jurgens designs and creates costumes for theatrical presentations. Additionally, Jurgens alters and repairs costumes. Jurgens has three departments: design, sewing and beading, The design department overhead consists of computers and software for computer assisted design, ‘The sewing department overhead consists of thread, sewing machines and small tools. The beading department has very little overhead, just thread and some glue. Of course, all departments are assigned a share of utilities, rent, and so on, Information on estimated overhead and direct labour hours for the year by department are as follows: Estimated Overhead Estimated Direct Labour $ Hours Design Department 55,000 2,000 Sewing Department 42,000 7,000 Beading 3,000 1,000 The Aureole Dance Company has just contracted with Jurgens for 20 new costumes for a performance. Aureole has decided to stick with tried and true patterns, which Jurgens already has in stock, but to splurge on fancier materials and beading. As a result, no Design Department services are needed, Direct materials for the job will cost $6,000, The job will take 160 hours of Sewing Department time at $8.00 per direct labour hour and 400 hours of Beading Department time at $12.50 per direct labour hour. Required: (i) Caloulate a single overhead rate for Jurgens, What is the total cost of the Aureole job using this rate? (4 marks) Gi) Calculate departmental overhead rates for each department based on direct labour hours. What is the total cost of the Aureole job using these rates? (4 marks) iii) Assuming that Jurgens charges customers cost plus 25 percent, why might it be in Jurgens best interest to use a departmental overhead rate? (3 marks) ‘SUMMER SCHOOL 2011/2012(iv) _ Explain the difference between normal cost of goods sold and adjusted cost of goods sold. @ marks) (v) Explain how overhead is assigned to production when a predetermined overhead rate is used. @ marks) (vi) Explain why multiple overhead rates are often preferred to a plant-wide overhead rate. G marks) Question 5 Nataraj Company produces four products from a common input: Inex, Cumab, Depro and Sine. The joint costs for a typical month are described below. s Direct materials 63,500 Direct Labour 17,350 Overhead 50,150 The revenues from each product are as follows 3 Inex 40,000 Cumab 54,000 Depro 25,000 Sine 22,500 Management is considering processing Inex beyond the split-off point, which would increase the Inex sales value to $70,000. However, to process Inex further means that the company must rent some special equipment costing $5,000 per month and pay a royalty fee of $1,500 per month for the use of a proprietary process. Additional materials and labour needed would cost $5,000 per month. Required: (® Whatis the gross margin eamed by the four products for one month? @ marks) (ii) Should the division process Inex further, or sell it at split-off? What is the effect of the decision on monthly gross margin? (9 marks) ii) What is a joint cost and what is a by-product? ( marks) (iv) Should joint costs be considered in a sell or process further decision? Explain (3-marks) END OF QUESTION PAPER