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ACCA Certified Accounting Technician Examination Paper T4 Accounting for Costs Section A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 C C A C D B D C A D C B B C A A B C D C

June 2011 Answers

Workings: 2 [$137,000 + ($55,000 x 20/50)]

[(250 at $450) + (50 at $400)]

(180 x 20)

13 [(4,220 x $15) $230]

15 (3,000 x $760)

16 [(6,150 x 09) 5,820]

17 [(7,000 5,400) x 07]

18 [$72,000 (21,000 + 640)]

19 [$10,000 x (1 + 005)4]

20 (50,000 5,000)

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Section B 1 (a) The accounting system is an integrated system, combining the cost accounts and the financial accounts in a single set of accounting records using a common input of data for all accounting purposes. This is indicated by the debit entry in the raw materials inventory account referring to the corresponding credit entry being in the trade payables account. In an interlocking system the debit entry for amounts owed to a supplier for materials purchases would be in a cost ledger control account. Details of trade payables would be held in a separate financial ledger. (b) (i) (ii) (c) The main characteristic of job costing is that costs are attributed to individual jobs. Individual jobs each become a separate cost unit.

The costing term is defining an overhead or indirect cost.

(a)

Accommodation revenue per occupied bedroom per night: Number of occupied bedroom nights = 90 bedrooms x 078 occupancy x 30 nights = 2,106 Accommodation revenue per occupied bedroom night = $157,950 revenue 2,106 occupied bedroom nights = $75

(b)

Total costs in each profit centre ($): Accommodation Direct costs: Food Payroll Cost apportionment: Laundering Room cleaning General overheads Restaurant 14,760 12,240 27,000 6,180 23,580 53,686 83,446 $83,446 2,060 2,620 15,214 19,894 $46,894 8,240 26,200 68,900* 103,340 Total

Total costs

* 68,900 x [157,950 (157,950 + 44,760)] = 53,686 68,900 x [44,760 (157,950 + 44,760)] = 15,214 (c) Accommodation cost per occupied bedroom per night: = $83,446 costs of accommodation 2,106 occupied bedroom nights = $3962 Restaurant loss per meal served: Revenue Costs Loss 1,420 meals served = $150 loss per meal served $44,760 $46,894 $2,134

(d)

(a)

Net present value of Project A = (annual cash inflow x annuity rate for four years at 10%) investment. ($31,000 x 3169) $90,000 = $8,239

(b)

Internal rate of return of Project A: Present value at 15% = ($31,000 x 2856) $90,000 = ($1,464) Estimated internal rate of return = 10% + {5% x [8,239 (8,239 + 1,464)]} = 142%

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(c)

Net present value of Project B = ($8,500 01) $70,000 = $15,000

(a)

Selling price of $1100 per unit: (i) Break-even point = Fixed costs contribution per unit $15,000 ($1100 $600) = 3,000 units Margin of safety = Estimated sales break-even sales 5,000 3,000 = 2,000 units (ii) The break-even point would reduce because the contribution per unit would increase while fixed costs would be unchanged. The margin of safety would reduce (6,000 3,750 = 2,250 units down to 2,000 units) because the reduction in estimated sales (6,000 5,000 = 1,000 units) is greater than the reduction in break-even point (3,750 3,000 = 750 units).

(b)

Selling price at $1000 per unit: Sales volume required for $10,000 profit = (Fixed costs + target profit) contribution per unit ($15,000 + $10,000) ($10 $600) = 6,250 units

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ACCA Certified Accounting Technician Examination Paper T4 Accounting for Costs

June 2011 Marking Scheme Marks

(a)

Integrated Reasoning (i) (ii) Characteristic Cost unit

1 3

4 2 2 2 10

(b)

(c)

Overhead/indirect cost

(a)

Occupied room nights Revenue per occupied room night Direct costs Cost apportionment: Laundering Room cleaning General overheads Cost per occupied room night Total loss Loss per meal served

3 2 2 2 2 3

(b)

9 2

(c) (d)

2 2

4 20

(a)

Present value of inflows investment = net present value Present value at 15% 10% + 5% Internal rate of return % Present value of inflows investment = net present value

2 1 1 2 2 3 2 1 1

(b)

(c)

4 15

(a)

Break-even calculation Margin of safety calculation Break-even explanation Margin of safety explanation Fixed costs + profit Sales volume required

3 2 2 3 2 3

(b)

(c)

5 15

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