QUESTION ONE

Beginning inventory was 12,000 units, one-fourth complete as to labour and factory
overhead. 90,000 units were started in process during the period and 84,000 units
were finished during the period. There were 18,000 units in ending work in process,
one-third complete as to labour and factory overhead.

Assuming the use of the FIFO costing method and that all materials are put into
production at the beginning of the process, while labour and overhead are applied
evenly throughout production, calculate the equivalent units of production for direct
materials, direct labour and factory overhead. (10 marks)

QUESTION TWO

In a given period the production data and costs for a process were:

Production 6,300 units fully complete

2,100 units partly complete
The degree of completion of the partly complete units was:
Material 70% complete
Labour 60% complete
Overheads 50% complete
The costs for the period were:
Materials K77,700
Labour K60, 480
Overheads K77,550
Calculate the total equivalent production, the cost per complete unit and the
value of the WIP. (15 marks)

QUESTION THREE

a) XYZ furnishers furnishes you the following information relating to the half
year ended June 30, 2017:
K
 Fixed cost 450,000
Sales 1,500,000
Profit 300,000
During the second half of the year, the company has projected a loss of
K50,000.00

Calculate:
i. The Kwacha breakeven point and the margin of safety for the first six
months ending June 30, 2017. [8 marks]
ii. Expected volumes of the second half of the year assuming that fixed costs
and P/V ratio remain constant in the second half of the year. [3 marks]
iii. The breakeven point and margin of safety for the whole year [8 marks]

QUESTION FOUR
Madia Limited has provided the following costing data for your analysis:

Production depts. Service depts.

Total A B C Stores Transport
K K K K K K
Indirect Materials A 28,000 18,000 10,000 0 0 0
Indirect Materials B 22,000
Rent and rates 18,000
Plant depreciation 10,000
Material handling 8,000
Supervision cost 9,000
Inspection cost 13,000
Environmental Charge 14,000
General Repairs 6,000
Direct expenses 8,000
========
TOTAL 136,000
========

Basis A B C Stores Transport

Area occupied (m2) 200 250 180 80 20

Plant Cost (K’000) 80 70 30 10 5

Number of inspections 50 30 40 0 0

Genera repair hours(maintenance) 10 8 4 2 1

Environmental charges % 40 35 25 0 0
 No. of stores requisitions 10 8 6 2 0

No of employees 200 100 50 20 10

Indi Material B charge % 50 50 0 0 0

Stores apportionment % 50 30 20 0 0

Transport apportionment % 50 30 10 10 0

Required:

Using the information given

(i) Prepare an overhead analysis sheet to show the total overhead cost under
each production cost centre. (15
Marks)
(ii) Calculate an overhead absorption rate for the production departments given the
following level of activities:
A 5,000 machine hours,
B 3,000 machine hours
C 2,000 labour hours
(5 Marks)
(iii) Calculate the overhead costs for a job which requires 20 machine hours from
department A , 16 machine hours from department B and 6 hours from
department C. (5 marks)