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NATIONAL OPEN UNIVERSITY OF NIGERIA
Plot 91 Cadastral Zone Nnamdi Azikiwe Express Way, Jabi-Abuja
FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF FINANCIAL STUDIES
JANUARY 2018 EXAMINATION
COURSE CODE: ACC 306 COURSE UNIT: 3
COURSE TITLE: Cost Accounting
TIME ALLOWED: 2 ½ Hours
Instructions: 1. Attempt question one (1) and any other (3) questions.
2. Question one (1) carries 25 marks, while the other
three (3) questions carry 15 marks each.
3. Present all your points in coherent and orderly manner
QUESTION 1
a. The Department of Budgeting and Forecast in Costal Plc has the following
information in respect of materials MGS:
Units
Normal month usage 44,000
Maximum anticipated monthly usage 57,000
Minimum anticipated monthly usage 9,800
Delivery period from suppliers:
Maximum 5 months
Normal 4 months Minimum 2 months
Re-order quantity (EOQ) 40,000 units
Required:
(a) Calculate:
(i) Re-order level
(ii) Minimum stock level
(iii) Maximum stock level.
b. During the year, 20,000 units of Z were produced and sold. Costs and revenues were:
N
Sales 580,000
Production costs:
Variable 135,000
Fixed 115,000
Administrative + selling
Overheads fixed 125,000
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Required
Show the net profit using both absorption and marginal costing approach.
c. Outline four essential elements of effective cost accounting information.
QUESTION 2
Explain the following terms:
i. Straight-line method;
ii. Reducing balance method;
iii. Production unit method;
iv. Revaluation method
v. Process costing
QUESTION3
a. State eight advantages of operating central stores.
b. State seven duties of a store keeper.
QUESTION 4
Explain the following terms:
1. Deterministic or mechanistic system
2. Stochastic or probabilistic systems
3. Adaptive or self-organizing or cybernetic systems
QUESTION 5
Describe the following costing methods:
1. Job costing
2. Batch costing
3. Contract costing
QUESTION 6
Briefly explain the following measures of performance:
1. Controllable profit
2. Divisional profit
3. Net profit
4. Controllable residual profit
5. Net residual profit