Attempt all questions

no copy and paste

Question 2 (a) (i ) Distinguish between period costs and product costs. (2 marks) (ii) Explain the accounting treatment of period and product costs. (2 marks) (b) Generations Construction Lid (GCL) was awarded a contract to construct health centers in a new district in Uganda. Provided is the company's trial balance extract for the year ended 30 April, 2018. Dr Cr Shs '000' Shs '000' Amount received 2,500,000 Capital 6,000,000 Buildings 1,900,000 Materials 2,000,000 Creditors 320,000 Bank balance 720,000 Wages 1,800,000 Expenses 400,000 Plant and machinery 200,000 Additional information: 1. Work on the contract commenced on 1 May 2017. 2. Materials: Shs '000' Inventory 1 May, 2017 1, 100,000 Destroyed by fire 100,000 Inventory 30 April, 2018 500,000 3. The contract price was Shs 5,000,000,000. 4. Work certified was 80% of the total contract price and uncertified work was estimated at Shs 350,000,000 on 30 April, 2018. 5. Expenses are charged to the contract at 15% of the wages. 6. Plant and machinery are depreciated at 5% per annum.Required: (i) Prepare a contract account for the year ended 30 April. 2018. (6 marks) (ii) Determine the profit or loss on the contract. (3 marks) (c) New Dawn Ltd produces a daily newspaper which is currently selling at Shs 1.500 per copy. Their cost structure includes the following: Direct materials: 60% of the total cost. Direct labour: 30% of the total cost. Overheads: 10% of the total cost. Recently the prices for materials and labour have increased by 20% and 25% respectively. Consequently the existing profit is anticipated to fall by 20% if the selling price remains the same. Required: (i) Prepare a statement showing the anticipated increase in the cost per copy. (4 marks) (ii) Determine the cost and the profit per copy. (3 marks) (Total 20 marks) Question 3 (a) Explain any three ways in which employees can commit payroll fraud and how to overcome it. (6 marks) (b) Spark Wiring Company Ltd (SWCL) deals in repairs of electric equipment in customers' homes. The following information relates the period ended 31 December. 2017: Sales recorded were Shs 18.500.000.000 and the PV ratio was 30%. Due to labour turnover. 900 productive hours were lost. The actual labour hours worked were 8.000 which include 600 hours attributed to training new staff. Required: Prepare a cash budget for Umazo Ltd for the three Months ending 31 March, 2018. (16 marks) (Total 20 marks) Question 6 (a) (b) (C) With examples explain any three methods of classifying overheads. (3 marks) Alivia Designers produces men's suits. The following is the monthly production and total costs incurred for the first six months of the year ended 30 June, 2017. Month No of suits Cost Shs January 34 6,673,921 February 24 6,238,667 March 36 6,760,972 April 49 7,326,802 May 38 6,848,023 June 22 6,151,616 Required: Using regression analysis, predict the production cost for the month of July, 2017 when the company had planned to produce 50 suits. (8 marks) T.K. Engineering Company has four departments A, B, C and D. The following are budgeted costs for the month of April, 2018: Shs '000' Rent 2,980 Depreciation of plant 1,500 Insurance of plant 800 Lighting 630 Supervision 2,400 Staff welfare 1,200 The following data relates to the four departments: A B C D Area (m2) 7500 4500 2500 1875 Book value of plant (Shs) 4,500,000 3,750,000 2,500,000 4,200,000 Number of employees 40 22 18 15 Required: Using appropriate bases apportion the overhead costs to the four departments. (9 marks) [Tni'al on market The costs incurred due to labour turnover were: Shs \"000' Recruitment 12.040 Training 7.800 Selection 3.600 Settlement of new staff 60.000 Furthermore. the company's records revealed the following: Standard time 15 hours Time taken 9 hours Hourly rate Shs 25.000 Required: (i) Calculate the profit lost as a result of labour turnover for the year ended 31 December, 2017. (8 marks) (ii) Calculate the total earnings of a worker under the Halsey premium and Rowan plans. (4 marks) (iii) Advise SWCL on the bonus scheme to adopt in order to motivate the workers. (2 mark) (Total 20 marks) Question 4 (a) (i) Define the term 'process costing'. (1 mark) (ii) Identify any three features of process costing. (3 marks) (b) Explain any two differences between job costing and process costing. (4 marks) (c) Metal and Shaft Ltd produces oil lubricants which pass through 3 processes to completion. The following information relates to Process 3 for the year ending 31 December. 2017. At the beginning of the period work in progress was 1.000 litres. Values and stage of completion for materials, labour and overheads were as follows: Shs'OOO' % Input materials (Process 3) 12,000 100 Materials added 8.600 50 Labour 6,000 60 Overhead 4.000 30 Output of 6,200 litres were transferred from Process 2 at a value of Shs 46,500,000. Other costs were as follows: Shs '000' Materials added 10,000 Labour 15,500 Overheads 16.500 On 31 December. 2017, there was closing work in progress of 800 litres which were at the following stages of completion. Input materials 100% Materials added 50% Labour 50% Overheads 60% Required: Using first in first out method of stock valuation: (i) determine the equivalent units and equivalent cost per litre. (8 marks) (ii) determine the value of opening work in progress. (2 marks) (iii) Prepare a process account for Process 3. in litres. (2 marks) (Total 20 marks) Question 5 (a) ('3) Explain any two advantages and two disadvantages of budgetary control. (4 marks) Umazo Ltd manufactures two products: Skits and Skets in department A and department B respectively. The following information relates to a period of three months ending 31 March, 2018. Standard materials and labour costs per unit: Shs Material X per kg 200 Material Y per kg 250 Direct labour per hour 400 Variable overheads are 20% of the labour costs incurred and they are recovered one month after they have been incurred. The standard material and labour usage per unit for each product is as follows: Material X Material Y Direct labour Kg Kg Hours Skits 10 8 8 Skets 12 10 10 Fixed costs are budgeted at Shs 3,000,000 for every quarter of the year and these will be recovered on a monthly basis. Umazo Ltd receives rental income from its other investments of Shs 1,500,000 plus 5% on each and every month's pay. The company incurs Shs 400,000 as a monthly retainer fee for the management of these rental investments. Sales of Skets are 60% cash and 40% credit. Credit sales are realised one month after the month of sale. Sales of Skits are 80% cash and 20% credit. Credit sales are realised after two months from the month of sale. There is a 3% discount if customers pay in the stipulated period. Budgeted monthly sales in line with budgeted production are as below: Quantity Selling price Units Shs Skits 40.000 10.000 Skets 35,000 15,500