ACCT 219 – COST ACCOUNTING Question 1 1. Explain the advantages of centralized system of maintaining stores. (4 marks) 2. Explain the assumptions behind the determination of Economic Order Quantity (EOQ). (4marks) 3. The following information is given for material Y-20. Consumption: Annual 480,000 units Maximum     1,600 units/day Minimum        1200 units/day Normal        1400 units/day Re-order period  12 – 24 days Re-order quantity   32,000 units Required: 1. Re-order level. (4 marks) 2. Minimum stock level. (4marks) · Maximum stock level (4 marks)                                                                                                                   (Total: 20 marks) QUESTION 2 The following information relates to item Q002 stocked by Mutaka products Ltd for the month of April 2004: Receipts Issues Date Units Units Unit cost (Sh) April3 2,400 20 4 3,200 6 2,600 18 12 2,700 14 3,000 24 18 2,800 22 20 2,200 22 2,600 21 25 3,800 26 3,100 23 27 2,500 24 28 3,200 27 29 6,900 The closing balance for March 2004 was a batch of 2,900 units received at a unit price of Sh 21. Required: 1. Stores perpetual inventory record for item Q002 for April 2004 under LIFO and FIFO systems of stores issues.          (14 marks) 2. Closing stock valuation under the two systems (6 marks)                                                                   (Total: 20 marks) Question 3 The following balances remained in the books of Kingi Ltd and manufacturing co for the year ended 30th November 2009. Stock 1st December 2008                                                                  (000 shs) Raw materials                                                                                     400 Working in progress                                                                           200 Finished goods                                                                                    1400 Purchase of raw materials                                                                   4500 Return outwards raw materials                                                           60 Repairs to factory building                                                                 150 Salaries & wages                                                                                 120 Factory workers                                                                                  800 Salesmen                                                                                             180 Administration staff                                                                              420 Insurance                                                                                             500 Depreciation on plant                                                                          120 Depreciation on buildings                                                                   400 Advertising expenses                  .

1. ACCT 219 – COST ACCOUNTING
Question 1
1. Explain the advantages of centralized system of maintaining
stores. (4 marks)
2. Explain the assumptions behind the determination of
Economic Order Quantity (EOQ). (4marks)
3. The following information is given for material Y-20.
Consumption:
Annual
480,000 units
Maximum
1,600 units/day
Minimum
1200 units/day
Normal
1400 units/day
Re-order period
12 – 24 days
Re-order quantity
32,000 units
Required:
1. Re-order level. (4 marks)
2. Minimum stock level. (4marks)
· Maximum stock level (4 marks)
(Total: 20
marks)

2. QUESTION 2
The following information relates to item Q002 stocked by
Mutaka products Ltd for the month of April 2004:
Receipts
Issues
Date
Units
Units
Unit cost (Sh)
April3
2,400
20
4
3,200

3. 6
2,600
18
12
2,700
14
3,000
24
18
2,800
22
20
2,200
22
2,600
21
25
3,800
26
3,100
23
27
2,500

4. 24
28
3,200
27
29
6,900
The closing balance for March 2004 was a batch of 2,900 units
received at a unit price of Sh 21.
Required:
1. Stores perpetual inventory record for item Q002 for April
2004 under LIFO and FIFO systems of stores issues. (14
marks)
2. Closing stock valuation under the two systems (6
marks)
(Total: 20 marks)
Question 3
The following balances remained in the books of Kingi Ltd and
manufacturing co for the year ended 30th November 2009.
Stock 1st December
2008 (000 shs)
Raw materials
400
Working in progress
200
Finished goods
1400

5. Purchase of raw materials
4500
Return outwards raw materials
60
Repairs to factory building
150
Salaries &
wages
120
Factory workers
800
Salesmen
180
Administration staff
420
Insurance
500
Depreciation on plant
120
Depreciation on buildings
400
Advertising expenses
40
Discount allowed
10
Cleaning expenses of the building
15
Bank charges
19
Depreciation delivery van
30
Stocks on 30th November 2009
Raw materials

6. 470
Work in progress
290
Finished goods
1300
Rent
2000
Direct expenses
230
Sales
13500
Sales returns
700
Additional information
1. The company building occupies an area of 10,000m2 of this
area the factory occupies 4000m2 warehouse occupies 2500m2
and the rest is occupied by administration office
2. Prepaid insurance amounted to shs 50,000 at the end of the
year. Insurance is apportioned in the ration 2:2:1 to the factory,
warehouse and offices respectively.
· A provision of shs 50,000 needs to be made for a bonus
payable to the factory supervisors
Required
1. a) Manufacturing cost statement (10marks)
2. b) Trading profit and loss account for the year ended
30th November 2009 (10marks)

7. Question 4
Tom ltd has two production departments, A and B, and two
service departments, stores and General Services.
The company has budgeted the following costs for the
forthcoming period.
Shs
Maintenance 100
Depreciation of plant 60
Plant insurance 60
Heat and light 75
Canteen cost 30
Rent 50
Supervision 120
The following information is also available
A
B Stores General
Floor Area Square meters 15,000 8,000
3,500 3,500
Employees 50
25 15 10
Plant book value 200,000
100,000 50,000 40,000
Machine hours 80,000
60,000
Direct material usage 300,000 400,000
Overheads are absorbed in both production departments on a
machine Hour basis.
Required:

8. 1. a) Prepare an overhead analysis sheet for the period, using
suitable bases apportionment
(15 marks)
2. b) Calculate the Overhead absorption rates for each
department (5 marks)
QUESTION 5
Timau Ltd produces a detergent which passes through two
processes namely mixing and refining to completion. The
following data relate to the refining process for the month of
June 2000.
Cost of opening stock:
Shs.
Materials
100,000
Labour
25,000
Overheads
60,000
During the month 20,000 units were passed from the mixing to
the refining process. Costs incurred during the month were:
Shs.
Labour 125,000
Overheads 108,100
Other materials 45,300
At the end of the month 21,000 units had been completed and
passed to finished goods while 4,000 were still in process
having reached the following stages:

9. Materials - 100%
Labour - 40%
Overheads - 60%
Required:
Refining Process
Account.
(15marks)
QUESTION 6
On 4 May 1999, Watamu Construction Company was contracted
by Makoha Ltd. to construct a leisure park in Nairobi at a
contract price of Sh. 950,000,000. Work commenced on the
contract on 28 July 1999. Retention money was agreed at 10%
of work certified. At the end of the first year, no profits were
declared as the contract was considered to be in its infancy
The following details relate to the contract for the year ended
31 December 2000:
Sh’000
Balances brought forward 1.1.2000
Materials on site
4,500
Accrued wages
1,250
Plant (cost)
150,000
Cost of work done
158,000
Work certified to 31 December 1999
160,000
Transactions during the year.

10. Materials delivered to site:
Ex-stores
14,600
By suppliers
128,400
Additional plant (cost)
120,000
Subcontractors fees
18,450
Consultancy fee
28,000
Inspection fee
500
Salaries and wages
160,000
Head office expenses
1,200
Material transfers out
15,000
Materials sales (cost Sh 19,800)
22
Plant hire
250
Direct expenses
2,600
Total cash received from contractee
580,000
Work certified during the year
660,000
Cost of work uncertified
42,000
Balances carried forward:

11. Materials on site
51,000
Wages accrued
2,800
Plants have been purchased for use on this contract. Watamu
Construction Company provides for depreciation on plant at 12
1/2% per annum on cost.
Required:
· (i) Contract account for the year to 31 December 2000, clearly
showing the profits/ (losses) on contract for the year. (10
marks)
· (ii) Valuation of work-in-progress (5marks)
Relay Network
About Relay Network
Philadelphia based start-up
Founded when CEO Matt Gillin received a notification from
AT&T
“Secure messaging”
Relay Network is a philadelphia based start-up company, with a
secure messaging products targeted towards businesses. CEO
Matt Gillin founded Relay after selling his payment card

12. company Ecount to Citigroup, when he received a text message
from AT&T saying he hadn’t paid his bill. He thought - why
isn’t there a direct form of communication for business to
connect with their customers, and inform them of important
changes. Relay networks product does this and optimizes
communications between them.
Industry
Business-to-customer communications
Connecting with customers
80-90% of communication is done through phones
Relay Network is in the Business-to-customer communications
industry, meaning that they specialize in bringing content to the
customer. Rather than having their target audience come to them
knowing they have a problem, Relay solves a problem that the
consumers doesn’t already know exists - therefore making their
life easier and providing value in their product.
With 80-90% of communication being done through phones,
there is a huge customer base available at the tip of a marketers
fingers. Relay utilizes their apps to create a direct, personal,
and contextual interaction between customers and businesses.
Competition
Essendex
Collstream
ConvergeOne
SWOT

13. Bair
Target Audience
Bair
O-G-S-T
Objective: Rebranding
Goal: Better image to appeal to customers and businesses
Strategy: Sweepstakes

14. Tactics:
How we are going to do it and what will we use
Key Takeaways
Thank you!