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ACCT331-11A & ACCT431-11A 1^st In-Class Test

This Test constitutes 30% of your internal assessment for ACCT331 and 25% of internal assessment for ACCT431. You have 45 minutes to complete this test—including reading time.

There are three questions in this Test. You must answer all the questions. The maximum score you can achieve in this test is 35 marks.

You are expected to spend roughly the following times on the three questions:

Question 1 10 minutes

Question 2 20 minutes

Question 3 15 minutes

Total 45 minutes

Please write clearly so you can earn the marks you deserve. You must not exceed the provided space for your answers to Question 1. Only brief answers are required. Similarly you must not exceed the space provided for Questions 2 and 3.

If you do not understand the instructions or the meaning of a particular word please state any assumptions you have had to make.

Good luck.

QUESTION 1 (Short answer questions) (10 marks).

There are 5 short answer questions below. You should attempt all questions. Each question is worth 2 marks.

A. Discuss three differences between financial accounting and management accounting.

B. Distinguish planning decisions from control decisions.

C. Define product costs.  Describe two different purposes for computing product costs.

D. Describe four key perspectives in the balanced scorecard.

E.  How does a job-costing differ from a process-costing system?

For Questions 2 and 3, please use the limited pages that follow the question to write your answers.

Question 2 (15 marks)

A firm operates a process, the details of which for the period were as follows.  There was no opening work-in-progress.  During the period 8,250 units were received from the previous process at a value of $453,750, labour and overheads were $350,060 and material introduced was $24,750.  At the end of the period, the closing work-in-progress was 1,600 units, which were 100% complete in respect of materials, and 60% complete in respect of labour and overheads.  The balance of units were transferred to finished goods.

Requirements:

a) Calculate the number of equivalent units produced. (3 marks)

b) Calculate the cost per equivalent unit. (2 marks)

c) Prepare the process account (7 marks)

d) Distinguish between joint products, and by-products, and briefly explain the difference, in accounting treatment between them (3 marks)  (Total 15 marks).

Question 3 (10 marks)

The management of Springer plc is considering next year’s production and purchase budget.

One of the components produced by the company, which is incorporated into another product before being sold, has budgeted manufacturing costs as follows:

$

Direct Material 14

Direct labour (4 hours at $3 per hour) 12

Variable overhead (4 hours at $2 per hour)  8

Fixed overheads (4 hours at $5 per hour) 20

Total Cost           $54 per unit

Trigger plc has offered to supply the above component at a guaranteed price of $50 per unit.

Required:

a) Considering cost criteria only, advise management whether the above component should be purchased from Trigger plc.  Any calculation should be shown and assumptions made, or aspects which may require further investigation should be clearly stated. (6 marks)

b) Explain how your advice would be affected by the following:

“As a result of recent government legislation if Springer plc continues to manufacture this component, the company will incur additional inspection and testing expenses of $56,000 per annum, which are not included in the above budgeted manufacturing costs.”

(4 marks)