NATIONAL OPEN UNIVERSITY OF NIGERIA
14/16 AHMADU BELLO WAY, VICTORIA ISLAND, LAGOS
SCHOOL OF MANAGEMENT SCIENCES
MARCH 2014 EXAMINATION
Course Code: BHM780 Credit Unit: 3
Course Title: Management Accounting
Time Allowed: 2 hours 15 minutes
Attempt question one and any three questions of your choice. Question one carries 25 marks while others carry 15 marks each. Present your answer in coherent and orderly manner.
1. MARCATI Plc manufactures and sells a unique product of paper coat, the selling price is N40. The summarized profit and loss statement for 31 December 2012 is as follows:
Direct material 100,000
Direct wages 180,000
Variable production overhead 120,000
Fixed production overhead 80,000
Selling and administration 60,000
Administration 55,000 595000
Net profit before tax 355,000
Less Tax at 40% 142,000
Profit after tax 213,000
You are required to determine:
a. The quantity of paper coat produced;
b. The contribution per unit;
c. The contribution margin ratio;
d. The break-even point in both units and sales; and
e. Explain the term contribution margin ratio.
2. a. State five (5) basic assumption of capital rationing decisions.
b. Explain the term (i) cost unit and (ii) cost centre
3. a. Distinguish between financial accounting and management accounting.
b. Outline five (5) advantages of the payback period.
4. a. Write out five (5) factors that will determine pricing policy.
b. State the meaning of capital budgeting decision and list four example of such decision
5. a. Define and explain activity based costing.
b. Outline the disadvantages of accounting rate of return.
6. a. Give five (5) reasons why you think cost of product arrived at in traditional accounting system is not so adequate.
b. List four (4) advantages of accounting rate of return
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