Accounting Exam

Download and open the 2020 Integrated Report of “Merafe Resources” using the following link, and use it to answer the questions below:


Describe the role of the management accountant in this organisation. (100 Word Limit) (5 Marks)

Drawing on at least two different topics taught in the course, provide and explain two examples of the type of information that a management accountant in this organisation would supply to company management to assist in their planning and control decisions. (150 Word Limit) (7.5 Marks)


Question 2: 7 Marks

Gilmore Group has four overhead cost pools. Next year the expected overhead costs and the expected activity for the four activity-based cost drivers that would be used for each cost pool are as follows:

Overhead cost pools:

Activity-based cost drivers:




45,000 hours

Materials handling


Material moves

9,000 moves




450 setups



Quality inspections

18,000 inspections

The production manager is submitting a bid for a new job that she believes will result in future growth for the organisation.

The following estimates are for the new job:

Direct material


Direct labour (1,700 hours)


Number of material moves


Number of inspections


Number of setups


Number of machine-hours



Show all workings for the below calculations.

Assuming that 90,000 direct labour hours are used as the only overhead cost allocation base, calculate the amount of overhead that would be allocated to the new job and the total cost of the new job. (2 Marks)

Assuming that an activity-based costing system is used, calculate the amount of overhead that would be allocated to the new job and the total cost of the new job. (5 Marks)


Question 3: 8 marks

Riders Ltd has one production department and uses a weighted-average process-costing system. All materials are introduced at the start of the process. Conversion costs are incurred evenly throughout production. The company had beginning work-in-process inventories on June 1 of 82,000 units and ending work-in-process units of 90,000 units on June 30. The ending work-in-process units were 60% complete. During June, Riders completed 120,000 units. Costs in the beginning work-in-process inventory are: materials, $60,000; conversion, $110,000. During June, Riders charged production with $320,000 of materials and $730,000 of conversion costs. Required: (Round cost per equivalent unit to four decimal places)

Show all workings for the below calculations.

a. Calculate the number of units that the company started during June. (1.5 Marks)

b. Calculate the number of equivalent units with respect to direct material and conversion cost. (2 Mark)

c. Calculate the cost per equivalent unit for direct materials and conversion cost. (2 Mark)

d. Calculate the cost of ending work-in-process inventory. (2.5 Marks)


Question 4: 5.5 marks

Vector Turbo Pty Ltd manufactures retro socks and gloves for cycling.

Socks (per pair)

Gloves (per pair)

Machine hours required per unit

3 hrs

4 hrs

Standard cost per unit:

Direct material



Direct labour



Manufacturing overhead:










Variable manufacturing overhead is allocated on the basis of direct labour hours and fixed manufacturing overhead is allocated on the basis of machine hours.

The company requires 10,000 pairs of socks and 12,000 pairs of gloves. Management have decided to introduce a new apparel line. The company has only 36,000 machine hours per year that can be utilised for production of socks and gloves. An external organisation has offered to sell Vector socks for $20.00 and gloves for $25.00 per pair.

Required: (Consider each question below independently) Show all workings for the below calculations.

a. Assume that Vector has decided to manufacture all socks required and purchases gloves only as needed to satisfy requirements. Determine the number of pairs of gloves to be purchased. (2 Marks)

b. Assuming fixed costs cannot be avoided if purchasing from the external organisation, calculate the net benefit to the company of manufacturing (rather than purchasing) a pair of socks. Repeat the calculation for a pair of gloves. (2 Marks)

c. Vector does not have sufficient machine hours to produce all the socks and gloves required. Which product should Vector produce first with the limited machine time available? Why? (1.5 Marks)


Question 5: 6.5 marks

Verge Industries is preparing the budget for the following quarter. Unit sales are the same as purchases. Cost of goods sold is estimated at 30 percent of sales revenue. Purchases are to be made in the prior month to sales. Verge pays for purchases 40 percent in the month of purchase and 60 percent in the following month. Wages are estimated at 25 percent of sales and are paid during the month. Other operating expenses are estimated at 15 percent of sales and are to be paid next month.

Budgeted sales revenues for each month are prepared as follows:










Prepare Purchases Budget for December, January, and February. (1.5 Marks)

Prepare Cash Payments Budget for January, and February. (5 Marks)


Question 6: 10.5 Marks

Veloroo Company manufactures a single component. The standards for each finished product are as follows:

Direct materials: 5 lb. at $5 per kg.

Direct manufacturing labour: 3 hours at $9 per hour

Veloroo allocates variable manufacturing overhead to products on the basis of standard direct manufacturing labour-hours. For June 2020, variable manufacturing overhead was budgeted at $12 per direct manufacturing labour-hour. Fixed overhead was budgeted at $510,000 per month.

Veloroo’s actual data for June 2020 operations are as follows:

Raw materials purchased ($)


Raw materials purchased (kg.)

26,000 kg. of raw materials

Raw materials used to produce 4,500 units of finished goods

24,750 kg. of raw materials

Direct labour used

14,850 hours costing $148,500

Variable overhead costs incurred


Fixed overhead costs incurred



Calculate the following variances. Show all workings. Clearly indicate whether the variance is favourable (F) or unfavourable (U).

Materials price variance – based on materials purchased

Materials efficiency (i.e., quantity) variance – based on materials used

Labour price (i.e., rate) variance

Labour efficiency (i.e., quantity) variance

Variable overhead spending variance

Variable overhead efficiency variance

Fixed overhead spending variance

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