Q and as-Advanced Management Accounting- June 2010 Dec 2010 and June 2011

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1 ZAMBIA INSTITUTE OF CHARTERED ACCOUNTANTS PROFESSIONAL LEVEL P2: Advanced Management Accounting June 2010 December 2010 June 2011 QUESTION PAPERS AND SUGGESTED SOLUTIONS 2 Table of Contents JUNE 2010 P2: ADVANCED MANAGEMENT ACCOUNTING ................................ 3 SUGGESTED SOLUTIONS ................................................................ 14 DECEMBER 2010 P2: ADVANCED MANAGEMENT ACCOUNTING .............................. 32 SUGGESTED SOLUTIONS .............
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    1 ZAMBIA INSTITUTE OF CHARTERED ACCOUNTANTS PROFESSIONAL LEVELP2: Advanced Management AccountingJune 2010December 2010June 2011 QUESTION PAPERS AND SUGGESTED SOLUTIONS    2 Table of Contents JUNE 2010P2: ADVANCED MANAGEMENT ACCOUNTING ................................ 3SUGGESTED   SOLUTIONS ................................................................ 14DECEMBER 2010P2: ADVANCED MANAGEMENT ACCOUNTING .............................. 32SUGGESTED   SOLUTIONS ................................................................ 44JUNE 2011P2: ADVANCED MANAGEMENT ACCOUNTING .............................. 64SUGGESTED   SOLUTIONS ................................................................ 77    3 ZAMBIA INSTITUTE OF CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS EXAMINATIONS PROFESSIONAL LEVEL P2: ADVANCED MANAGEMENT ACCOUNTINGSERIES: JUNE 2010TOTAL MARKS  – 100TIME ALLOWED: THREE (3) HOURS INSTRUCTIONS TO CANDIDATES 1. You have ten (10) minutes reading time. Use it to study the examination paper carefully so thatyou understand what to do in each question. You will be told when to start writing.2. There are SEVEN questions in this paper. You are required to attempt any FIVE questions. ALLquestions carry equal marks.3. Enter your student number and your National Registration Card number on the front of the answer booklet. Your name must NOT appear anywhere on your answer booklet.4. Do NOT write in pencil (except for graphs and diagrams).5. The marks shown against the requirement(s) for each question should be taken as an indication of the expected length and depth of the answer.6. All workings must be done in the answer booklet.7. Present Value and Annuity Tables are attached at the end of the question paper.8. Graph paper (if required) is provided at the end of the answer booklet.    4 Question 1 Mununshi Ltd has four control periods, namely periods 1, 2, 3 and 4. It started producing and selling anew type of toy in period 4 of 2008. Toys are produced in batches. The budgeting information for periods1 and 2 of 2009 is as follows:(i) All batches produced will be sold in the period of production at K2,400 per batch.(ii) Estimated production/sales is:Period 4 Period 1 Period 2Period/year 2008 2009 2009Batches 60 90 90(iii) The labour cost of batch 1 of 2008 was K1,200,000 (at K10,000 per hour). Direct labour is subjectto a learning curve effect of 80%. The labour output rates from the commencement of productionof the product, after adjusting for learning effect, are as below: Total Batches Produced Cumulative Average Time per Batch 30 40.14 hours60 32.11 hours90 28.18 hours120 25.68 hours150 23.90 hours180 22.54 hours210 21.45 hours240 20.55 hours All time will be paid for at K10,000 per hour.(iv) Variable overhead is estimated at 200% of direct labour cost.(v) Direct material is used at the rate of 200 units per batch of product for the first 40 batches of period 4, 2008. Units materials used per batch will fall by 2% of the srcinal level for each 40batches thereafter due to careful usage. Materials will be bought at K18 per unit throughout2009.(v) Fixed costs per period are K50 million.
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