COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

AF 211: COST AND MANAGEMENT ACCOUNTING
Instructor: CPA(T) DAVID I MUSHI
GROUP ASSIGNMENT
COURSES RESPONSIBLE: BAEC2, BCOMAC2,BCOMEFIN2,BCOMM2,BAEST2,BCOMIB2
GENERAL INSTRUCTION
1. This group assignment should be conducted in a group of 10 members
2. Please avoid plagiarism of any kind
3. Deadline 28/12/2023 11:00 AM- Academic Block office number 102A
4. Use: Times New Roman, Font size 12, space 1.5
QUESTION ONE
Rider Ltd, a company located in Dar es salaam industrial area, manufactures plastic containers
for the pharmaceutical and cosmetic industries. The plant, in which the company undertakes all
of its production, has two production departments ‘Cutting’ and ‘Shaping’, and two service
departments –‘Stores’ and ‘Maintenance’.
The information provided below has been extracted from the company’s budget for the next
financial year which ends on 31 December 2022:
Allocated Production Overhead Costs Tsh

Cutting Department 140,000

Shaping Department 160,000
Stores Department 35,000
Maintenance Department 28,000

Apportioned Production Overheads Tsh

Factory rent 525,000

Factory building insurance 70,000
Plant & machinery insurance 39,000
Plant & machinery depreciation 58,500
Canteen subsidy 150,000
The following additional information is also provided:

~1~
 Cutting Shaping Stores Maintenance
Dept Dept Dept Dept

Floor area (square metres) 18,000 12,000 3,000 2,000

Value of Plant & Machinery (K) 300,000 50,000 25,000 15,000
Number of stores requisitions 1,000 500
Maintenance hours required 2,700 2,000 300
Number of employees 34 60 4 2
Machine hours 12,000 2,200
Labour hours 9,000 15,000

(a) Prepare an overhead analysis sheet based on the above information, clearly state the
basis used for any apportionments.

(b) Re-apportion the service department costs and calculate the most appropriate
overhead rate for each department (Rate should be calculated to two decimal
places).

(c) During the year ended 31 March 2012, the following hours were actually worked and
the following actual costs actually incurred:

Department Labour Hours Machine Hours Overhead costs

Incurred

Cutting 8,000 14,000 K531,500

Shaping 16,000 3,000 K405,500

Calculate the over/under absorbed overhead for each of the two departments for the
year ended 31 March 2022.

~2~
QUESTION TWO

The following information relates to the inventory of raw material Z and work-in-progress of the
only product manufactured by NEMO Company

Raw Material D

01 August Received 1,000kg @ Tzs 9.50 per kg

15 August Received 900kg @ Tzs 11.00 per kg

19 August Issued to production 800 kg

20 August Received 600 kg @ Tzs 10.50

per kg 26 August Issued to production 1,200 kg

Work-in-Progress at 31 August

600 units which are 40% complete

400 units which are 60% complete

300 units which are 80% complete

There is no opening stock of raw material z or work-in-progress at 1 August. Completed

finished goods are valued at Tzs 30.50 per unit.

Required

A. Prepare a statement showing the amount charged to production and the total value of
inventory of raw materials held after each inventory transaction (rounding to two
decimal places), using each of the following methods of inventory costing:

✓ First in, First Out (FIFO)

✓ Last In, First Out (LIFO)
✓ Weighted Average Cost(AVCO)

B. Outline the advantages and disadvantages of each of the above three (3) methods of
inventory costing.

Work-in-Progress at 31 August
600 units which are 40% complete
400 units which are 60% complete
300 units which are 80% complete
There is no opening stock of raw material D or work-in-progress at 1 August. Completed
finished goods are valued at Tzs30.50 per unit
C. Calculate the value of the company’s inventory of work-in-progress at 31 August.

~3~
QUESTION THREE
The following information relates to Maximax Ltd. It is a manufacturing business that is
considering the introduction of a piece-work incentive scheme in one of its departments, which
has 6 employees.
Current Payroll
Basic working week 38 hours
Over-time premium 20% of normal pay grade.
Normal grade A pay rate is TZS 22 per hour.
Normal grade B pay rate is TZS 18 per hour.

Employee Normal Normal Normal

Hours Worked Pay Grade Units
Produced
1 41 A 170
2 44 A 170
3 40 B 150
4 38 B 150
5 38 B 160
6 45 A 180
Piecework Incentive Scheme Proposal
Under the proposed incentive scheme, the standard time allowance would be 20 minutes
per unit. The piecework rate would be based on grade A labour rates, with a standard
piecework enhancement of 6%. All employees would receive the same piecework rate.

Required:
a. Outline the purpose of an incentive scheme.
b. Calculate the normal pay due to each employee based on the current payroll terms.
c. Calculate the standard piecework rate on the basis of the proposed incentive
scheme.
d. Calculate the normal pay due to each employee under the terms of the proposed
incentive scheme.

~4~
QUESTION FOUR

(a) The Cost Clerk of Nayo Nayo Ltd collated the following company information:

Description Cost (Tzs) Description Cost (Tzs)

Direct materials 50,000 Consumable stores 1,250
Direct labour 15,000 Manager’s Salary 2,500
Wages of foreman 1,250 Directors’ fees 625
Electric power 250 Office Stationery 250
Factory lighting 750 Telephone Charges 62.50
Office lighting 250 Postage and Telegrams 125
Storekeeper’s wages 500 Salesmen’s salary 625
Oil and water 250 Travelling expenses 250
Rent: factory 2,500 Advertising 625
Rent: Office 1,250 Warehouse charges 250
Repairs and renewals: Sales 94,750
Factory plant 1,750 Carriage outward 187.50
Transfer to reserves 500 Dividend 1,000
Discount on shares 250
written off
Depreciation:
Office premises 625
Factory Plant 250
Required:

Prepare an operating statement clearly highlighting the following:

(i) Prime cost

(ii) Factory cost
(iii) Cost of production
(iv) Cost of sales
(v) Profit

(b) Define the following terms:

(i) Cost object

(ii) Cost unit
(iii) Cost centre
(iv) Revenue centre
(v) Profit centre

~5~
QUESTION FIVE
(a) Briefly differentiate the following:
(i) Cost allocation and Cost apportionment
(ii) Cost reduction and Cost control
(b) What are the steps of the cost accounting cycle?
(c) Ambiere Co Ltd is a registered company in Tanzania. It produces three products A, B,
and C for which the standard variable cost and budgeted selling price are as follows:
A B C
TZS. TZS. TZS.
Direct material 3,000 6,000 8,000
Direct wages 4,000 4,000 10,000
Variable overheads 3,000 5,000 7,000
Selling price 18,000 25,000 48,000
In two successive periods, sales were as follows:
A B C
Units Units Units
Period I 10,000 10,000 10,000
Period II 20,000 13,000 5,000
The budgeted fixed overheads amounted to TZS.135,000 each period. Inspite of
increased sales; the profit for the second period has fallen below that of the 1st period.
REQUIRED:
Prepare a presentation to the management explaining the change in profitability

~6~