• Document: MANAGEMENT ACCOUNTING
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MANAGEMENT ACCOUNTING FORMATION 2 EXAMINATION - APRIL 2011 NOTES: Section A - Questions 1 and 2 are compulsory. You have to answer Part A or Part B only of Question 2. (If you provide answers to both Part(s) A and B of Question 2, you must draw a clearly distinguishable line through the answer not to be marked. Otherwise, only the first answer to hand for this question will be marked). Section B - You are required to answer any three out of Questions 3 to 6. (If you provide answers to all of Questions 3 to 6, you must draw a clearly distinguishable line through the answer not to be marked. Otherwise, only the first three answers to hand for these four questions will be marked). TIME ALLOWED: 3 hours, plus 10 minutes to read the paper. INSTRUCTIONS: During the reading time you may write notes on the examination paper but you may not commence writing in your answer book. Please read each Question carefully. Marks for each question are shown. The pass mark required is 50% in total over the whole paper. Start your answer to each question on a new page. You are reminded that candidates are expected to pay particular attention to their communication skills and care must be taken regarding the format and literacy of the solutions. The marking system will take into account the content of the candidates' answers and the extent to which answers are supported with relevant legislation, case law or examples where appropriate. List on the cover of each answer booklet, in the space provided, the number of each question(s) attempted. The Institute of Certified Public Accountants in Ireland, 17 Harcourt Street, Dublin 2. THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS IN IRELAND MANAGEMENT ACCOUNTING FORMATION 2 EXAMINATION - APRIL 2011 Time allowed: 3 hours, plus 10 minutes to read the paper. Section A: Answer Question 1 and either Part A or Part B of Question 2. Section B: You are required to answer any three out of Questions 3 to 6. SECTION A - QUESTIONS 1 AND 2 ARE COMPULSORY 1. Montrose Ltd manufactures plastic containers for the pharmaceutical industry. The factory, 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 March 2012: Allocated Overhead Costs € Cutting Department 14,000 Shaping Department 16,000 Stores Department 3,500 Maintenance Department 2,800 Other Production Overheads € Factory rent 525,000 Factory building insurance 70,000 Plant & machinery insurance 39,000 Plant & machinery depreciation 58,500 Canteen subsidy 150,000 Direct Costs € Cutting Department 144,000 Shaping Department 210,000 The following additional information is also provided: Cutting Dept. Shaping Dept. Stores Dept. Maintenance Dept. Floor area (square metres) 18,000 12,000 3,000 2,000 Value of Plant & Machinery (€) 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 REQUIRED: (a) Prepare an overhead analysis sheet based on the above information.You must clearly state the basis used for any apportionments. (8 marks) (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). (4 marks) Page 1 (c) Using the rates calculated in part (b) calculate the full production costs of the following job and the selling price if the company requires a ma

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