DBIT 402  COST ACCOUNTING.

UNIVERSITY EXAMINATIONS: 2016/2017
EXAMINATION FOR THE DIPLOMA IN BUSINESS INFORMATION
TECHNOLOGY
DBIT 402 COST ACCOUNTING
SPECIAL/SUPPLEMENTARY EXAMINATION
DATE: JULY, 2017 TIME: 2 HOURS
INSTRUCTIONS: Answer any Three Questions.

QUESTION ONE
Define and briefly explain the following terms giving specific examples:
(i) Committed costs (4 Marks)
(ii) Opportunity costs (4 Marks)
(iii) Relevant costs (4 Marks)
(iv) Sunk costs (4 Marks)
(v) Controllable costs (4 Marks)
QUESTION TWO
a) A company has been for a long time spending their funds without really monitoring their
revenues and cost.
a. Advice them on the advantages and disadvantages of budgetary control
(10 Marks)
b) A budgetary system should be designed to minimize the occurrence of dysfunctional
behaviour. This can be achieved if the systems designers and operators bear in mind the
behavioural aspects of such systems. Discuss the human aspects to be considered when
coming up with the budgetary systems (10 Marks)
QUESTION THREE
a) Explain 4 methods of labour remuneration (10 Marks)
b) Discuss five causes of labour turnover (10 Marks)
QUESTION FOUR
a) Distinguish between financial accounting and management accounting (10 Marks)
b) Costs are classified in different categories. Identify 5 of them (10 Marks)
QUESTION FIVE
A Company has an annual demand for its material amounting to 25,000 tons Pa. The purchase
price per ton for the stock item is ksh. 2,000 and the stock holding cost is 25% of the purchase
price. The ordering cost is ksh. 400 per order.
Required:
a) The EOQ (5 Marks)
b) The total holding cost (5 Marks)
c) The total ordering cost (5 Marks)
d) The total relevant cost (5 Marks)

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