- 20 Marks
IMAC – MAY 2021 – L1 – Q3 – Relevant Cost and Revenue
Identifying relevant and irrelevant costs for a construction contract, and qualities and uses of management accounting information.
Question
a) Kwame Adjei has been invited to bid for a contract to construct a place of convenience for a school at Gorlu in the Upper East Region. He has estimated the following expenses to be incurred to execute the contract.
- Cost of concrete mixer bought at GH¢70,000 three years ago, has a written down value of GH¢52,000.
- Stones bought six months ago at GH¢1,800 per trip currently sells at GH¢2,200 per trip. The contractor constantly uses the stones.
- 200 bags of cement bought three months ago at GH¢40 per bag, currently sells at GH¢45 per bag.
- Sand to be bought at GH¢900 per trip.
- Each mason is to be paid GH¢80 per day.
- 600 pieces of 5” blocks sells at GH¢3 per piece.
Required: i) Identify and explain TWO (2) costs that cannot be used in bidding for the contract. (4 marks)
ii) Identify and explain THREE (3) costs that can be used to bid for the contract. (6 marks)
b) Outline FIVE (5) qualities of good management accounting information system. (5 marks)
c) State and explain FIVE (5) uses of costs and management accounting information to a profit-making organisation. (5 marks)
Find Related Questions by Tags, levels, etc.
Report an error