INTRODUCTION TO MANAGEMENT ACCOUNTING – Page 8

ICMA – Nov 2024 – L1 – Q5b – Budgeting Models and Systems

Explain the benefits of GIFMIS to the government of Ghana.

Question

Efforts to improve Public Financial Management (PFM) Systems in Ghana led to the Ghana Integrated Financial Management Information System (GIFMIS), which is an adaptation of the Integrated Financial Management Information System (IFMIS). The rationale of GIFMIS is to establish an integrated ICT-based PFM system in Ghana at national, regional, and district levels.

Required:

State FOUR benefits of GIFMIS to the government of Ghana.

Answer

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Tags: Budgeting, Financial Reporting, Fiscal Policy, GIFMIS, Government Accounting, Public Financial Management
Level: Level 1

Topic: Budgeting Models and Systems
Series: Nov 2024

ICMA – Nov 2024 – L1 – Q5a – Cost Segregation and Estimation

Determine fixed and variable cost components using regression analysis and estimate total cost for a given production level.

Question

Ebo LTD is planning to determine its variable and fixed cost elements for its planned activity level for the next year. The company has recorded the following costs and production units in the past six months:

Month	Units (X)	Cost (Y)
January	5.8	40.3
February	7.7	47.1
March	8.2	48.7
April	6.1	40.6
May	6.5	44.5
June	7.5	47.1

Required:

i) Construct the least square regression model.
ii) Determine the variable cost per unit of output using the model.
iii) Determine the fixed cost for the month using the model.
iv) Estimate the total cost if the company plans to produce 6,200 units.

Answer

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Tags: Cost Estimation, Fixed Cost, Least Squares Method, Regression Analysis, Variable Cost
Level: Level 1

Topic: Cost Segregation and Estimation
Series: Nov 2024

ICMA – Nov 2024 – L1 – Q4b – Day-Rate Incentive Scheme Calculation

Calculates the cost per unit for both low and high day-rate incentive schemes.

Question

Amanda LTD – Day-Rate Incentive Scheme
Amanda LTD is a manufacturing company and its management is considering the introduction of a high day-rate incentive scheme. During one of such production periods, record shows that, if an employee makes 100 units in a 40-hour week, the employee is paid GH¢2 per hour, but if 120 units are made, the employee is paid GH¢2.50 per hour. Production overhead is added to cost at the rate of GH¢2 per direct labour hour.

Required:
i) What is the cost per unit for the low day-rate scheme?
ii) What is the cost per unit for the high day-rate scheme?

Answer

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Tags: Cost Calculation, Day Rate Scheme, Incentive Scheme
Level: Level 1

Topic: Marginal Costing and Absorption Costing
Series: Nov 2024

ICMA – Nov 2024 – L1 – Q4a – Apportionment of Overheads

Apportion overhead costs across departments based on the most appropriate bases.

Question

: Apportionment of Overheads
The following expenses were estimated for the month of June 2024:

Item	GH¢
Electricity	80,000
Rent	18,000
Property rate	6,000
Insurance premium (office equipment)	15,000
Internet and communication	25,000
Indirect wages	60,000

There are three departments: A, B, and C. The following additional information has been provided:

Department	Area occupied (sq. metres)	Number of customers	Number of employees	Value of office equipment (GH¢)
A	300	700	120	50,000
B	450	600	150	40,000
C	250	500	130	60,000

Required:
Apportion the above overheads using the most appropriate base and determine the total overhead for each department.

Answer

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Tags: Cost Allocation, Departmental Costs, Overhead Apportionment
Level: Level 1

Topic: Cost Segregation and Estimation
Series: Nov 2024

ICMA – Nov 2024 – L1 – Q3d – Fixed Overhead Volume Variance

Explains the concept of fixed overhead volume variance and lists potential causes for such variances.

Question

Fixed Overhead Volume Variance
Fixed overhead volume variance (FOVV) measures the difference between the actual fixed overheads incurred and the fixed overheads that should have been incurred at the actual level of activity.

Required:
Explain fixed overhead volume variance and TWO possible causes of such variances.

Answer

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Tags: Cost Control, Fixed Overhead, Volume Variance
Level: Level 1

Topic: Standard Costing and Variance Analysis
Series: Nov 2024

ICMA – Nov 2024 – L1 – Q3c – Material and Labour Variances

Calculates material and labour variances based on given actual and standard cost data.

Question

Material and Labour Variances
The data below relates to Agbamame Enterprise for its flagship product, “Herb of Life”:

Standard Cost Card – Per Unit of Herb of Life

Description	Cost (GH¢)
Direct materials	5 kg at GH¢4 per kg = GH¢20
Direct labour	4 hours at GH¢15 per DLH = GH¢60
Variable overhead	4 hours at GH¢20 per DLH = GH¢80
Fixed overhead	GH¢50 per unit

Budgeted production: 600 units
Actual sales and production: 550 units

Actual cost of:

Actual Costs	Cost (GH¢)
Labour (1650 hours)	16,500
Materials (1650 kg)	5,775
Fixed overhead	15,000
Variable overhead	13,275

Data shows that 5% of labour hours paid for was idle, and 10% of materials bought was in stock at the end of the period.

Required:
i) Calculate the material variances.
ii) Calculate the labour variances.

Answer

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Tags: Labour Variance, Material Variance, Standard Costing, Variance Analysis
Level: Level 1

Topic: Standard Costing and Variance Analysis
Series: Nov 2024

ICMA – Nov 2024 – L1 – Q3b – Relevant Cost Concepts

Explains two key concepts of relevant cost used in decision-making.

Question

Relevant Cost
Relevant cost should be used for assessing the economic and financial consequences of any decision made by management. Only relevant cost and benefits should be taken into consideration when evaluating the financial consequences of a decision.

Required:
Explain TWO key concepts of relevant cost.

Answer

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Tags: Costs, Financial Decision-Making, Management Accounting, Relevant Cost
Level: Level 1

Topic: Relevant Cost and Revenue
Series: Nov 2024

ICMA – Nov 2024 – L1 – Q3a – Value for Money (VFM)

Explains the components of Value for Money (VFM) in the public sector.

Question

Value for Money (VFM)
Value for Money (VFM) is an objective that can be applied to any organization whose main objective is non-financial but has restrictions on the amount of finance available for spending, which the public sector is no exception.

Required:
Explain the components of VFM.

Answer

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Tags: Economy, Effectiveness, Efficiency, Public Sector, Value for Money
Level: Level 1

Topic: Cost-Volume-Profit (CVP) Analysis
Series: Nov 2024

ICMA – Nov 2024 – L1 – Q2c – Government Budgeting Challenges

Identifies and explains the challenges or limitations in government budgeting.

Question

Challenges in Government Budgeting
Budgeting in the public sector relates to a process of translating government plans and policies into financial terms by systemically relating cost to attaining the objectives of government plans and policies. As important as this process is, there are some challenges and limitations associated with government budgeting.

Required:
State FOUR challenges (limitations) of government budgeting.

Answer

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Tags: Budgeting Challenges, Financial planning, Government Budgeting, Public Sector
Level: Level 1

Topic: Budgeting Models and Systems
Series: Nov 2024

ICMA – Nov 2024 – L1 – Q2b – Working Capital

Calculates total amount held in working capital excluding cash and equivalents.

Question

Working Capital Calculation
A company has annual sales revenues of GH¢45 million and the following working capital periods:

Working Capital Item	Period (months)
Inventory conversion period	2.5
Accounts receivable collection period	2.0
Accounts payable payment period	1.5

Production costs are 70% of sales revenue.

Required:
Calculate the total amount held in working capital excluding cash and cash equivalents.

Answer

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Tags: Accounts Payable, Accounts Receivable, Budgeting, Costing, Inventory
Level: Level 1

Topic: Budgeting, Cost and Cost Behaviour
Series: Nov 2024

IMAC – NOV 2019 – L1 – Q2 – Budgeting

Explain purposes of budgeting, stages in budgeting process, and differences between master and functional budgets.

Question

Question:
You have been approached by the Managing Director of a small company that has recently been set up. The company is hoping to obtain a significant amount of bank finance to support its activities and it has been asked to supply various documentations as part of its funding application. The Managing Director has provided all of the required information except that of the forthcoming year. He has explained to you that he really doesn’t understand why this has been requested and further confesses that he is unsure about how exactly a budget is prepared.

Required:
a) State and explain THREE (3) purposes of budgeting. (6 marks)
b) State the stages in the budgeting process. (6 marks)
c) Differentiate between master budget and functional budget and identify TWO (2) advantages and ONE (1) disadvantage associated with these budgets. (8 marks)

Answer

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Tags: Budgeting Process, Master Budget, Purposes of Budgeting
Level: Level 1

Topic: Budgeting
Series: NOV 2019

IMAC – NOV 2019 – L1 – Q1 – Job Costing

Calculate overhead absorption rates and estimate the costs and invoice price for a job.

Question

You have just been appointed the full-time Management Accountant for Genuine Jobbers Limited, a company based in the North Industrial Area in Accra that produces cartons to meet customers’ specific requirements. You have been tasked to determine the cost and invoice price per job for the forthcoming period and have been provided with the following:

Budgeted statement of profit or loss for the financial year ended 31 March, 2020:

The sales department is currently negotiating a price for an enquiry for job number 45A/2020 and the following information has been provided for that purpose:

Direct costs estimates:

	GH¢
Direct material	18,000
Direct labour: Grinding department 400 hours @ GH¢10 each	4,000
Finishing department 300 hours @ GH¢12 each	3,600

Note:

It is recommended that production overheads are charged to jobs on the basis of direct labour hours worked.
Selling and administrative expenses are charged at 10% of production cost.
It is a policy of the company to make a profit margin as budgeted on each job.

Required:
a) Compute the overheads absorption rates for each of the production departments. (4 marks)
b) As the Management Accountant, estimate the costs of Job 45A/2020 in the light of the information provided, and hence an invoice price for the Sales Manager’s use. (16 marks)

Answer

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Tags: Invoice Price Calculation, Job Costing, Overhead Absorption
Level: Level 1

Topic: Job Costing
Series: NOV 2019

Subject: INTRODUCTION TO MANAGEMENT ACCOUNTING

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ICMA – Nov 2024 – L1 – Q5b – Budgeting Models and Systems

Explain the benefits of GIFMIS to the government of Ghana.

Required:

ICMA – Nov 2024 – L1 – Q5a – Cost Segregation and Estimation

Determine fixed and variable cost components using regression analysis and estimate total cost for a given production level.

Required:

ICMA – Nov 2024 – L1 – Q4b – Day-Rate Incentive Scheme Calculation

Calculates the cost per unit for both low and high day-rate incentive schemes.

ICMA – Nov 2024 – L1 – Q4a – Apportionment of Overheads

Apportion overhead costs across departments based on the most appropriate bases.

ICMA – Nov 2024 – L1 – Q3d – Fixed Overhead Volume Variance

Explains the concept of fixed overhead volume variance and lists potential causes for such variances.

ICMA – Nov 2024 – L1 – Q3c – Material and Labour Variances

Calculates material and labour variances based on given actual and standard cost data.

ICMA – Nov 2024 – L1 – Q3b – Relevant Cost Concepts

Explains two key concepts of relevant cost used in decision-making.

ICMA – Nov 2024 – L1 – Q3a – Value for Money (VFM)

Explains the components of Value for Money (VFM) in the public sector.

ICMA – Nov 2024 – L1 – Q2c – Government Budgeting Challenges

Identifies and explains the challenges or limitations in government budgeting.

ICMA – Nov 2024 – L1 – Q2b – Working Capital

Calculates total amount held in working capital excluding cash and equivalents.

IMAC – NOV 2019 – L1 – Q2 – Budgeting

Explain purposes of budgeting, stages in budgeting process, and differences between master and functional budgets.

IMAC – NOV 2019 – L1 – Q1 – Job Costing

Calculate overhead absorption rates and estimate the costs and invoice price for a job.

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ICMA – Nov 2024 – L1 – Q5b – Budgeting Models and Systems

Explain the benefits of GIFMIS to the government of Ghana.

Required:

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ICMA – Nov 2024 – L1 – Q5a – Cost Segregation and Estimation

Determine fixed and variable cost components using regression analysis and estimate total cost for a given production level.

Required:

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ICMA – Nov 2024 – L1 – Q4b – Day-Rate Incentive Scheme Calculation

Calculates the cost per unit for both low and high day-rate incentive schemes.

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ICMA – Nov 2024 – L1 – Q4a – Apportionment of Overheads

Apportion overhead costs across departments based on the most appropriate bases.

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ICMA – Nov 2024 – L1 – Q3d – Fixed Overhead Volume Variance

Explains the concept of fixed overhead volume variance and lists potential causes for such variances.

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ICMA – Nov 2024 – L1 – Q3c – Material and Labour Variances

Calculates material and labour variances based on given actual and standard cost data.

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ICMA – Nov 2024 – L1 – Q3b – Relevant Cost Concepts

Explains two key concepts of relevant cost used in decision-making.

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ICMA – Nov 2024 – L1 – Q3a – Value for Money (VFM)

Explains the components of Value for Money (VFM) in the public sector.

You're reporting an error for "ICMA – Nov 2024 – L1 – Q3a – Value for Money (VFM)"

ICMA – Nov 2024 – L1 – Q2c – Government Budgeting Challenges

Identifies and explains the challenges or limitations in government budgeting.

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ICMA – Nov 2024 – L1 – Q2b – Working Capital

Calculates total amount held in working capital excluding cash and equivalents.

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IMAC – NOV 2019 – L1 – Q2 – Budgeting

Explain purposes of budgeting, stages in budgeting process, and differences between master and functional budgets.

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IMAC – NOV 2019 – L1 – Q1 – Job Costing

Calculate overhead absorption rates and estimate the costs and invoice price for a job.

You're reporting an error for "IMAC – NOV 2019 – L1 – Q1 – Job Costing"

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