SECTION B

QUESTION 2:

Two companies Juk Ltd and Roop Ltd operate in the tourism sector. Financial forecasts are provided below:

(a)   Required:

Calculate the following ratios for both companies:

• Gross profit margin
• Net profit margin
• Current ratio and Quick Asset ratio
• Gearing and Interest
• ROCE
• Earnings per share
  

(b)   

• Based   on   your   answer   above,   compare   the performance of the two companies.
• List four limitations of ratio analysis.

QUESTION 3

(a)   Thon Ltd makes two products, Amix and Benix.

Unit variable costs are:

The sales price per unit is Rs20 per Amix and Rs23 per Benix. During July 2013, the available   direct labour will be limited to 14,000 hours. Suppliers for materials will provide up to a maximum of30,000 kilos of  materials for the month of July 2013.

Quantity demanded in  July 2013 is expected to be:

Amix              6,000 units

Benix             5,000 units

Required:

• Determine the binding constraint.
• Calculate the contribution per unit of the limiting factor for each product and rank them accordingly.
• Determine  the  optimum  production  mix  and  calculate  the resulting profit, assuming that fixed overheads per month are Rs25,000.

(b)

• List and briefly describe three distinctions between a relevant cost and an irrelevant cost in decision making, using appropriate examples.
• List five assumptions of the break-even chart.

QUESTION 4:

Part A:

On 1st April 2013, a company held 500 units of finished goods in stock. These were valued at  Rs12  each.  During April  2013  three  batches of  finished goods were received into store from the production department, as follows:

Goods sold out of stock during April were as follows:

Required:

What were the stock balance after each transaction if the firm uses:

1. FIFO
2. LIFO
3. AVCO

Part B:

In preparing the financial statements of Sir Gent, you find that the accounts officer has raised a suspense account with a debit balance of Rs18,800. Whilst investigating, you ascertain that this balance consist of the following errors:

(a)      Proceeds  from  the  issue  of  shares  (at  nominal  value)  during  the  year amounting to Rs20,000. It was not recorded in the books.

(b)      A  purchases return  of  Rs2,100  has  been  debited  to    purchases return account.

(c)      Purchases have been over added by3 Rs2,100.

(d)      Cash  received from a  debtor,  Espay,  amounting to  Rs1,250, which  was incorrectly debited to her account.

(e)      Munna, a supplier to Sir Gent, granted a cash discount of Rs5000. The latter was recorded to the debit side of discount allowed account.

Required:

(i)       Clear  the  suspense  account  showing  the  transfers  to  the  correct  ledger accounts.                                                                                          

(ii)      Prepare appropriate journal entries to correct the above errors.