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- 20 Marks
BMF – Nov 2024 – L1 – Q2 – Documents in Sales Cycle
List six documents used in the sales cycle, discuss how they facilitate accounting and management of sales, and state two that impact double entry.
Question
a. A financial objective can be expressed in a number of different ways and there are advantages and weaknesses or limitations with each. List the THREE commonly used ways of expressing financial objectives and explain TWO problems identified with each.
b. Uhuru Limited wants to buy a new item of equipment which will be used to provide better services to its customers. The expected after-tax cash inflows are as stated below:
| Year | 1 | 2 | 3 | 4 |
|---|---|---|---|---|
| N | N | N | N | |
| Cash flow | 200,000 | 220,000 | 240,000 | 260,000 |
The cost of capital to the company is 8 percent (expressed in 4 significant figures). Assuming the NPV of the investment is N70,000, what was the initial investment?
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- 20 Marks
PM – May 2025 – Q2 – Performance Measurement Systems
Calculate profitability and liquidity ratios, analyze performance improvement, and cash from reduced debt collection for Adebat Cleaning Services.
Question
Adebat Cleaning Services is a company that operates a car wash service in Ikeja, Lagos
State. The economic condition in Nigeria in recent times has affected all households
and businesses. Due to deregulation, petroleum products prices have gone up
astronomically and food inflation has also reached an all-time high of over 200%. Costs
of vehicles have gone up beyond the reach of an average citizen, having increased by
over 300% due to the depreciation on the naira exchange rate to other international
currencies. The economic situation has further reduced the disposable income of
citizens by over 50%. As a result of this harsh economic environment, car owners find it
difficult to replace their cars and now result to constant maintenance, including
regular car wash.
Adebat Cleaning Services operates two types of car wash, Complete-wash and Mini-
wash. The Complete wash entails cleaning of both the inside and outside of the cars,
while Mini wash is the washing of the outside of the cars only. Adebat charges ₦1,000
and ₦500 for the Complete and Mini wash respectively.
The company’s budget and actual figures for 2024 were as follows:
| Budget | Actual | ||
|---|---|---|---|
| Number of cars: | |||
| Complete – wash | 6,000 | 6,800 | |
| Mini – wash | 4,000 | 7,000 | |
| ₦ | ₦ | ||
| Revenue | 8,000,000 | 10,640,000 | |
| Variable costs: | |||
| Staff wages | (3,840,000) | (4,018,800) | |
| Cleaning materials | (200,000) | (400,000) | |
| Energy costs | (240,000) | (340,800) | |
| (4,280,000) | (4,759,600) | ||
| Contribution | 3,720,000 | 5,880,400 | |
| Fixed costs: | |||
| Rent, rates and depreciation | (1,200,000) | (1,200,000) | |
| Operating profit | 2,520,00 | 4,680,400 |
The budgeted contribution to sales ratios for the two types of car wash are 45% for
complete-wash and 56% for mini-wash.
Required:
a.
Calculate the following profitability and liquidity ratios for years 2023 and
2024.
Profitability:
(i) Gross profit margin
(ii) Net profit margin
(iii) Return on capital employed where capital employed is equal to equity and borrowings.
Liquidity:
(iv) Current ratio
(v) Acid test ratio
(vi) Receivables collection period (days).
(6 Marks)
b.
Explain whether the financial performance and position of the company has
improved for the year ended December 31, 2024 as a result of the new policies
adopted by the company.  (7 Marks)
c.
Calculate the amount of cash which would be realised if the company could
impose a debt collection period of 45 days. (7 Marks)
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- 30 Marks
PM – May 2025 – Q1 – Decision-Making Techniques
Calculate relevant cost for engineering project, explain financial profit difference, discuss contribution margin theory and opportunity costs in decision making.
Question
A company has been asked to provide a quotation for an engineering project that will
take one year to complete. An analysis of the project has already been completed and
the following resource requirements have been identified:
(i)
A specialised machine will be required for a total of 10 weeks. Two of these
weeks are at the start of the project and three of them are at the end. The
machine could be hired from a reputable supplier, who would guarantee its
availability when it is required, for ₦40,000 per week. Alternatively it could be
purchased at a cost of ₦2,500,000. If it was purchased, it could be sold in one
year‟s time for ₦1,500,000. If the machine was purchased, it could be hired out
to other companies for ₦25,000 per week and it is believed that it would be
hired out for a total of 30 weeks.
(ii)
The machine has a running cost of ₦7,200 per week. This cost is incurred by
the user of the machine.
(iii)
It is the company‟s policy to depreciate non-current assets by 25% per year on
a reducing balance basis.
(iv)
Skilled labour would be required for a total of 9,000 hours during the year.
The labour required could be recruited at an hourly rate of ₦120. Alternatively
some of the employees currently working on other projects within the company
could be transferred to this project. The hourly rate is ₦100 per hour. If these
existing employees were to be transferred to this project, replacement will be
needed on the existing project work. Replacements on the existing project
work would cost ₦110 per hour.
(v)
Unskilled labour would be required for a total of 12,000 hours during the year.
These employees would need to be recruited on a one year contract at a cost of
₦80 per hour.
(vi)
The project would need to be supervised and it is estimated that there would
be a total of 500 hours of supervision required during the year. One of the
existing supervisors could undertake this work, but will require a total of 300
hours overtime during the year to carry out the supervision on this project as
well as his existing duties. The supervisor earns a salary of ₦500,000 per year
for working 2,000 hours and is not paid for overtime work. If this project goes
ahead, the supervisor will be paid a bonus of ₦5,000, which would not be paid
if the project is not undertaken.
(vii)
The direct materials required for the project are as follows:
Material A
The total amount required for the project would have to be purchased at a cost
of ₦150,000.
Material B
The total quantity required would be 10,000 square metres. The company
purchased 25,000 square metres of this material for a project two years ago at
a total cost of ₦1,000,000. The earlier project used 20,000 square metres of the
material and the remainder is currently held in inventory. The company does
not foresee any other use for this material in the future and could sell it for
₦20 per square metre. The current purchase price of the material is ₦50 per
square metre.
(viii)
The company has already incurred expenditure of ₦250,000 in analysing the
resource requirements of the project.
(ix)
It is the company‟s policy to attribute overhead costs to projects using an
absorption rate of 40% of prime costs.
(x)
It is the company‟s policy to add a 25% profit mark-up to total costs when
setting its prices.
Required:
a.
Prepare a statement that shows the relevant cost of the project. For each of the
resources indicated in notes (1) to (10) you must clearly explain the reason for
the cost value that you have used.
Ignore the time value of money and taxation.
(20 Marks)
b.
Assume that:
(i)
The company used your calculations as the basis of the quotation and
added ₦1,250,000 for profit.
(ii)
All costs incurred were the same as forecast.
Explain why the financial profit reports at the end of the year would not show a
profit of ₦1,250,000 for the engineering project. (4 Marks)
c.
Explain why contribution margin theory is used as a basis for providing
information relevant to decision making.
(2 Marks)
d.
Explain the relevance of opportunity costs in decision making.
(4 Marks)
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- 20 Marks
BMF – Nov 2024 – L1 – Q1 – Management, Individual, and Organizational Behavior
Describe group cohesion, explain five characteristics of effective team, and explain concepts: formal organization, structure, flat organization, outsourcing, shared services.
Question
a. Describe the term „group cohesion‟                                                                                      Â
b. Briefly explain FIVE characteristics of an effective team
c. Briefly explain the following concepts:
i. Formal organization
ii. Organization structure
iii. Flat organization                                                                                                     Â
iv. Outsourcing v. Shared services
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- 20 Marks
MI – Nov 2024 – L1 – Q6 – Electronic Business and E-Commerce
Define m-commerce, explain five applications, state five e-commerce technologies, and identify four computer hardware components.
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- 15 Marks
AA – May 2025 – Q7 – Audit Procedures for Evidence
Explain appropriate audit procedures for obtaining evidence on various review points in Real Favour Limited's audit file.
Question
Real Favour Limited is a client of Adodo Lafe & Co (Chartered Accountants). The Audit Manager has just completed his review of the audit file. His review points include:
(i) confirming ownership of motor vehicles used for distribution of goods;
(ii) confirming the amounts owed by customers;
(iii) testing the procedure of payment of wages to daily paid and casual workers;
(iv) testing the correctness of salary amounts credited to staff bank accounts;
(v) confirming the authorisation for the purchase of plant and machinery;
(vi) ascertaining that inventories belonging to the relevant periods have been accounted for during the inventory stock count;
(vii) checking the periodic trend in the performance of the company as reflected in the financial statements; (viii) confirming the existence of land and building at the branch office;
(ix) understanding the nature of one-off and unusual payments recorded in the financial records; and
(x) confirming from management that all liabilities have been provided for.
Required:
Explain which audit procedures you would deem most appropriate for obtaining audit evidence in each circumstance, as the senior in charge of the assignment.
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