Management Accounting · May 2026

ROYAL NIGERIA LIMITED a. Stores Ledger Account Using First-In, First-Out (F.I.F.O.) Method DATE DETAILS RECEIPTS ISSUES BALANCE N N N N N Jul 1 Receipt 3,000 4.00 12,000 3,000 4.00 12,000 7 Receipt 4,000 3.50 14,000 3,000 4.00 12,000 4,000 3.50 14,000 7,000 26,000 10 Issues 2,500 4.00 10,000 500 4.00 2,000 4,000 3.50 14,000 4,500 16,000 19 Issues 500 4.00 2,000 2,500 3.50 8,750 3,000 10,750 1,500 3.50 5,250 21 Receipt 3,500 4.10 14,350 1,500 3.50 5,250 3,500 4.10 14,350 5,000 19,600 28 Issues 1,500 3.50 5,250 1,500 4.10 6,150 3,000 11,400 2,000 4.10 8,200 Value of closing inventory = N8,200

b. Stores Ledger Account Using Last-In, First-Out (L.I.F.O.) Method DATE DETAILS R EC EI PT S I S S U E S B AL AN C E N N N N N Jul 1 Receipt 3,000 4.00 12,000 3,000 4.00 12,000 7 Receipt 4,000 3.50 14,000 4,000 3.50 14,000 3,000 4.00 12,000 7,000 26,000 10 Issues 2,500 3.50 8,750 1,500 3.50 5,250 3,000 4.00 12,000 4,500 17,250 19 Issues 1,500 3.50 5,250 1,500 4.00 6,000 3,000 10,750 1,500 4.00 6,000 21 Receipt 3,500 4.10 14,350 3,500 4.10 14,350 1,500 4.00 6,000 5,000 20,350 28 Issues 3,000 4.10 12,300 500 4.10 2,050 1,500 4.00 6,000 2,000 8,050 Value of closing stock = N8,050

c. Operating Statement Using: First-In, First-Out Last-In, First-Out N N N N Sales (w1) 85,000 85,000 Less Cost of Sales: Purchases (w2) 40,350 40,350 Less closing inventory (8,200) (32,150) (8,050) (32,300) Gross Profit 52,850 52,700

Workings: 1. Calculation of Sales July 10: 2,500 units @N10 = 25,000 July 19: 3,000 units @N10 = 30,000 July 28: 3,000 units @N10 = 30,000 Total Sales = 85,000

2. Calculation of Purchases July 1: 3,000 units @N4 = 12,000 July 7: 4,000 units @N3.50 = 14,000 July 21: 3,500 units @N4.10 = 14,350 Total Purchases = 40,350

Examiner’s Report This question tests candidates’ knowledge of inventory valuation methods. It was attempted by about 75% of the candidates and performance was good as about 70% of them scored 50% and above of the marks allocated. However, some candidates could not correctly prepare an operating statement as required in the (c) part of the question. Candidates are reminded that a thorough knowledge of inventory valuation includes the effect of closing inventory on the operating statement.

MARKING GUIDE

a. 16 ticks for 8 Marks ½ Mark per tick (16 ticks × ½ mark) 8 Marks

b. 16 ticks for 8 Marks ½ Mark per tick (16 ticks × ½ mark) 8 Marks

c. 8 ticks for 4 Marks ½ Mark per tick (8 ticks × ½ mark) 4 Marks 20 Marks

a. Expenditure Code of Orire Limited S/N EXPENDITURE BLOCK CODE COST CENTRE CODE

i. Wages of factory supervisor 1101 - 1200 101 - 200

ii. Plastics used as input in manufacturing 1000 - 1100 100

iii. Iron materials used in manufacturing 1000 - 1100 100

iv. Office personnel wages 1401 – 1500 201 -300

v. Sales adverts 1501 - 1600 301 - 400

vi. Factory workers’ wages 1101 - 1200 100

vii. Production machinery repairs 1201 - 1300 101 -200

viii. Finance and admin Director’s salary 1601 - 1700 201 - 300

ix. Production machine’s depreciation 1501 - 1600 101 – 200

x. Items used in production department 1301 - 1400 101 - 200

b. FIVE characteristics of big data

i. Volume: This refers to the voluminous data generated. The big data datasets are so massive that the traditional data processing systems become inadequate. ii. Veracity: Big data focuses on the accuracy, reliability and trustworthiness of the data.

iii. Value: It has the potential of producing meaningful insights and actionable information. This makes it achieve the goal of improved decision making, customer understanding and optimised business processes. iv. Variety: Big data is constituted of diverse formats and data which could be structured, semi structured, or unstructured. v. Velocity: Data is generated, collected and processed speedily with big data. Big data processes real or near real time data requiring speedy analysis.

Examiner’s Report This question tests candidates’ understanding of(a) cost coding and (b) big data. It was attempted by about 40% of the candidates and performance was good in the (a) part as about 65% of them scored 50% and above of the allocated marks. However, majority of them did not perform well in the (b) part as only about 30% of them scored 50% and above of the allocated marks. Big Data, as a topic, is obviously not a popular one, therefore not well prepared for. This accounted for the below average performance in this new area. Candidates are enjoined to prepare for every topic under the syllabus as they are all examinable.

MARKING GUIDE

a. 20 ticks for 10 Marks ½ Mark per tick (20 ticks × ½ mark) 10 Marks

b. 1 Mark for stating each point 1 Mark for explanation of each point (2 Marks per point i.e. 2 marks × 5 points) 10 Marks 20 Marks

Nyanya Lines Limited Operating Statement for the most profitable route DETAILS Notes NYANYA – WUSE NYANYA -GWALADA N’000 N’000 N’000 N’000 Nyanya to Gwagwalada 5 47,880 Nyanya to & fro Wuse: Sundays – Thursdays 1 15,300 Fridays – Saturdays 2 8,568 23,868 Sundays – Mondays 3 9,072 Tuesdays – Saturdays 4 16,200 25,272 Gross Income 49,140 47,880 Less Expenses: Petrol 6 17,500 24,750 Grease 7 750 700 Sundry Expenses 8 11,500 11,000 Tyres 9 2,400 3,360 Repairs 10 1,200 1,680 Insurance 11 1,950 1,950 Depreciation 12 1,850 (37,150) 1,850 (45,290) Net Profit Per Bus 11,990 2,590 TOTAL (Net profit per bus X 6) 71,940 15,540

WORKINGS: No. of Buses = 6 buses No. of Seats = 48 seats No. of Operating Days = 50 weeks x 7 days = 350 days Operating hours: 6am – 9pm = 15 hours daily Nyanya to Wuse: 1½ hour + 1 hour loading = 2½ hours No. of trips within operating hours for Nyanya to Wuse route = 15 hours ÷ 2½ hours = 6 trips Income per Operating Days per Route: Nyanya to Wuse: 1. Sundays to Thursdays: 5days x 50wks x 3 trips x 48 seats x N500 x 85% = N15,300,000 2. Fridays to Saturdays: 2days x 50wks x 3 trips x 48 seats x N700 x 85% = N8,568,000 Wuse to Nyanya: 3. Sundays to Mondays: 2days x 50wks x 3 trips x 48 seats x N700 x 90% = N9,072,000 4. Tuesdays to Saturdays: 5days x 50wks x 3 trips x 48 seats x N500 x 90% = N16,200,00 Nyanya to Gwagwalada: 4 hours + 1 hour loading = 5 hours No. of trips within operating hours for Nyanya to Gwagwalada route = 15 hours ÷5 hours = 3 trips 5. Nyanya to Gwagwalada = 7days x 50wks x 3 trips x 48 seats x N1000 x 95% = N47,880,000 6. Petrol: Nyanya to Wuse – N350,000 x 50wks = N17,500,000 Nyanya to Gwagwalada – N495,000 x 50wks = N24,750,000 7. Grease: Nyanya to Wuse – N15,000 x 50wks = N750,000 Nyanya to Gwagwalada – N14,000 x 50wks = N700,000 8. Sundry Expenses: Nyanya to Wuse – N230,000 x 50wks = N11,500,000 Nyanya to Gwagwalada – N220,000 x 50wks = N11,000,000 9. Tyres: Nyanya to Wuse – N200,000 x 12mths = N2,400,000 Nyanya to Gwagwalada – N280,000 x 12mths = N3,360,000 10. Repairs: Nyanya to Wuse – N100,000 x 12mths = N1,200,000 Nyanya to Gwagwalada – N140,000 x 12mths = N1,680,000

11. Insurance: N1,950,000

12. Depreciation: N1,850,000 QUESTION THREE – SOLUTION (ALTERNATIVE) Nyanya Lines Limited Operating Statement for the most profitable route DETAILS Notes NYANYA – WUSE NYANYA -GWALADA N’000 N’000 N’000 N’000 Nyanya to Gwagwalada 5 287,280 Nyanya to & fro Wuse: Sundays – Thursdays 1 91,800 Fridays – Saturdays 2 51,408 143,208 Sundays – Mondays 3 54,432 Tuesdays – Saturdays 4 97,200 151,632 Gross Income 294,840 287,280 Less Expenses: Petrol 6 105,000 148,500 Grease 7 4,500 4,200 Sundry Expenses 8 69,000 66,000 Tyres 9 14,400 20,160 Repairs 10 7,200 10,080 Insurance 11 11,700 11,700 Depreciation 12 11,100 (222,900) 11,100 (271,740) NET PROFIT 71,940 15,540

WORKINGS: No. of Buses = 6 buses No. of Seats = 48 seats No. of Operating Days = 50 weeks x 7 days = 350 days Operating hours: 6am – 9pm = 15 hours daily Nyanya to Wuse: 1½ hour + 1 hour loading = 2½ hours No. of trips within operating hours for Nyanya to Wuse route = 15 hours ÷ 2½ hours = 6 trips Income per Operating Days per Route: Nyanya to Wuse: 1. Sundays to Thursdays: 5days x 50wks x 3 trips x 6 buses x 48 seats x N500 x 85% = N91,800,000 2. Fridays to Saturdays: 2days x 50wks x 3 trips x 6 buses x 48 seats x N700 x 85% = N51,408,000 Wuse to Nyanya: 3. Sundays to Mondays: 2days x 50wks x 3 trips x 6 buses x 48 seats x N700 x 90% = N54,432,000 4. Tuesdays to Saturdays: 5days x 50wks x 3 trips x 6 buses x 48 seats x N500 x 90% = N97,200,000 Nyanya to Gwagwalada: 4 hours + 1 hour loading = 5 hours No. of trips within operating hours for Nyanya to Gwagwalada route = 15 hours ÷5 hours = 3 trips 5. Nyanya to Gwagwalada = 7days x 50wks x 3 trips x 6 buses x 48 seats x N1000 x 95% = N287,280,000 6. Petrol: Nyanya to Wuse – N350,000 x 6 buses x 50wks = N105,000,000 Nyanya to Gwagwalada – N495,000 x 6 buses x 50wks = N148,500,000 7. Grease: Nyanya to Wuse – N15,000 x 6 buses x 50wks = N4,500,000 Nyanya to Gwagwalada – N14,000 x 6 buses x 50wks = N4,200,000

8. Sundry Expenses: Nyanya to Wuse – N230,000 x 6 buses x 50wks = N69,000,000 Nyanya to Gwagwalada – N220,000 x 6 buses x 50wks = N66,000,000 9. Tyres: Nyanya to Wuse – N200,000 x 6 buses x 12mths = N14,400,000 Nyanya to Gwagwalada – N280,000 x 6 buses x 12mths = N20,160,000 10. Repairs: Nyanya to Wuse – N100,000 x 6 buses x 12mths = N7,200,000 Nyanya to Gwagwalada – N140,000 x 6 buses x 12mths = N10,080,000

11. Insurance: N1,950,000 x 6 buses = N11,700,000

12. Depreciation: N1,850,000 x 6 buses = N11,100,000

Examiner’s Report This question tests candidates’ understanding of service costing, with emphasis on transportation. It was attempted by about 50% of the candidates and performance was above average as about 50% of them scored 50% and above of the marks allocated. However, some candidates missed out some tiny details and this affected their performance. Candidates are encouraged to pay more attention to details in future examinations.

MARKING GUIDE 1 Mark each for income on each Route to & fro (5 ticks × 1 mark) 5 Marks 1 Mark each for each expenses except Insurance & Depreciation (10 ticks × 1 mark) 10 Marks ½ Mark each for Insurance & Depreciation on each route (4 ticks × ½ mark) 2 Marks ½ Mark each for Net Profit (2 ticks × ½ mark) 1 Mark ½ Mark each for working of loading hours and no of trips for each route (4 ticks × ½ mark) 2 Marks 20 Marks

BALLY NIGERIA LIMITED

a. Income Statement for The Month of July 2025

i. Marginal Costing Technique ₦’000 ₦’000 Sales (225,000x₦200) 45,000 Opening inventory (60,000x₦110) 6,600 Direct materials (215,000x₦50) 10,750 Direct labour (215,000x₦40) 8,600 Variable prod. o/hd (215,000x₦20) 4,300 30,250 Less closing inventory (50,000x₦110) (5,500) Less: Total Variable Cost of Production 24,750 CONTRIBUTION 20,250 Less Expenses: Fixed prod. overhead 2,750 Other fixed overhead expenses 1,200 (3,950) Profit 16,300

ii. Income Statement using Absorption Costing Technique ₦’000 ₦’000 Sales (225,000x₦200) 45,000 Opening inventory (60,000x₦121) 7,260 Direct materials (215,000x₦50) 10,750 Direct labour (215,000x₦40) 8,600 Variable prod. o/hd (215,000x₦20) 4,300 Fixed prod. o/hd (215,000x₦11) 2,365 33,275 Less closing inventory (50,000x₦121) (6,050) Less: Cost of Goods Sold (27,225) 17,775 Less Under absorbed FPOH (₦2,365,000 - ₦2,750,000) 385 Other fixed overhead expenses 1,200 (1,585) Profit 16,190

Note: FPOH = Fixed Production Overheads

b. RECONCILIATION OF MARGINAL AND ABSORPTION COSTS PROFITS: ₦’000 Marginal cost profit 16,300 Add fixed production overhead in closing inventory (50,000x₦11) 550 Less fixed production overhead in opening inventory (60,000x₦11) (660) Absorption cost profit 16,190

WORKINGS Units produced: units Closing Inventory 50,000 Units Sold 225,000 Less Opening Inventory (60,000) Units Produced 215,000 Valuation of production cost per unit: Marginal costing: ₦ Direct material per unit 50 Direct labour per unit 40 Variable production overhead per unit 20 Variable cost per unit 110 Absorption costing: ₦ Direct material per unit 50 Direct labour per unit 40 Variable production overhead per unit 20 Fixed production overhead per unit (2,750,000/250,000) 11 121

Examiner’s Report This question tests candidates’ understanding of marginal and absorption costing. It was attempted by about 60% of the candidates and performance was above average, as about 55% of them scored 50% and above of the marks allocated. A few of the candidates did not apply the effect of fixed costs on each of the approaches. Candidates should add the ICAN Study Text to their study materials for future examination.

MARKING GUIDE

ai. 1 mark each for sales & all component of total variable cost of production (6 ticks × 1 mark) 6 Marks ½ mark each for fixed expenses and net profit (3 ticks × ½ mark) 1½ Mark 7½ Marks aii. 1 Mark each for sales all components of cost of goods sold, fixed expenses and net profit except other fixed overload expenses (10 ticks × 1 mark) Other fixed overhead expenses 10 Marks ½ Marks 10½ Marks b. 4 ticks for 2 Marks ½ Mark per tick (4 ticks × ½ mark) 2 Marks 20 Marks

a. Calculation of contribution per limiting factor Jay Kay Lee N N N N N N Selling Price 250 230 300 Less Variable Cost: Direct materials 80 24 32 Direct labour 76 108 128 Variable overhead 27 (183) 45 (177) 57 (217) Contribution per unit 67 53 83 Labour hours 76 108 128 Contribution/ Labour hours 0.88 0.49 0.65 Ranking 1st 3rd 2nd Allocation of 632,000 Labour Hours Available Ranking Product Units possible Labour hour per unit Balance of Labour Hours 1st Jay 10,000 19 190,000 (632,000) (442,000) 2nd Lee 11,000 32 352,000 (442,000) (90,000) 3rd Kay 3,333 27 90,000 - In order to maximise profit, the following is the product mix: Product Jay – 10,000 units Product Lee – 11,000 units Product Lee – 3,333 units

b. Profit based on current production mix Contribution N Jay (7,000 x N67) 469,000 Kay (9,000 x N53) 477,000 Lee (8,000 x N83) 664,000 Total contribution 1,610,000 Less fixed overhead 640,000 Profit 970,000 Profit based on new production mix Contribution N Jay (10,000 x N67) 670,000 Kay (3,333 x N53) 176,649 Lee (11,000 x N83) 913,000 Total contribution 1,759,649 Less fixed overhead 640,000 Profit 1,119,649 The increase in profit will be (1,119,649 – 970,000) = N149,649 Total Labour Required Labour Hours Available

Workings: 1. Calculation of total direct labour hours available Jay Kay Lee Direct labour cost per unit(N)[a] 76 108 128 Direct Labour Rate (N)[b] 4 4 4 Labour hours required per unit [c = a/b] 19 27 32 Units produced [d] 7,000 9,000 8,000 Labour hours of production [e = cXd] 133,000 243,000 256,000 Total labour hours [f] = 133,000 + 243,000 + 256,000= 632,000

2. Calculation of fixed overhead Jay (units) Kay (units) Lee (units) Total Current sales 7,000 9,000 8,000 Fixed overhead/unit N25 25 30 Total N175,000 N225,000 N240,000 N640,000

Examiner’s Report This question tests candidates’ understanding of decision making with emphasis on optimum production mix. It was attempted by about 75% of the candidates and performance was good, as more than 75% of them scored 50% and above of the marks allocated. A few of the candidates were however unable to do a proper ranking based on contribution per limiting factor. Candidates are advised that an understanding of basic principles is essential for success in examinations.

MARKING GUIDE

a. 18 ticks for 9 Marks ½ Mark per tick (18 ticks × ½ Mark) 9 Marks

b. 22 ticks for 11 Marks ½ mark per tick (22 ticks × ½ mark) 11 Marks 20 Marks

Note: ½ mark is given for correct determination of labour hours required per unit, labour hour of production for each product and the total labour hours (632,000) as well as calculation of fixed overhead of each product and the total fixed overhead (640,000).

a. Advantages of standard costing:

i. It helps to minimise production costs. ii. Activities are standardised. iii. It gives opportunity to improve production. iv. It helps in measuring efficiency. v. It helps managerial activities. vi. It helps in determining production. vii. It makes comparison of activities easier. viii. It makes quality to be improved upon. ix. It is economical in management. x. It helps in estimating cost of new production accurately. xi. It makes accounting for costs easier. Disadvantages of Standard Costing: i. The need for revised standard from time to time. ii. It can be quite expensive iii. Determining standards can be cumbersome iv. It depends on budget. v. Experts are involved in the process.

b. Abala Manufacturing Limited

i. Standard Cost of the Product

ii. Standard Production of 1,400 actual units N’000 Direct Materials (1,400 @ N4,500) 6,300 Direct Labour (1,400 @ N2,000) 2,800 Variable Overheads (1,400 @ N1,000) 1,400 Fixed Overheads (1,400 @ N500) 700 Standard Cost per Unit 11,200

iii. Direct Material Variances Material Price Variance = AQ (SP – AP) = 22,000 (N300 – N400) = N2,200,000 (A) Material Usage Variance = SP (SQ – AQ) = N300 ([1400@15] – 22,000) = N300 (21,000 – 22,000) = N300,000 (A)

iv. Direct Labour Variances Labour Rate Variance = AH (SR – AR) = N6,800 (N400 – N500) = N680,000 (A) Labour Efficiency Variance = SR (SH – AH) = N400 ([1,400 @ 5hrs] – 6,800) = N400 (7,000 – 6,800) = N80,000 (F) N Direct Materials (15sqF @ N300) 4,500 Direct Labour (5hrs @ N400) 2,000 Variable Overheads (5hrs @ N200) 1,000 Fixed Overheads (5hrs @ N100) 500 Standard Cost per Unit 8,000

v. Variable Overheads Variances Variable Expenditure Variance = AH (SR – AR) = 6,800 (N200 – [N1,600,000 ÷ 6,800]) = 6,800 (N200 – N235.30) = N240,000 (A) Variable Efficiency Variance = SR (SH – AH) = N200 ([1,400 @ 5hrs] – 6,800) = N200 (7,000 – 6,800) = N40,000 (F)

Examiner’s Report This question tests candidates’ knowledge of standard costing and basic variances. It was attempted by about 50% of the candidates and performance was average, as about 50% of them scored 50% and above of the marks allocated. The major pitfall here was lack of adequate preparation. Candidates are enjoined to study all sections of the syllabus when preparing for future examinations.

MARKING GUIDE

a. Advantages of standard costing 4 points for 2 Marks ½ mark per point (Any 4 points × ½ mark) 2 Marks Disadvantages of standard costing 4 points for 2 Marks ½ mark per point (Any 4 points × ½ mark) 2 Marks 4 Marks b i 1 mark each for direct material & direct labour (2 ticks × 1 mark) 2 Marks ½ mark each for variable overhead, fixed overhead and standard cost per unit (3 ticks × ½ mark) 1½ mark 3½ Marks ii 5 ticks for 2½ Marks ½ mark per tick (5 ticks × ½ mark) 2½ Marks iii MPV formula ½ mark