2023 JUPEB Accounting Question & Answers l Legit Expo

2024 JUPEB Economics

JUPEB ACCOUNT

Number 3

a) New income statement with sales volume increased by 100 units:
Sales (10,100 units) = 10,100 units * N350 = N3,535,000
Less: Variable expenses (10,100 units * N20) = N202,000
Contribution = N3,535,000 – N202,000 = N3,333,000
Less: Fixed expenses = N135,000
Net Profit = N3,333,000 – N135,000 = N3,198,000

(b) New income statement with sales volume of 9,000 units:
Sales (9,000 units) = 9,000 units * N350 = N3,150,000
Less: Variable expenses (9,000 units * N20) = N180,000
Contribution = N3,150,000 – N180,000 = N2,970,000
Less: Fixed expenses = N135,000
Net Profit = N2,970,000 – N135,000 = N2,835,000

(c) New income statement with contribution to sales ratio reduced to 40%:
Contribution to Sales Ratio = 40% = 0.40
Let X be the new sales value required to maintain the existing net profit.
X – (X * 0.40) = N15,000
0.60X = N15,000
X = N15,000 / 0.60
X = N25,000

So, the sales value required to maintain the existing net profit is N25,000.

(d) New income statement with variable expenses increased by 5%:
Sales (10,000 units) = 10,000 units * N350 = N3,500,000
Less: Variable expenses (10,000 units * N20 * 1.05) = N210,000
Contribution = N3,500,000 – N210,000 = N3,290,000
Less: Fixed expenses = N135,000
Net Profit = N3,290,000 – N135,000 = N3,155,000

(e) Three differences between absorption costing and marginal costing techniques are:

Treatment of Fixed Overheads:
Absorption Costing: Fixed overheads are treated as a product cost and are absorbed into the cost of goods produced. They are included in the valuation of closing stock.
Marginal Costing: Fixed overheads are treated as a period cost and are not included in the product cost. They are charged against revenue in the period they are incurred.
Valuation of Closing Stock:
Absorption Costing: Closing stock is valued at the total cost per unit, which includes both variable and fixed costs.
Marginal Costing: Closing stock is valued at the variable cost per unit, as fixed costs are not included in the product cost.
Profit Reporting:
Absorption Costing: Profit is influenced by the level of production as fixed overheads are absorbed into the cost of goods produced.
Marginal Costing: Profit is determined by the difference between total sales revenue and total variable expenses. It remains constant irrespective of changes in production levels.

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(5a)
(i) Examination of Financial Statements: An external auditor is responsible for examining and verifying the accuracy of a company’s financial statements. This includes the proper recording of transactions, verification of all asset and liability accounts, examination of associated records, and other procedures to ensure the accuracy of the statements.
(ii) Reporting and Certification: An external auditor is required to issue an audit report indicating their opinion on the fairness of the financial statements. In addition, the auditor is required to certify the statements as free from material misstatement or fraud.
(iii) Investigation: An external auditor is also required to investigate any known or suspected fraud or misappropriation of funds. This includes the examination of related documentation and reports from other sources.

(5b)
(i) Right to Independence: Auditors have the right to withdraw from an engagement if they feel that their independence has been compromised. This includes if they have received pressure or direction from management, financial advisors, or other parties to provide a biased opinion.
(ii) Right to Resign without Prejudice: Auditors have the right to resign without prejudice, meaning they are not legally responsible for any of the clientโ€™s accounting or financial decisions made after they have resigned.
(iii) Right to an Explanation: Auditors have the right to an explanation regarding the reasons they were asked to resign or why an engagement was terminated.
(iv) Right to Professional Courtesy: Auditors have the right to be treated professionally and respectfully during the resignation process.
(v) Right to Notification: Auditors should receive notification of their resignation in writing and should have an opportunity to review and respond to any written complaints concerning their professional actions or conduct.

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(7a)
Tax is a general term referring to the money or levy imposed by a government on individuals or entities for various purposes, such as funding public services, infrastructure, or social programs. *WHILE* Taxation, on the other hand, is the process of collecting taxes by the government from individuals or entities based on predetermined rules and rates.

(7b)
(i) Engaging with stakeholders, including taxpayers and industry representatives, to address tax-related issues and concerns.
(ii) Collaborating with other departments within FIRS to enhance tax collection and enforcement efforts.
(iii) Evaluating the effectiveness of tax policies and identifying areas for improvement.
(iv) Conducting research and analysis to improve tax administration and compliance.
(v) Providing technical advice and support to the FIRS management and board.

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