UNIVERSITI TEKNOLOGI MARA

TEST 2

COURSE : MANAGEMENT ACCOUNTING AND CONTROL

COURSE CODE : MAF451
EXAMINATION : TEST 2
TIME : 2 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of TWO (2) questions.

2. Answer all questions
3. Start each answer on a new page.
4. Save your answer in one PDF file.
5. Name your file with <your name> <group>
Example: WAN AHMAD_AC1102F
6. Submit your file answer into Google Classroom.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 4 printed pages

QUESTION 1

1
PART A
Cozy Home Sdn Bhd manufactures and sells two types of luxurious designed throw pillows,
Ashlo and Marlo, by passing through two consecutive processes (Process 1 and Process 2).
In manufacturing the two products, another product known as Pillows for Cat incidentally
produced which needs additional cost of RM2.00 per unit for special finishing. It is the
company’s policy to value the work in progress using First-in-First-out (FIFO) method.

The following data relates to the production for the month of May 2021:

Process 1
 Opening Work in Progress – 1,200 units at RM9,800
 Material for the process – 13,200 units at RM70,416
 Labour costs – RM19,500
 Overheads – RM11,808
 Actual output – 10,200
 Normal loss – 10% of total input
 Scrap value of losses – RM3.00 per unit
 All losses are detected at the end of the process
 Closing Work in Progress – 1,400 units
 Degree of completion for both opening and closing work in progress are as follow:

Opening WIP Closing WIP

Material 90% 80%
Labour 70% 60%
Overheads 60% 60%

Process 2
 No materials need to be added to the units transferred from Process 1.
 No work in progress at the beginning of the period for this process and all input units
are completed at the end of the month.
 Direct labour costs – RM16,800.
 Overheads – absorbed at 70% of direct labour costs.
 No losses are expected for the process.
 All joint products are sold at split off point and joint costs are apportion using sales
value method.
 The completed units and selling per unit are as per below:

Units Selling price / unit

Ashlo 4,800 RM50.00
Marlo 5,000 RM30.00
Pillow for Cat 400 RM7.00

Required:
Prepare Process 1 and Process 2 accounts by showing all relevant statements.
(26 marks)

PART B

2
State whether the following statements are TRUE or FALSE

TRUE or
No Statement
FALSE
1 Normal losses are expected losses and they can be avoided in the
manufacturing process.

2 One of the features of process costing is that the output of one

process will be the input for the next process.

3 Closing work in progress can be valued using First-in-First-Out

(FIFO) method or Weighted Average method.

4 Joint costs are total cost incurred up to the split-off point.

5 Petrol and diesels are by-products of oil processing industry.

(4 marks)
(Total: 30 marks)

QUESTION 2

MAMACUN Bakery started business, on 1 January 2020. The company makes and sells
only one type of cake named “NUTELLA CHEESE CAKE”. The budgeted selling price of
the product is RM45.00 per cake and the budgeted costs per cake are as follows:

Direct Material A 1/2 kilogram @ RM8.00 per kilogram

Direct Material B RM10.00
Direct Labour 3 hours @ RM2.00 per hour
Production Overhead RM7.00
Variable Selling Overhead RM2.00
Administrative overhead RM2.00

Production overhead per cake consists of fixed production overhead and variable
production overhead. The fixed production overhead cost per unit is based on a
normal annual production level of 45,000 units. Total budgeted fixed production
overhead for the year 2021 was RM225,000.

Fixed selling overhead is amounted to RM40,000 per annum. All administrative

overhead is considered as fixed cost and is calculated based on the normal annual
production level.

All fixed costs are expected to be incurred evenly throughout the year.

The company's activity levels during the first and second quarter of the year 2021 was
as follows:

First Quarter Second Quarter

Sales (units) 12,000 14,000
Production (units) 15,000 13,000

There will be no opening stock in the first quarter.

Required:

3
a. Calculate production cost per unit under marginal and absorption costing
approaches.
(4 marks)

b. Prepare Statement of Profit or Loss for the product for the second quarter of
2021 based on:

i. Marginal costing approach

ii. Absorption costing approach
(13 marks)

c. Prepare the reconciliation statement of the profits derived from the two
approaches.
(3 marks)
(Total: 20 marks)

END OF QUESTIONS