Universiti Kuala Lumpur

Business School
Foundation in Business
KFP08104 : Introduction to Management Accounting
Semester December 2020

Mid Term Examination

Instructions:
1. Answer all question from Part A and Part B.
2. All answer must be hand written on the appropriate answer sheet.
3. Time Allowed: Three (3) Hours.
4. Email your answer to, abdrasip@gmail.com by 1.30pm on 22 March 2021.

Part A.

1. Which of the following is NOT describing management accounting

A. The main users are internal parties, managers and employee
B. The focus is on activities that influence future decision
C. They are regulated by Generally Accepted Accounting Principles (GAAP)
D. It not required to follow GAAP

2.Cost can be classified into various categories according to

A. Their management function
B. The ease of traceability
C. The behavior in accordance with changes of activities
D. All of the above

5. Which of the following statement is NOT true regarding cost term and concepts
A. Variable costs are costs that vary in total in direct proportion to changes in activity
B. Fixed costs are cots that remain constant in total regardless to changes in activity
C. Selling and administration are example of product cost
D. Prime costs is made of direct materials and direct labour

4.Which of the following is NOT an indirect costs.

A. The foreman’s salary
B. Supplies
C. Leather use in a manufacturer of shoes
D. Lubricants for machines

5.Prime costs include the following, EXCEPT.

a) Direct materials
b) Direct labour
c) Factory overheads
d) All of the above

6.The cost of direct materials used is

A. the beginning inventory of direct materials plus purchases minus ending inventory of direct
materials
B. the beginning inventory of direct materials plus purchases plus ending inventory of direct
materials
C. the beginning inventory of direct materials minus purchases minus ending inventory of
direct materials
D. the beginning inventory of direct materials minus purchases plus ending inventory of direct
materials
7.The net revenue forgone as a result of the rejection of an alternative is called
a) an opportunity cost
b) a sunk cost
c) a historical cost
d) a period cost

8. A variable cost is_________ per unit.

A. vary
B. constant
C. increase
D. decrease

9. From the following information regarding direct materials for a manufacturing firm, what is the
amount of direct materials used for the period.

Beginning inventory RM75,000

Ending inventory RM85,000
Direct material purchased RM336,000

a) RM360,000
b) RM316,000
c) RM326,000
d) None of the above

10.The are three inventory accounts commonly used in manufacturing firms. They are
A. raw materials, work-in-process and finished goods
B. raw materials, work-in-process and factory overheads
C. raw materials, cost of goods manufactured and finished goods
D. raw materials, cost of goods sold and finished goods

11.From the following information, what is the cost of goods manufactured

Beginning work-in-process RM80,0000

Total manufacturing cost RM686,000
Ending work-in-process RM 30,000

a) RM736,000
b) RM763,000
c) RM760,000
d) None of the above

12.What is the cost of goods sold if the cost of goods available for sale is RM826,000 and ending
finished goods inventory was at RM110,000

A. RM716,000
B. RM710,000
C. RM760,000
D. None of the above

13. An increase in total fixed costs causes the break-even-point to

A. Decrease
B. Increase
C. Unchanged
D. None of the above
14.Which of the following are the basic assumptions for break-even-analysis and Cost-volume-profit
analysis model.
a) All costs are classified as fixed or variables
b) There is only one product or a constant sales mix
c) Volume is the only factor affecting variable costs
d) All of the above

15.Contribution margin
A. is the excess of sales over variable cost of a product
B. is the amount of money available to cover fixed cost and to generate profit
C. is one of important concepts in cost-volume-profit analysis
D. All of the above
(15 Marks)

Indicate whether the following statements are true (T) or false (F)

_____ 1.Management accounting is based on a set of generally accepted accounting principles

_____ 2.Factory overhead is all costs other than direct labor and direct materials

_____ 3.Fixed costs are costs that do not vary with volume

_____ 4.Gross margin and contribution margin are synonymous

_____ 5. An example of a variable cost is depreciation based on the straight line method

_____ 6.The break even point in units can be computed by dividing total fixed costs by the
contribution margin ratio

_____ 7. A sunk cost is irrelevant to future decision

_____ 8. A sales budget precedes a production budget.

_____ 9. A variable cost is constant per unit.

_____ 10. Prime cost include direct materials, direct labour, and a fair share of factory overhead.

(10 Marks)

Complete the following statements

1. Prime cost is the sum of __________ and __________.

2. Cost of goods sold is beginning finished goods inventory plus __________ minus ending finished
goods inventory

3. ___________ stay the same per unit of activity, whereas __________ decrease as volume
increases.

4. As compared to _____________ accounting, _____________ accounting draws heavily from other

disciplines such as finance and quantitative analysis.

6. The higher the _____________, the less the volume required to break-even.
7. The cost of direct materials used is _______ plus _______ minus the ending inventory of direct
materials.
(10 Marks)

Classify the following costs as either manufacturing (M), selling (S) or administrative expenses(A) in
term of their function

1. Factory supplies _____

2. Advertising _____

3. Rent on general office building _____

4. Sanding materials used in furniture making _____

5. President’s salary _____

(5 marks)

Part B
Question 1

RockStar Manufacturing Company shows the following accounting recordes fo 2019.

Direct Materials purchased RM550,000

Inventories 1 Jan 2019:
Materials RM20,000
Work in Process RM200,000
Finished Goods 1,000 units
Direct labour RM1,050,000
Factory Overhead (40% variable) RM750,000
Selling Expenses (100% Fixed) RM500,750
General & Administration expenses(all fixed) RM385,230
Sales 7,500 units @RM535/unit
Inventories as at 31 Dec 2019
Materials RM50,000
Work in Process RM100,000
Finished Goods 1,000 units

Required
A) Prepared a statement of cost of goods manufactured.
B) Find the number of units manufactured and unit manufacturing cost.
C) Prepare income statement for the period.
D) Find the total variable and fixed costs.

(20 marks)
Question 2
The following information is given for Rossen Sdn.Bhd:
Unit sales price RM10
Variable cost per unit RM6
Total Fixed cost RM50,000

Required
You are required to determine the following.

A)Contribution margin per unit. (2 marks)

B)Contribution margin ratio. (3 marks)
C)Break-even sales in unit. (3 marks)
D)Break-even sales in RM
E)Sales in units required to achieve a net income of RM4,000. (3 marks)
F)Sales in units required to achieve a net income of 15 percent of sales (3 marks)

G) (i) Assumeme the budgeted sales of RM150,000 with break-even sales level of RM125,000.
What is the margin of safety for Rossen Sdn Bhd.? (3 marks)

(ii) Briefly explain what is margin of safety and its use. (3 marks)

Questio 3
Breifly explain the following cost terms.
A) Sunk cost
B) Opportunity cost.
C) Prime cost.
D) Period cost.
E) Cost object.
F) Cost accumulation.
G) Contribution margin.
H) Fixed cost.
I) Variable cost.
J) Financial accounting vs management accounting.
(20 marks)

Total: [100 marks]

End of Examination Paper