CONFIDENTIAL 1 AC/JULY 2020/ACC416

UNIVERSITI TEKNOLOGI MARA

FINAL ASSESSMENT

COURSE : COST AND MANAGEMENT ACCOUNTING

COURSE CODE : ACC416
EXAMINATION : JULY 2020
TIME : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) questions

2. Answer ALL questions. Start each answer on new page.

3. Discussion is strictly prohibited

3. Answer ALL questions in English.

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

This examination paper consists of 7 printed pages

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QUESTION 1
A. Identify the classification for the following costs by function (production cost, selling and
distribution overhead, administration overhead or research and development overhead)

i. Depreciation of mixing machine in tomato sauce production

ii. Commission paid to sales representatives
iii. Salary of the typist in Managing Director department
iv. Wages of security guard in raw material warehouse
v. Remuneration of scientist in laboratory
vi. Hire of special machine
vii. Advertising
viii. Administrative office rent
ix. Salary of factory workers
x. The costs of materials used in prototypes
(5 marks)

B. Mari Belajar Tuition Centre, a business owned by Maria, that offers tuition services to
students for various subjects. Each student is charged RM70 per month. To avoid clash
of timetable, each student is only allowed to take one subject. The following are the
information provided for her business.

Business license 2,400 per annum

Tutor’s salary per staff 1,200 per month
Rental of shop lot 30,000 per annum
Advertising expenses 200 per month
Utilities 300 per month
Depreciation of furniture 3,000 per annum
Stationeries expenses 250 per month
Number of students 146 students
Number of tutors 4 staff

Required:

i. Calculate the total operating cost for the second quarter of the year 2020.

ii. Determine the total profit for the second quarter of 2020.
(10 marks)
(Total: 15 marks)

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QUESTION 2
A. Idaman Enterprise is producing Crispy Seaweed in Kota Samarinda. Seaweed is one
of the main ingredients in making the products. Idaman Enterprise uses 0.5 kilogram of
seaweed to produce one small container of Crispy Seaweed which is currently sold for
RM25.00 per container. The company practices First In Fist Out (FIFO) in managing
their stock movement. The following were the transactions that took place in the month
of May 2020.

May Transactions
Purchases Produces
3 400 kilograms at RM8.30 per kg before deducting
RM0.30 per kilogram for discount.
7 - 600 containers
9 - 400 containers
22 400 kilograms at RM7.00 per kilogram
25 - 600 containers
28 200 kilograms at RM6.50 per kilogram

Additional information:

1. Balance from the previous month of 200 kilograms worth RM1,500.

2. On 23 May 2020, the business returned to supplier 5 kilograms of seaweed

purchased on 22 May 2020 due to low quality.

3. On 29 May 2020, there was 15 kilograms of seaweed have gone bad and
unusable, thus it was thrown off.

4. Physical stock counts showed a balance of 370 kilograms were in the store on 31
May 2020.

Required:

i. Prepare the Store Ledger Card for the month of May 2020 by showing the closing
stock value show as at 31 May 2020. (All calculations are to be stated to 2 decimal
places).
(15 marks)

ii. Compute the new cost per kilogram for opening balance of June 2020 if Idaman
Enterprise decides to change its stock pricing method to weighted average
method.
(2 marks)

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B. Kerawit Maju Sdn Bhd manufacture ‘Sambal Berapi’ located in Tuaran, Sabah. They
normally produced 320,000 unit sambal annually. ‘Sambal Berapi’ requires 0.04 kilogram
of shrimp paste for every unit of ‘Sambal Berapi’. The price paid for the shrimp paste
cost at RM18 per kilogram. The administration cost to place an order is RM10 and
delivery cost is RM40 per order. The carrying cost of the shrimp paste is 10% of the
purchase price while the breakage cost is estimated at RM0.20 per kilogram. Kerawit
Maju Sdn Bhd is planning to use economic order quantity model for the current year.

Required:

i. Calculate the Economic Order Quantity (EOQ) of the shrimp paste using the
formula method.

ii.
Calculate the total cost (carrying and ordering cost) if Kerawit Maju Sdn Bhd were
to order the shrimp paste at EOQ.
(7 marks)
(Total: 24 marks)
QUESTION 3
Below is the information of Prosedoc Manufacturing workers; Sarah, Reen and Ameera for
the month of April 2020.

Employees SARAH REEN AMEERA

Hours worked 158 hours 180 hours 170 hours
Units produced 3,300 units 4,800 units 3,400 units
Labour category Skill Skill Semi-skill

Additional Information:

1. Normal working hour is 160 hours per month.

2. The wages of skill worker are based on hourly rate of RM11 per hour with the overtime
rate (if any) is one and a quarter of the hourly rate.

3. The semi-skill workers are paid based on piecework with a guaranteed minimum
payment of RM1,500 per month. It is the company’s policy to pay a lump-sum of RM80
for every 200 units produced.

4. Bonus is paid based on individual output produce. The bonus rate is given 50% of the
RM10 per hour. Standard time for labours is 20 units per hour.

Required:

a. Compute the gross wages for each worker for the month of April 2020.
(10 marks)

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b. State the direct labour for the following business:

i. Restaurant
ii. Hairdressing
iii. Cleaning service
iv. Airline transportation service
(4 marks)
(Total: 14 marks)

QUESTION 4
Nadi Food Sdn Bhd involves in bakery product manufacturing industry. There are three
production departments which are mixing department, finishing department and packaging
department and two service departments which are store department and maintenance
department. The budgeted overhead costs for the period are:

Production Department Service Department

Overhead Total Mixing Finishing Packaging Store Maintenance
RM RM RM RM RM RM
Indirect 145,000 65,000 25,000 34,000 7,000 14,000
materials
Depreciation on
55,000
building
Depreciation of
75,000
plant
Lighting 54,000
Supervision 30,000

Additional information is available in respect of the four cost centres:

Production Department Service Department

Total Mixing Finishing Packaging Store Maintenance
Area (sq. 60,000 14,400 12,000 18,000 10,800 4,800
metre)
Number of
60 15 12 24 3 6
employees
Value of
700,000 210,000 420,000 70,000 - -
plant (RM)
Number of
material 80 32 24 20 - 4
requisition
Maintenance
100 40 35 25 - -
hours
Direct labour
23,000 5,000 6,000 12,000 - -
hours
Machine 30,000 15,000 10,000 5,000 - -
hours

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Additional information:
1. The company use repeated distribution method to allocate the cost of service
departments to production department.

2. The mixing and finishing departments are machine oriented while packaging department
is 90% labour intensive.

3. The actual data is shown in the following table:

Mixing Finishing Packing
Department Department Department
Actual overhead cost (RM) 140,000 102,700 80,500
Machine hour 14,000 11,000 8,000
Direct labour hour 5,000 4,000 10,000

Required:
a. Prepare an overhead analysis sheet for the company to show the allocation,
apportionment, and reapportionment. (Answer are to be rounded up to the nearest RM)
(15 marks)
b. Calculate:

i. The overhead absorption rate for mixing department, finishing department and
packaging department by using appropriate basis. (Answer are to be rounded up
to 2 decimal places)
(3 marks)

ii. Over or under absorption of overhead for each department. (Answer are to be
rounded up to the nearest RM)
(3 marks)

c. Give a suitable basis of apportionment for the following expenses:

v. Medical expenses
vi. Maintenance on building
vii. Fire precaution service
viii. Insurance on machinery
ix. Power
(5 marks)
(Total: 26 marks)

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QUESTION 5
Sayong Nara Sdn Bhd specialise in the production of decorative clay pot called Labu Sayong.
The product is currently sold at RM40 per unit. The standard cost of producing one unit of
Labu Sayong based on normal production of 144,000 units per annum is given below:
Direct material – L21 RM10.50 per unit
Direct material – S33 RM7.50 per unit
Direct labour 2 hours @ RM2.10 per hour
Production overhead RM3 per unit
Administration overhead RM1.80 per unit
Variable selling overhead 15% of sales revenue

Additional information:
1. 50% of the production overhead is fixed.
2. Fixed selling overhead is RM216,000 per annum.
3. The administration overhead cost is fixed.
4. All fixed costs are assumed to be incurred evenly throughout the year.
5. The opening inventory at the beginning of March 2020 is 800 units.
6. Actual production and sales data for the month of March and April 2020 are given
below:
March April
Production 12,000 units 14,000 units
Sales 11,000 units 12,000 units

Required:
a. i. Prepare the income statement for the month of April 2020 using marginal
costing and absorption costing approach.

ii. Reconcile the profits of the two income statements determined in (i) above.
(16 marks)
b. State true or false for the following statement:
i. All fixed costs are treated as period costs for marginal costing
ii. Absorption costing is method acceptable for tax and external reporting purpose
iii. Over absorption cause profit to be overstated and need to be deducted to the
unadjusted profit
iv. Marginal Costing is not useful for decision making as it does not emphasize the
main factor contribute to increase or decrease in net profit
v. Marginal costing will report a higher profit than absorption costing when
production is greater than sales
(5 marks)
(Total: 21 marks)

END OF QUESTION PAPER

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