CONFIDENTIAL 1 AC/DEC2021/MAF151

UNIVERSITI TEKNOLOGI MARA

COMMON TEST 1

COURSE : FUNDAMENTALS OF COST ACCOUNTING

COURSE CODE : MAF151
DATE : 4 DECEMBER 2021
TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of THREE (3) parts.

2. Answer ALL questions in English. Start each answer on a new page.

3. Please submit your HANDWRITTEN answers in ONE (1) pdf file.

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

This examination paper consists of 7 printed pages
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PART A

This part consists of TEN (10) multiple choice questions. Choose the most suitable
answer for each question.

1. Cost and management accounting is not restricted to specific standards because

A. it provides managerial information for internal purposes.

B. it reports on segments of the business.
C. it provides information related to the past.
D. it is prepared when it is required by the manager.

2. Which of the following is NOT controllable cost?

A. Monthly salary paid to storekeeper.

B. Amount of fabrics used in making shawls.
C. Cost of road tax for factory’s truck.
D. Cost of commission paid to salesmen.

3. Which of the following is the main purpose of cost accounting system?

A. Gather information related to channels of marketing.

B. Provide management with relevant cost information for decision making.
C. Identify suppliers of materials for production.
D. Analyse the sales projections of a newly launched product.

4. Milage can be used as a cost unit for the following EXCEPT

A. Train tickets
B. Bicycle rental
C. Bus fare
D. Airplane tickets

5. Understocking occurs when

A. materials in store is above the maximum stock level

B. materials in store is below the maximum stock level
C. materials in store is above the minimum stock level
D. materials in store is below the minimum stock level

6. Just In Time purchasing can benefits the business because

A. it requires higher investment on inventory.

B. it allows suppliers flexibility when supplying inventory.
C. it increases the manufacturing set up times.
D. it can achieve higher customer satisfaction.

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7. Which of the following is NOT the objectives of material control system?

A. Ensure that materials are protected against losses.

B. Ensure that materials are supplied based on the schedule of the supplier.
C. Ensure that materials are bought at the lowest cost.
D. Ensure the balance between the cost of materials with the quality of materials.

8. Periodic stocktaking is

A. caried out by the storekeeper.

B. carried out annually on a specific date.
C. carried out during normal production period.
D. carried out based on physical verification.

9. Responsibility centre consist of

i. Cost centre
ii. Revenue centre
iii. Profit centre
iv. Investment centre

A. i and iii
B. ii and iii
C. i, iii and iv
D. i, ii, iii and iv

10. Which of the following describes the First-In-First-Out method?

i. The closing stock value will be the highest during inflation.

ii. The closing stock value will be the highest during deflation.
iii. The stock inside the store is at the latest price.
iv. The stock inside the store is at the oldest price.

A. i and iii
B. i and iv
C. ii and iii
D. ii and iv

(10 marks)

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PART B

This part consists of FIVE (5) TRUE/FALSE questions.

1. Conversion cost in an ice-cream making company does not include the main
ingredients in making the ice-cream.

2. Profit centre is expected to earned income consistent with the amount of resources
invested in it.

3. External sources of management accounting information come from the suppliers as

well as the customers.

4. An invoice is a source document sent by the customer to the business.

5. The optimal cost of ordering materials happens when the annual cost of ordering
equals to the annual cost of holding.
(5 marks)

PART C

QUESTION 1

A. State the behaviour and function of the following costs.

Cost Behaviour Function

i. Electricity charges of the laboratory.
ii. Margarine used in the production of biscuits.
iii. Production supervisor’s salary assigned to a specific
number of workers.
iv. Insurance on building.
v. Commission paid to salesmen based on units sold.
vi. Road tax for delivery van.
(6 marks)

B. State the cost unit for the following object of products or services.

Products / Services Cost Unit

i. Eggs in cake manufacturing
ii. Fabrics used by a scarf company
iii. Boat ride tickets
iv. Photocopying cost
v. Catering service
vi. Gym membership
vii. Theme Park tickets
viii. Architect fees
(4 marks)
(Total: 10 marks)
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QUESTION 2

FitJuice Company produces health drinks. The following relates to the costs incurred by the
company in the month of August 2021:

Costs RM
Direct materials 9,000
Indirect materials 4,050
Direct labour 8,500
Indirect labour 6,000
Production supervisors’ salary 1,800
Depreciation of building 2,500
Hire of special equipment 3,800
Insurance on building 2,050
Sales commission 3,700
Product promotion cost 1,500
Royalty on health drinks recipe 2,200
Road tax for delivery van 720

Additional information:

1. All indirect materials are used in the production process.

2. Indirect labour consists of part time workers’ salaries at the factory and RM2,500 of
the company’s security guards salaries.
3. The company’s building is 180,000 square feet. 60% of the space is used by the
factory, 25% is for the office and the balance is used for the marketing department.

Required:

Calculate the following costs:

a. Total prime costs

b. Total production overheads
(6 marks)

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QUESTION 3

MyScoot Limited produces 8,000 units of electric scooter annually. In producing each unit of
electric scooter, the company uses 2 units of component TT. The production of electric scooter
requires between 200 to 300 units of component TT per week and the supplier will deliver
component TT within 2 to 4 weeks. Currently, 700 units of component TT is ordered each time.

Required:

Calculate the following:

a. Reorder level
b. Maximum stock level
c. Minimum stock level
d. Average stock level
(3 marks)

QUESTION 4

Be-Safe Limited distributes customised face mask. The face mask uses high quality nonwoven
fabric bought from a supplier in Vietnam at RM35 per roll. 500 rolls of fabric are expected to
be use every month to cater for the demand of the face mask and the demand is expected to
be constant.

The company needs to incur requisition, shipping and receiving costs for the fabric that
amounted to RM3 per roll. The fabric needs to be kept in a temperature-controlled store and
the storage cost is expected to be RM0.05 per roll. Insurance and breakage cost is at 1% on
the inventory value.

Required:

a. Determine the demand per annum, cost per order and the carrying cost per roll for the
fabric.
(3 marks)

b. Determine the Economic Order Quantity for the fabric using the EOQ formula.
(2 marks)

c. Calculate the annual costs for the fabric at EOQ.

(3 marks)
(Total: 8 marks)

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QUESTION 5

Awesome Berhad is a company manufacturing school bags that use a type of raw material
called ‘NylonB7’. Each school bag uses 1.5 meter of ‘NylonB7’. Awesome Berhad uses
weighted average method in valuing its inventory. On 1 October 2021, the following batches
of ‘NylonB7’ were inside the store:

Date of purchase Quantity Value

27 September 2021 200 meters RM1,400
29 September 2021 800 meters RM6,400

The following transactions were recorded in October 2021:

Date Transaction
October 3 Purchased 500 meters of ‘NylonB7’ at RM9 per meter.
13 Returned 300 meters of damaged ‘NylonB7’ that was purchased on 29 September
2021.
21 Issued ‘NylonB7’ to make 200 school bags.
31 A stock count revealed that there were 800 meters of ‘NylonB7’ inside the store.

Required:

Prepare the store ledger card for Awesome Berhad for the month of October 2021.
(8 marks)

END OF QUESTION PAPER

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