CONFIDENTIAL 1 AC110/120/JAN 2022/MAF201

UNIVERSITI TEKNOLOGI MARA

TEST 2

COURSE : COST AND MANAGEMENT ACCOUNTING 1

COURSE CODE : MAF201
EXAMINATION : JANUARY 2022
TIME : 1 HOUR AND 15 MINUTES

INSTRUCTIONS TO CANDIDATES

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

2. Answer ALL questions in English.

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 3 printed pages

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CONFIDENTIAL 2 AC110/120/JAN 2022/MAF201

QUESTION 1

Ququrose Enterprise is producing and selling a single slimming product, Ququrose

Chantique, for those having trouble gaining weight or keeping on weight. The cost and
revenue data, based on annual sales and production of 60,000 packets for the year 2021 is
given below:
RM RM
Sales 3,000,000
Less: Production cost
Direct material 660,000
Direct labour 420,000
Variable production overhead 420,000
Fixed production overhead 330,750
1,830,750
Less: Non-production cost
Administration expenses 280,500
Selling and distribution expenses 450,000
730,500
Net profit 438,750

Additional information:
1. Administration expense is a cost fixed in nature.
2. Selling and distribution expense is semi-variable cost. The business will charge the
fixed selling and distribution expense based on the following schedule:

Quantity sold Fixed cost charged

0 – 50,000 packets RM150,000
Exceeding 50,000 packets RM300,000

Required:

(Each question is to be treated independently)

(a) Identify the following for the year 2021:

(i) Total variable cost per packet.
(ii) Total fixed cost.
(4 marks)
(b) Determine for the year 2021:
(i) Break-even point of the product in packets and value.
(ii) The margin of safety in packets and value.
(4 marks)

(c) The company plans to improve the quality of the Ququrose Chantique for the year
2022, but the improvement will increase the variable cost by RM2.50 per packet.
Management believes that the improvement to the product will boost sales units by
20% although the administration expenses will increase by RM40,750.

Required:
Predict the new selling price per packet to be set for Ququrose Chantique if the company
wishes to earn a net profit of RM632,000 for the year 2022.
(3 marks)
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(c) For future business expansion, a new business plan is proposed and discussed by
the management team. In addition to the current product, they plan to produce
another product, Ququrose Fit Detox. It has been estimated that the variable cost
would amount to RM35.00 per packet, and it can be sold at RM65.00 per packet.
Sales for Ququrose Chantique and Ququrose Fit Detox are estimated to be 90,000
and 60,000 packets per year respectively. To accommodate the new business plan,
the following additional fixed costs have to be considered:
- must hire another machine operator who will be paid a fixed salary of RM2,500
per month.
- a new machine also needs to be purchased for RM120,000 with a useful life of 5
years.

Required:

Advise Ququrose Enterprise whether to proceed or not with the future business plan by
referring to the break-even point in packets.
(7 marks)

TRUE OR FALSE QUESTIONS

For each of the following statements, indicate whether it is TRUE or FALSE.

1. The margin of safety indicates how much the company can decrease its sales before
a loss occurs.
(1 mark)

2. A break-even analysis is a systematic method to study the effects on the future profit
of changes in fixed cost, variable cost, sales price, quantity, and mix.
(1 mark)
(Total: 20 marks)

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QUESTION 2

A. Multiple Choice Questions. Choose the most suitable answers.

1. Which one of the following is the functional budget?

a) Production and sales budget
b) Raw material budget
c) Labour budget
d) All of the above

2. The sales budget is prepared by whom?

a) Production Manager
b) Sales Manager
c) Managing Director
d) None of the above

3. The production budget is dependent on:

a) Purchase budget
b) Sales budget
c) Cash budget
d) Overhead budgets

4. The budget period is the…

a) Period of the budget committee
b) Period of budget centres
c) Period for which a budget is prepared
d) Period of budget officer
(1 mark each x 4 = 4 marks)

B. Structured Questions.

ABC Limited manufactures two products, A and B, from three basic raw materials:
DM11, DM21, and DM31. The company operates a budgetary control system and
values its stock of finished goods on a marginal cost basis. The following forecasted
information is given for January 2022:

1. The company is introducing a new inventory control system that should

reduce stocks. The forecast is that stocks on 31 January 2022 will be reduced
as follows: raw materials by 10% and finished products by 20%.

2. Selling prices are RM440 for each product A and RM360 for each product B.

3. Information on direct material and labour costs for January 2022 are as
follows: Standard cost data per unit of product:
Product A B
Price per unit units units
Direct material:
DM 11 RM2 5 -
DM 21 RM4 - 10
DM 31 RM1 5 5
Rate per hour hours hours
Direct wages: RM12.50 2 4
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4. Budgeted data for January 2022 for sales, opening stocks and closing stocks
are as follow:

Finished Product: A B
Sales RM3,300,000 RM1,800,000

Stock as at 1 January 2022 3,000 2,000

(units)

Direct Material: DM 11 DM 21 DM31

Stock as at 1 January 2022 24,500 20,500 17,500
(units)

Required:

From the data given above, you are required to produce for January 2022 the
following:

a. Sales budget (in units and value)

b. Production budget (in units)
c. Material usage budget (in units and value)
d. Material purchases budget (in units and value)
e. Direct labour budget (direct labour hours and cost)

(16 marks)
(Total: 20 marks)

END OF QUESTION PAPER

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