CONFIDENTIAL 1 AC/JUL 2023/MAF201

UNIVERSITI TEKNOLOGI MARA

TEST 2

COURSE : COST AND MANAGEMENT ACCOUNTING 1

COURSE CODE : MAF201
EXAMINATION : JULY 2023
TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

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

2. Answer ALL questions in English.

3. Do not bring any material into the examination room unless permission is given by the
invigilator.

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

This examination paper consists of 5 printed pages

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CONFIDENTIAL 2 AC/JUL 2023/MAF201

QUESTION 1

A. True and False Questions. Choose the most suitable answers.

1. In Cost Volume Profit analysis, it is assumed that total variable costs vary directly with
changes in volume.
2. The break-even point is the level of activity where the total variable cost equals to
total fixed costs.
3. The contribution margin is calculated as the difference between selling price and fixed
cost per unit.
(3 marks)

B. Structured Question.

Kopi Kontena Sdn Bhd is the exclusive wholesale distributor of the “Golden Roast Coffee”
manufactured in one of the industrial areas in Perak. The coffee is sold in individual packets
of 300gram at RM6.00 each. In developing the company’s financial strategy for the year
2023, the company’s CEO has accumulated all data on projected operation as follows:

Sales volume in 2023 300,000 packets

Variable costs:
Cost of coffee RM2.00 per packet
Cost of labour RM1.00 per packet
Selling and distribution RM0.85 per packet

Mixed costs:
Administration expenses RM155,000 per annum
Other overhead expenses RM90,000 per annum

Additional Information:
 The administration expenses are fixed costs.
 50% of the other overhead expenses are fixed costs and the remaining are variable
costs.

Required:

(Each question is to be treated independently)

a. Classify the current cost into:

i. Total variable cost per packet
ii. Total fixed cost for the year
(3 marks)
b. Compute the following:
i. The break-even point in packets and value.
ii. The margin of safety in packets and value.
iii. The net profit for 2023.
(6 marks)

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c. It is estimated that the cost of coffee will increase by 5% and the total fixed costs is
expected to increase by RM20,000. This will result the selling price increase by 10%
and the sales quantity decrease by 10% from the current sales level. Other costs
remain the same. Thus, compute the new profit for the company.
(6 marks)

d. The manager of the company is proposing to produce and sell new products; Ketagih
coffee and Saigon coffee in addition to the current production in order to improve its
performance. However, this decision will increase the marketing cost by RM40,000.
The projected information related to the new propose products are as follows:

Particulars Ketagih Coffee Saigon Coffee

Selling price RM8.00 RM10.00
Variable cost RM5.00 RM5.00
Sales units 150,000 150,000

The company is confident that the same current monthly sales volume for Golden
Roast Coffee can be maintained.

Explain whether the company should proceed with the plan to introduce and sell the
new products or maintain current operation. Your justification should be based on the
break-even point (in units) as a comparison.
(7 marks)
(Total:25 marks)

QUESTION 2

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

1. Parties involved in preparing budget:

i. Accountant
ii. Top management from Production Department only
iii. Top management from each department
iv. All the factory operators

A. i and ii only.
B. i and iii only.
C. iii and iv only.
D. ii and iv only.
(1 mark)

2. Find which of the following is not true about the purpose of budget?

A. To aid the planning of actual operation.

B. To coordinate the activities of the operation.
C. To communicate business plan with suppliers and customers.
D. To motivate managers to strive to achieve the budget goal.
(1 mark)

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3. A _________ is a detailed schedule showing the expected sales for the

budget period.

A. Sales budget.
B. Production budget.
C. Material usage and purchase budget.
D. Production cost budget.
(1 mark)

4. Which of the following is not a step of budgetary control:

A. Comparing the actual and budgeted figures to find any variances.

B. Establishing a plan or target of performance.
C. Recording the actual performance.
D. None of the above.
(1 mark)

5. A budget is tool which help the management in planning and control

of____________:

A. Production activities.
B. Purchase activities.
C. Sales activities.
D. All business activities.
(1 mark)

B. Structured Question.

Lurve Design Sdn Bhd produces a high quality one panel ready-made curtains for local
market. Currently it has two types of curtains namely Exclusive and Luxury. The company
sells its product for RM250 and RM300 per unit respectively. Two main materials, which are
Brocade and Lace will be used in making both curtains that purchased from supplier at
purchase price of RM50 per metre and RM35 per metre respectively. However, the
management of the company is planning to expand its market to increase the target sales.
The following data relates to the projected data for July 2023:

Exclusive Luxury Brocade Lace

Stock as of 30 June 2023 120 units 150 units 300 metres 200 metres
Sales (units) 1,788 1,985 - -

Additional information:

1. For each unit of Exclusive, it consumes 2.5 metres of Brocade and 2 metres of Lace
and for each unit of Luxury, it consumes 3 metres of Brocade and 2.5 metres of Lace.

2. The stock balances at end of July 2023 for both of products and materials are
expected to be 10% and 5% respectively higher than its opening stock.

3. Direct labour wages is paid at RM10 per hour. Each production unit of Exclusive and
Luxury is required 3 hours and 2 hours of direct labour respectively.

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4. The components of the overhead cost for the period are as follows:

Exclusive Luxury
RM RM
Variable production overhead 2,000 2,500
7,500 (shared based on budgeted production units
Fixed production overhead of each product)

Required:

Prepare the following budget for July 2023:

i. Sales budget (in quantity and value)

ii. Production budget (in quantity)
iii. Materials usage and purchase budget (in quantity and value)
iv. Direct labour cost budget
v. Production cost budget for each product
(20 marks)
(Total: 25 marks)

END OF QUESTION PAPER

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