CONFIDENTIAL 1 AC/JUL 2021/MAF151

UNIVERSITI TEKNOLOGI MARA

FINAL ASSESSMENT

COURSE : FUNDAMENTALS OF COST ACCOUNTING

COURSE CODE : MAF151
EXAMINATION : JULY 2021
TIME : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) 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 9 printed pages

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QUESTION 1

A. Choose the following costs according to traceability and behaviour that best describe
the costs involved in each of the following situations:

Traceability Behaviour
Direct material cost Fixed cost
Direct expenses Variable cost
Indirect production cost Step cost
Indirect non-production cost Semi-variable cost

a. Electricity cost incurred by manufacturing department is an indirect production

cost. It is classified as _____(i)_____ in term of cost behaviour.

b. Depreciation for office equipment is a/an _______(ii)______. If a straight-line

method is adopted, it is classified as fixed cost in term of cost behaviour.

c. Royalty paid for units sold of a product is a/an ______(iii)__________. It is

______(vi)_____ in term of cost behaviour.
(4 marks)

B. Below are the costs incurred by LEEDA Manufacturing Sdn Bhd for June 2021:

RM
Advertising 500
Electricity (70% production and 30% non-production) 4,000
Supervisor salaries 8,000
Carriage inwards on raw materials 350
Production staff salaries 20,000
Raw materials 16,000
Salesmen commission and salaries 4,400
Returned damaged raw material to supplier 1,000
Depreciation of non-current assets (60% production and 40%
non-production) 3,300

Required:

Classify the above costs according to:

a. Prime costs
b. Period costs
(4 marks)
(Total: 8 marks)

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QUESTION 2

A. a. Purchasing plays an important role in any business in order to acquire raw

materials to be assembled into finished product. It must be conducted by
proper methods that cover procurement and documents so as to control and
minimize costs associated with material investment.

Outline briefly the following documents in relation to the purchasing and

receiving function:

i. Material Requisition Note

ii. Purchase Requisition Note
iii. Goods Received Note
(3 marks)

b. Just in Time (JIT) system was originally formed in Japan as a response to the
country’s limited natural resources, leaving little room for wastage. Today, JIT
system is used by many businesses despite the high costs needed to
implement it.

i. Define Just In Time (JIT) purchasing system.

ii. State TWO (2) features of JIT purchasing system.
(3 marks)

B. NASR Sdn Bhd is involved in the purchase and resale of the famous white coffee
throughout Malaysia. The demand for the product is expected to be constant at
80,000 packs annually. However, the monthly sales may increase up to 7,500 packs
during special promotion period and sales never fall less than 3,000 packs per
month.

NASR Sdn Bhd purchase the product from Coffee-Ku Manufacturing Sdn Bhd at the
purchase price of RM25 per pack. The supplier usually takes between half a month
to one month to deliver the product. The cost of placing an order comprises of
purchase order cost of RM45 and receiving and inspection costs of RM55. The
carrying cost is charged at 1% of the purchase price.

Required:

Determine the following:

a. Economic Order Quantity (using formula)

b. Re-Order Level

c. Maximum Stock Level

d. Minimum Stock Level

(6 marks)

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C. HUDA Sdn Bhd is a business that assembles automobile components and has
adopted a perpetual inventory system in controlling its stocks. One of its main stocks
is ‘Component X70’.

On 1 June 2021, the store ledger card shown a total quantity of 250 units of
‘Component X70’ at total valuation of RM2,850 which comprises 100 units that were
purchased on 28 May 2021, at a price of RM12 each. The balance were purchased
on 28 April 2021.

Below are the transactions of purchase and issue of ‘Component X70’ for the
month of June 2021:

3 Purchased 400 units at valuation of RM5,000.

10 Issued 500 units.
18 Purchased 650 units at valuation of RM8,450.
20 Returned to supplier 80 units due to wrong specification
which were purchased on 18 June 2021.
22 Issued 600 units.
29 Purchased 500 units at valuation of RM6,700.
30 A physical stock count revealed 600 units of ‘Component
X70’ in store.

Required:

Prepare a Store Ledger Card to record the above transaction in June 2021, using a
method that would result in the lowest cost of goods sold charged to production.

(6 marks)
(Total: 18 marks)

QUESTION 3

Alisya Enterprise manufactures a product named as ‘Red01’. The business currently pays its
workers’ wages using time-based scheme. The business employs two workers, Inara and
Ashraf. The standard working hours per week is 40 hours.

Below is the information gathered for Week 1 of June 2021:

Worker’s Actual Hours Rate per Rate per Units Units

Name Worked hour (RM) unit (RM) Completed Rejected
Inara 52 hours 8.50 1.40 290 10
Ashraf 38 hours 8.50 1.40 200 10

Additional information:

i. Under the time-based scheme, overtime is allowed and the overtime rate is paid at
160% of the normal hourly rate.

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ii. The time allowed for each unit of product ‘Red01’ is 15 minutes.

iii. The workers are entitled for individual bonus for every good unit produced. The
bonus is determined based on time saved at 60% of the normal hourly rate.

Required:

a. Calculate the gross wages for Inara and Ashraf in Week 1 of June 2021 showing
their basic wages, overtime (if any) and bonus (if any).
(8 marks)

b. Determine the gross wages for Inara and Ashraf in Week 1 of June 2021 if the
business decides to change the remuneration scheme to the piecework scheme. The
business also plans to introduce a guaranteed minimum wage which is RM300.
(8 marks)

c. High labour turnover causes problems for a business. State TWO (2) examples each
for prevention cost and replacement cost in relations to labour turnover costs.
(4 marks)
(Total: 20 marks)

QUESTION 4

A. Cookies Delight produces and sells cookies, pastries dan frozen pizzas for local
markets. The productions of these products start at Mixing departments and continue
to Baking department before they can be packed and sold. Mixing department and
Baking departments use machines in their operations.
These departments are supported by two service departments: Maintenance and
Store.
The following is the budgeted data for the month of October 2021:

Production Departments Service Departments

Mixing Baking Maintenance Store
Direct Costs
Direct materials (RM) 10,000 15,000 - -
Direct wages (RM) 9,000 8,000 - -
Allocated Costs
Indirect materials (RM) 6,000 9,000 2,500 3,000
Indirect wages (RM) 5,000 11,000 2,000 2,000

Additional information
Floor area (sq meter) 3,500 2,500 1,000 1,000
Machine value (RM) 85,000 55,000 - -
Number of employees 12 10 4 4
Maintenance hours 110 80 - 10
Number of material 250 220 30 -
requisition
Direct labour hour 150 100
Machine hour 2,880 2,250
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Accumulated overheads:
RM
Depreciation on machinery 6,000
Rent 8,000
Supervision 5,400
Insurance on building 6,000

Required:

a. i. Prepare an overhead analysis sheet showing allocation,

apportionment and re-apportionment of overhead.
(Round up to nearest RM)
(15 marks)

ii. Calculate the overhead absorption rate (OAR) for both production
departments.
(Round up to two decimal places)

(3 marks)

b. Identify one suitable basis of apportionment for each of the following

expenses:

i. Depreciation of equipment
ii. Fire insurance
iii. Canteen expenses
iv. Material handling expenses

(4 marks)

B. YY Sdn Bhd manufactures two products, Gold A and Silver B. The company has
been adopting a traditional costing system in allocating its overhead costs to each
product by using direct labour hour basis. The standard direct labour rate to produce
both products is RM12 per hour. Meanwhile the overhead absorption rate is RM25
per direct labour hour.

The management of YY Sdn Bhd plans to adopt the Activity-based costing (ABC)
system in order to gain a competitive advantage. The following information is
gathered to implement the new costing method:

Gold A Silver B
Estimated production units 5,000 units 15,000 units
Direct material cost per unit RM20 RM26
Direct labour cost per unit RM18 RM24
Number of purchase orders 400 800
Number of inspections 200 525

The following information relates to the overhead cost attached to each activity.

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Activity Cost Pool Estimated Cost Drivers

Overhead (RM)
Purchasing 240,000 Number of purchase orders
Assembling 525,000 Number of direct labour hours
Packaging 100,000 Number of units produced
Quality inspection 72,500 Number of inspections

Required:

a. Determine the Activity-based overhead rate (ABOR).

(4 marks)

b. Under the Activity-based costing system, calculate the product cost per unit
for product ‘Gold A’.
(4 marks)

c. Evaluate the product cost per unit of ‘Gold A’ under the Traditional costing
system and Activity-based costing system.
(2 marks)

d. Explain THREE (3) advantages of using Activity-based costing system.

(3 marks)
(Total: 35 marks)

QUESTION 5

A. Product costing methods are used to assign cost to a manufactured product.

Different methods apply to different production and decision environments.

a. Give TWO (2) differences between job order costing and batch costing.

(4 marks)

b. Carina Ikhlas Sdn Bhd received an order named Job 120, for a customized
baby stroller. The relevant data relating to the Job 120 are as follows:

RM
Direct materials

Alumunium 290.00
Cloth 170.00

Direct labour

Assembly (25 hours) 100.00

Finishing (12 Hours) 120.00

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The overhead absorption rate:

Assembly RM3.50 per machine hour

Finishing RM2.50 per direct labour hour

Machine hour for Job 120 at assembly department is 20 hours. Selling and
distribution expenses are 15% of the production cost. Profit is 20% of selling
price.

Required:

Prepare a job cost sheet for Job 120, showing clearly its prime cost, total
cost, profit and selling price.
(6 marks)

B. a. Based on the following service business listed below, state ONE (1) example
of cost unit for each.

Service Business Cost Unit

i. Hotel for Pets (cat)
ii. House Cleaning
iii. Boat for Langkawi Island Hoping
iv. In-home senior citizen care

(4 marks)

b. The following information is available for Smarty Kindergarten for June 2021:

Items
Number of pupils 40 children
Foods and drinks RM10 per children per month
Learning materials –
book, stationery and printing RM15 per children per month
Building rental RM2,000 per month
Depreciation of furniture RM800 per month
Utilities RM600 per month
Teaching staff 4 staff
Chef 1 staff
Administration staff 1 staff
Salaries: Teaching staff - RM900 per staff per month
Chef – RM700 per staff per month
Administrative staff – RM500 per staff per
month

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Required:

Calculate the following for Smarty Kindergarten for June 2021:

i. Total fixed costs

ii. Total variable costs
iii. Total costs per children
(5 marks)
(Total: 19 marks)

END OF QUESTION PAPER

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