UDE1007/CH2/T2 amiroh@umcced.edu.

my

Cost and Management Accounting I

Chapter 2 - Tutorial 2

a. Define what is cost object. 2 marks

b. Define what is cost centre. 2 marks
c. Kids house sdn bhd manufactures and sell high quality children’s wear made from basic
raw materials, cotton and silk. The garments are made in two production departments,
design and cutting department and sewing department. Each of the department has skilled
workers. Apart from the production departments, two other departments in the factory are
Maintenance and Quality controls. Finished garments are packed and ready to be
distributed.

Among cost involved in the business operation of Kids House sdn bhd are as follows:

1. Raw material cotton

2. Raw material silk
3. Wages of mechanics and repairer
4. Wages of workers in design & cutting department
5. Wages of seamstress in sewing department
6. Depreciation of sewing machines
7. Director salary
8. Production manager salary
9. Supervisor salary
10. Rent and rate of factory salary
11. Indirect material
12. Depreciation of office car
13. Salary of clerk for raw material store
14. Hire special Machine
15. Water and Electricity

Required: Classify cost item 1 -15 into Direct material @ Direct labour @ Direct expenses
@ Overhead.

d. Classify each of the following as either fixed (F), variable (v) or semi-variable (SV) costs.

i. Direct labour
ii. Factory rent
iii. Depreciation on factory equipment
iv. Direct materials
v. Maintenance of machinery
vi. Royalty payments
vii. Factory utilities
viii. Telephone charges
UDE1007/CH2/T2 amiroh@umcced.edu.my

e. Which of the following costs are likely to be controllable by the production manager?

i. Raw materials used in production

ii. Depreciation of machinery
iii. Direct labour
iv. Insurance on machinery
v. Price paid for raw materials
vi. Electricity costs

PART B
Question 1

Jaheet conducts a business as wedding planner in Bandar Jenjang. Below is the data related to
cost and activities involved in the year of 2018:

Month Total events (unit) Total sewing cost (RM)

January 4,100 8,910
February 4,010 8,900
March 3,060 6,030
April 3,600 6,300

By using the High-Low method, determine the following:

i) variable cost per unit;

ii) fixed cost; and
iii) cost function.
iv) total order cost incurred if the unit order increase to 1,500 unit.

Question 2

Syarikat Soso prepares the following information pertaining purchasing activities of Product SS
during the first six months of year 2018.

Month Total order (unit) Total (RM)

January 150 22,500
February 185 31,200
March 230 27,500
April 350 31,200
May 380 38,000
June 270 32,500

By using the High-Low Method, determine:

a) variable cost per unit;

b) fixed cost; and
c) cost function.
d) total order cost incurred for July if the unit order is 420 unit.
UDE1007/CH2/T2 amiroh@umcced.edu.my

Question 3

Below is the information on machine repair cost for Syarikat Dunia Motor for the year 2018.

Month Usage time Cost (RM)

(machine hour)
January 8,480 11,400
February 6,800 11,200
March 6,400 10,800
April 19,000 12,200
May 12,000 11,800
June 10,160 11,500

By using the High-Low Method, determine:

a) variable cost per unit;

b) fixed cost;
c) cost function; and
d) machine repair cost incurred for July if the usage time used is 15,000 machine hour.

Question 4

Cellent Sdn Bhd manufactures Product LED. Below is the information on the machine hour for
production of Product LED and the electricity costs for the first six months for the year 2015. By
using High-Low Method, calculate the cost at a level of 90,000 machine hours.

Month Machine hour (hour) Electricity cost (RM)

January 65,000 99,100
February 80,000 108,600
March 60,000 94,200
April 75,000 106,679
May 64,000 98,900
June 77,000 107,090

By using the High-Low Method, determine:

a) variable cost per unit;

b) fixed cost;
c) cost function; and
d) total cost at 90,000 machine hour
UDE1007/CH2/T2 amiroh@umcced.edu.my

Question 5
The total cost of maintenance at Jack Sdn Bhd consists of both fixed and variable costs. The
following information relates to the four months:

Month Hours worked Total cost (RM)

1 9,300 115,000
2 9,200 113,600
3 9,400 116,000
4 9,600 116,800

Using high/low method, estimate the total cost for Jack if 10,000 hours were worked in month 5.