See Zhao Wei U2003083

Question 1:
(a) 1)Cost per unit of Alpha 180 +80 =RM260
Cost per unit of Beta 130 +120 =RM250

2) Profit per unit of Alpha 650-260=RM 390

Profit per unit of Beta 475-250=RM 225
(b)
Because Maharani Manufacturing assigned the manufacturing cost using the direct labour
dollars . The use of robotics system will reduce the use of labors and therefore lesser labor
will be used in the process for Alpha product.

(c)
Because the robotic system used for Alpha product is high. Even though the machine hours
are same for Alpha and Beta, It is preferable to use machine hours per unit to do the
comparison.

POR
Alpha Beta
300,000/50,000 300,000/400,000
=6 Machine hour per unit =0.75 hours per unit

Therefore, the Alpha product use the higher cost in machine-related parts .Using machine
hour per unit will bring more accurate results.

(d)(i) (ii) (iii)

Cost pool POR ABC Cost assigned
=Expected cost/total =POR x cost driver of each product
cost driver Alpha(RM) Beta(RM)

Set up 500,000/500 1,000x 400 1,000 x 100

=1,000 =400,000 =100,000
Machine-related 600,000/45,000 73.33 x 300,000 73.33 x 300,000
=73.33 =22,000,000 =22,000,000
Packing 5,000,000/250,000 20 x 50,000 20 x 200,000
=20 =1,000,000 =4,000,000
Total 23,400,000 26,100,000
production
cost
Cost per unit 23,400,000/50,000 26,100,000/400,000
=Production =468 =65.25
cost/unit

Alpha Beta
Direct material and direct labour per unit 180 130
Prodcution cost per unit 468 65.25
Full production cost per unit 648 195.25
(e)
Alpha Beta
Full production cost per unit 648 195.25
Selling price 650 475
Net profit per unit 2 279.75

Alpha is not profitable as original estimated data. Because under the ABC costing system, the
cost production per unit of Alpha is higher,therefore, the net profit of Alpha is lesser which is
only Rm2 per unit..While the cost per unit of Beta is lower, so Beta is profitable with the net
profit per unit is RM279.25.

(f)
Sales mix is a calculation that determines the proportion of each product a business sells
relative to total sales. To determine the sales mix, using the ratio of sales of each product to
total sales to get the sales mix. this ratio is a useful tool to compare the relative profitability of
two products with different retail sales prices. The consideration should be taken when the
demand of market has changed. Besides, the used of robotic system also should be considered
in using sales mix. It will make the result of sales mix more accurate.

Question 5:

(a) In this situation , sales mix can be applied in this case. Break even point can be find
through the formula:

Sales mix (total sales)=A: B :C

Weighted average contribution margin =Contribution margin per unit A(Sales mix A)
+Contribution margin per unit B(Sales mix B)+Contribution margin per unit C(Sales mix C)

Break even =Fixed cost / weighted average contribution margin per unit
After get the total Break even point, the company can assigned the unit to product A,B,C by
multiple sales mix.

(b) When Suppose Jatidiri Sdn Bhd decide to use advanced manufacturing technology , the
variable cost will decrease and fixed cost will increase. This is because the advanced
manufacturing technology will reduce the variable cost such as direct labor.

When the company has lower variable cost and higher fixed cost, the net income of the
company is stable. It will help the company to survive when the economic is worst.

However, the net income will be lower when the economy is good because the fixed expense
is high during that moment.When the company has the higher sales, the company with
advanced manufacturing technology will get the losses compare to the company based with
labor hours.
Question 6:
(a)
Information Variable cost per Fixed cost Contribution Break even
unit margin per unit point
=selling price =(Fixed
-Variable cost cost/contribution
per unit margin)
1 20 5,000 50-20 5,000/30
=30 =166,67
2 20 +(50 x0.1) 4,000 50-25 4,000/25
=25 =25 =160
3 20+ (50 x 0.2) 0 50-20 0
=30 =30

(b)
Cantik Uniform should choose the option 1.Even though the break even point of option 3 is
the lowest which is only 0. The contribution margin of option 1 is much higher until it can
cover the fixed cost involved to get the higher profit.
To do the comparison:
Option 1 2 3
Sales 40,000 40,000 40,000
(selling price x unit)
Less: variable cost 20 x 800 25 x800 30 x 800
(variable cost per =16,000 =20,000 =24,000
unit x unit)
Contribution margin 24,000 20,000 16,000
Less:Fixed cost 5,000 4,000 0
Net income 19,000 16,000 16,000
Question 7:
(a)
Item Physical Percentage of Equivalent unit
unit: Completion
with Respect Direct Material Conversion
to Conversion cost
Beginning WIP 200,000
Unit started during 800,000
March
Total units to 1,000,000
account for
Units completed 800,000 100% 800,000 800,000
and transferred
Ending WIP 100,000 60% 100,000 60,000
Normal spoilage 80,000 80,000 80,000
Abnormal spoilage 20,000 20,000 20,000
Total units 1,000,000 1,000,000 960,000
accounted for
DM (RM) CC (RM) Total cost (RM)
Beginning WIP 1,600,000 1,400,000 3,000,000
Cost incurred 6,400,000 8,200,000 14,600,000
during March
Total cost to 8,000,000 9,600,000 17,600,000
account for
Equivalent units 1,000,000 960,000 80,000
Cost per equivalent 8 10 18
unit
Total cost
Abnormal spoilage 360,000
=20,000 x 18
Completed cost and 800,000 x 18
transferred and +80,00 x 18
normal spoilage =15,840,000
Ending WIP:
DM 8 x 100,000
=800,000
CC 10 x 60,000
=600,000
Total ending WIP 1,400,000
Total cost 17,600,000
accounted for
Question 9:
Service Department Operating Department
P Q R S
Budgeted overhead 31,280 55,640 161,490 399,350
Allocation P (31,280)
(1,000/46,000 ; 680
26,000/46,000; 17,680
19,000/46,000) 12,920
Total Main 56,320
Allocation Q (56,320)
(30,000/32,000 ; 52,800
2,000/32,000) 3,520
Total Operating Department 231,970 415,790
department overhead to apply

Question 10:
When allocating costs to departments, we want to assign a fair amount to the department that
is using the service. Although sometimes there is no direct cause and effect relationship
between the cost driver and the portion of the cost assigned to the department, we still try to
look at appropriate drivers of the costs.

For example, an appropriate driver for assigning the costs of running the personnel
department might be the total number of employees in each department, because, more
employees required would seem to cause more costs for the personnel department.
Another appropriate driver might be the number of new hires by each department.

The costs of security or custodial services would seem to increase as the amount of space
increases, so, the square footage of the department using these services may be an appropriate
driver of the cost. Another appropriate driver might be the number of hours actually spent
by security or custodians in each department.

Reference : Notes Cost Accounting 2020/2021 and Investopedia