EAB 10603

TUTORIAL INTRODUCTION TO MANAGEMENT ACCOUNTING

1. Identity the following costs into the following cost classification

Costs Business Cost classification

Direct Direct Production Period
material labor overheads cost
Cloth Jazz Taylor
Internet Pak Din Kopitiam
broadband
fees
Driver’s Fed Express Courier
Commission Services
Stationery Legal Firm
Electricity of Fuad Furniture Maker
Factory
Flour Aryn Baker
Cooking gas Ali Restaurant
Telephone Accounting Firm
bills

2. Give two (2) examples of cost for the following business

A. Fixed cost for Kilang Perabot Ahmad
B. Variable cost for Hotel Alamanda
C. Semi-variable cost at Mary Photocopy Shop

3. The following cost incurred at one of the snack shop in Dungun. You are required to
classify the following cost according to their function (Production cost,
Administrative cost, Selling cost or Finance cost)

No Cost Function
1 Cost of flour to make doughnuts
2 Supervisor’s salary of the overnight shift when
needed
3 Depreciation expenses of kitchen equipment
4 Electricity cost at the kitchen
5 Manager’s salary
6 Disposable plastics cups
7 Insurance expenses on office equipment
8 Maintenance cost of office equipment
9 Cost of supplies e.g. plastic bags
10 Interest on borrowing paid to AM Bank

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4. Identify the following cost as controllable or non-controllable by the head of the

production department.

A. Direct labour working hours

B. Insurance of machinery
C. Types of material used in production
D. Price of material paid to supplier
5. Distinguish between the following and give an example for each

A. Product and Period cost

B. Direct costs and Indirect costs
C. Production and Non-Production overheads

6. Determine the following examples either fixed cost, variable cost or semi-fixed and
variable cost.

No Examples Fixed, variable or semi-fixed and variable

cost
1 Rental of building
2 Electricity expenses
3 Woods in furniture industry
4 Office telephone bills
5 Flour in Bakery Company

7. What is sunk cost and give one (1) example of this cost

8. Give the three (3) examples of company revenues and expenses

9. Tasty Bakery is involved in selling cakes. Identify each item according cost
classification.

Fixed Variable Semi-variable

No. Cost items
Cost Cost cost
1 Flour
2 Electricity expenses
3 Rental of shop
4 Eggs
5 Baking powder
6 Cashier’s salary
7 Telephone expenses
8 Insurance
9 Depreciation of machine
10 Salary of baker

10. Classify the following costs into the following cost classifications. (Each cost item
should belong to one cost classification)

Cost classification

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Cost Business Direct Direct Production Period

material labour overhead cost
Flour Bread
wood Furniture industry
Electricity Saloon
Driver’s Taxi Industry
salary
Seeds Small Crops
Computer Accounting Firm
rentals
Glue Cabinet Maker
Sugar Cakes
Ink Printing
Button Tailor

11. Track Corporation incurred the following cost while manufacturing its bicycles.

A. Bicycle components
B. Depreciation on plant
C. Property taxes on store
D. Labour costs of assembly-line workers
E. Factory supplies used
F. Advertising expenses
G. Delivery expenses
H. Sales Commission
I. Salaries paid to sales clerks

Required:
Identify each of the above costs as direct materials, direct labour, manufacturing
overheads or period cost.

12. Classify each cost either manufacturing cost or non-manufacturing cost

A. Salary to the clerk

B. Bank Loan paid to CIMB Bank Bhd
C. Petrol Expenses for the lorries
D. Paid materials used to the suppliers
E. Rental of office computer paid to the vendors
F. Direct material cost in the factory

13. Classify the following cost either production costs, selling and distribution costs,
administration costs or research and development costs.
A. Costs of oils used to lubricate production machinery
B. Motor vehicle licenses for lorries
C. Depreciation of factory plant and equipment
D. Cost of chemicals used in the laboratory
E. Commission paid to sales representative
F. Salary of the secretary to the finance director

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G. Trade discount given to the customers

H. Holiday pay of machine operators
I. Salary of security guard in raw material warehouse
J. Fees for advertising agency
K. Rent of finished goods warehouse
L. Salary of scientist in laboratory
M. Insurance of the company’s premises
14. Classify each cost either direct material cost, direct labour cost or direct expenses
A. Wood used to make a chair
B. Salary to the bakers at Bakery Shop
C. Fabrics for the skirt
D. Royalty paid to the GLC Company
E. Metal used for the legs of a chair

15. Classify the following labour cost as either direct or indirect cost
A. The basic pay of direct workers
B. The basic pay of indirect workers
C. Overtime premium
D. Bonus payments
E. Social insurance contribution
F. Idle time of direct workers work on installation of equipment

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