CONFIDENTIAL ACIJUN 2018/MAF201 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE. COST AND MANAGEMENT ACCOUNTING 1 COURSE CODE : MAF201 EXAMINATION : JUNE 2018 TIME : 3HOURS INSTRUCTIONS TO CANDIDATES 1 This question paper consists of five (5) questions. 2 Answer ALL questions in the Answer Booklet. Start each answer on a new page. 3 Do not bring any material into the examination room unless permission is given by the invigitator. 4 Please check to make sure that this examination pack consists of i) the Question Paper ii) an Answer Booklet ~ provided by the Faculty 5. ‘Answer ALL questions in English, DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO D0 SO This examination paper consists of 6 printed pages (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 2 ACIJUN 2018/MAF201 QUESTION 1 Expert Builders Sdn Bhd is a construction company that has been engaged to rebuild a school hall destroyed by a fire. The project, with a contract price of RM4.5 milion, is expected to take 22 months to complete. Work on the project started in early December 2016. The following is the information related to the year ended 31 October 2017: RM Materials purchased and sent to site 900,000 Materials from Head Office 35,000 Plant and machinery, at cost 240,000 Additional information: 1 RM40,000 worth of materials purchased were later found to be unsuitable and were returned to the supplier. 2. Materials amounting to RM20,000 remained on site as at 31October 2017, 3. Plant and machinery is depreciated at 20% per annum. 4. Other costs related to the contract are as follows Paid in the year | Accrued as at Prepaid as at (RM) —_|-31/10/2017 (RM)_|_ 31/10/2017 (RM) Direct wages 720,000 16,500 - Sub-contractors 70,000 - 10,500 | Other direct costs 95,500 - e 5. Head office overheads are absorbed to the project at 10% of cost of materials used. 6. Further costs to complete the contract are estimated at RM800,000 7. Rectification costs are estimated to be 5% of the contract price. 8 Progress billings as at 31 October 2017 was amounted to RM1.4 million and is subjected to 10% retention money. 9, The company calculates profit based on cost method. Required: a. Prepare the following: i Construction in Process Account for the year ended 31 October 2017 ii. An extract of the Statement of Financial Position as at 31 October 2017 (12 marks) b. Define the following terms: i Retention money ii. Progress billing (3 marks) (Total: 15 marks) (© Hak Cipta Universiti Teknologi MARA, CONFIDENTIALCONFIDENTIAL 3 ACIJUN 2018/MAF201 QUESTION 2 Sedap Rasa Sdn Bhd produces a product by passing through two consecutive processes. The following data are related to the two processes for January 2018, Process A Input for Process A: Material FM240,000 (RM30 per kg) Direct labour RM80,000 Production overhead RM64,000 Normal loss is expected to be 5% of materials input and all scrap can be sold at RM10 per kg. Inspection was made at the end of the process. The actual output transfer to process B was 7,000 kg. Process B Work in Progress (WIP) as at 1 January 2018 was 1,000 kg valued at RMS54,740. The WIP was 100% complete for transfer from Process A, 80% complete for added materials and 50% complete for conversion cost. Costs incurred in January 2018: Added materials RM69,600 Conversion cost. RM57,440 Expected loss is 400 kg and these losses can be sold at RM10 per kg. Inspection was made at the end of the process and it was identified that actual scrapped amounted to 200 kg. Partially completed outputs were found at the end of the process. They were 100% complete for transfer from Process A, 70% complete for added materials and 60% complete for conversion costs. Output completed and transferred to finished goods stock were 7,000 kg, Required: a. Prepare process account for Process A for January 2018 (6 marks) b. Prepare process account for Process B for January 2018 showing all the relevant ‘statements. (15 marks) ©. List FOUR (4) characteristics of process costing, (4 marks) d. Distinguish between normal losses and abnormal losses. (2 marks) (Total: 27 marks) (© Hak Cipta Universiti Teknologi MARA, CONFIDENTIALCONFIDENTIAL 4 ACIJUN 2018/MAF201 QUESTION 3 Enah Enterprise makes a type of sweetener which is sold to bakeries and other food manufacturers. The sweetener is sold in standard one-litre containers with the following variable costs per container: RM Direct materials 7.00 Direct labour 5.00 Manufacturing overhead 2.00 Each container is priced at RM40 per unit. Fixed manufacturing costs are budgeted to be RM45,000 per month while fixed non-manufacturing costs are expected to be RM25,500 per month. Variable selling expenses are 5% of sales value. ‘The budgeted production activity per month is as follows’ Direct labour hours 18,000 hours Machine hours 6,000 hours Production units 15,000 units Fixed manufacturing overheads are absorbed using a predetermined rate per unit of output. Production and sales for the following months in 2018 were: January February Sales (units) 12,500 13,000 Production (units) 13,000 15,500 There were 2,500 units of opening inventory in January. Fixed costs incurred were as budgeted. Required: a. Prepare a profit statement for February 2018 using: i Absorption costing ii Marginal costing (10 marks) b. Explain ONE (1) advantage of marginal costing, (2 marks) c. Explain briefly the situation when marginal costing profit will be higher than absorption costing profit. (2 marks) (Total: 14 marks) (© Hak Cipta Universiti Teknologi MARA, CONFIDENTIALCONFIDENTIAL 5 ACIJUN 2018/MAF201 QUESTION 4 Smart Technology Sdn Bhd has been manufacturing and selling electronic calculator since 2010. The management of the company is planning to improve its financial position in order to maintain the growth rate of the company. The data given below are related to the current year. Selling price per unit RM60.00 Annual sales volume (units) 132,000 Variable costs per unit: RM Direct material 20.00 Direct labour 10.00 Manufacturing overhead 9.00 Selling expenses 3.00 Annual fixed costs RM Manufacturing overhead 404,000 Selling and administrative 532,000 Required: (Each question is to be treated independently) a. Atthe current operating level, identify the following i Break-even points (in units) ii. Margin of safety (in units) (4 marks) b. In order to boost sales, the marketing manager suggested a more aggressive promotional campaign to be carried out. This campaign would cost an additional RM16,000 per annum. Determine the following: i The new break-even point (in units) ii, The new net profit il, ‘The new margin of safety (in RM) (6 marks) c. The management team is in the process of preparing budgets for the coming year. From the feedback that they received, it is expected that the direct labour cost will increase by 5%, while variable selling cost and direct material cost will decrease by 4% and 2% respectively. Assuming the total fixed costs remain at RM936,000, advise the company on the number of electronic calculator (in units) it should sell next year in order to break-even. (4 marks) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 6 ACIJUN 2018/MAF201 d. Referring to the situation in part (c) above, recommend the number of electronic calculator (in units) the company must sell next year in order to maintain this year's, profit (6 marks) e. State FOUR (4) assumptions of cost volume profit analysis. (4 marks) (Total: 24 marks) QUESTION 5 Meligai Mini Market is currently preparing its cash budget for the year 2018 and the following information has been made available. 1 — March ~ April May | June RM | _RM RM RM Sales 75,000 87,500 90,000 95,000 Purchases | 48,000 57,500 50,000 50,000 Wages 20,000 19,000 20,000 24,000 Overheads 8,500 9,500 11,000 12,000 Administrative expenses | 7,000 | 9,000 8,000 11,000 2. 10% of the monthly sales are for cash while the remainders are on credit. 3. 60% of the credit sales will be collected one month after sale. The remainder will be collected in two months after sales. However, 2% of this remainder will become bad debts. 4. Purchases are to be paid at the end of each month and are entitled to 10% discount from creditors. 5. Wages and administrative expenses are paid as incurred. 6. Overheads include a monthly depreciation charge of RM2,500. It is paid in the month incurred. 7. __ Rental of the premises is RM8,000 per quarter. This amount is paid at the beginning of each quarter. 8 Avan with a carrying value of RM5,000 is expected to be sold in May for a profit of RM2,300. 9. At the end of March 2018, the bank account showed an overdraft of RM5,400. Required: a. List FOUR (4) purposes of budgets in an organisation. (4 marks) b. Prepare the monthly cash budget for Meligai Mini Market for the second quarter of 2018. (16 marks) (Total: 20 marks) END OF QUESTION PAPER (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL