BAAB1014 BUSINESS ACCOUNTING

Assignment Guidelines & Rubrics

Name: Hareen Muthaliar

Quiz 2 – 5%
Learning outcomes
1. Explain the basic concepts of accounting, bookkeeping and cost accounting terminology.
2. Systematically recording business transactions in appropriate accounting records.
3. Prepare basic financial statements, management reports and various alternative cost
Instructions: Answer all questions.

Question 1
Mobile excellent Sdn Bhd (MESB) produces AC compressor for a car manufacturer, Expert
Holding, with a sales price of RM580 and a variable cost of RM180 per unit. Fixed costs are
RM440, 000 per annum. Number of units sold for year was 1,500 units.
You are required to calculate the following:
a). Contribution / Sales ratio
Total Sales = RM 580 × 1500 = RM870,000
Total Variable cost = RM 180 × 1500 = RM 270,000
Contribution Margin per unit (RM400) = RM 580 – RM 180
Contribution RM 600,000
× 100= × 100=68.96 % (Contribution Ratio )
Sales 870,000

(2 marks)
b) Number of units to break-even
RM 440,000
=1,100 Units
( RM 580−RM 180)

(2 marks)

c). Sales value at break-even point. (“Multiply the break-even quantity by the sales price per
unit.”) or Fixed Cost ÷ Contribution Margin)
Break Even Units × Sales per unit = 1,100 × RM 580 = RM 638,000 (Sales at Break Even
Point
(2 marks)
d) Calculate margin of safety in units and value.
Margin Safety In Units & Value
1) Margin Safety (Units) = Current Sales Units (1,500) – Break Even Units (1,100)
Margin Safety (Units) = 400

2) Margin Safety (Value) = Actual Sales Volume – Sales Value at Break Even Point
(1,100 × 580) = RM 870,000 – RM 638,000
Margin of Safety (Value) = RM232,000

(3 marks)

e) Number of units to be sold to achieve a profit of RM220,000 per annum.

Number of units = x ( unknown ) “To reach RM 220,000”
Total Sales = RM 580 x , Total Cost = RM 440,000 + RM 180 x , Profit= RM 220,000
Total Sales – Total Cost = Profit
RM 580 x – (RM 440,000 + RM180 x ) = RM220,000
RM 580 x – RM 180 x = RM 440,000 + RM220,000
Then, RM 400 x=¿ RM 220,000
So, x=¿ 550 Units

(3 marks)

f) Number of units to be sold to achieve a profit of RM220,000 per annum with increasing of
10% total fixed cost. (new number of units to be sold, × the desired profit by the new
contribution per unit.)

(3 marks)

g) Calculate the new break-even in units and value if the total variable cost per unit increases by
15.

The new break-even value is 1179 units x RM580 = RM 683, 820

Answer: New break-Even Unit = 1179,
New Break-Even value = RM 683, 820

(5 marks)

(Total: 20 Marks)

Question 2. The following balances were extracted from the books of VE Enterprise on 31
December 2021.
Particulars RM RM
Capital 50,000
Motor Vehicles 90,000
Fixtures & Fittings 48,500
Inventory as at 1 Jan 2021 32,200
Allowance For Doubtful 500
Debts
Accumulated Depreciation as
per 1 Jan 2021:
Motor Vehicles 16,000
Fixtures & Fittings 10,400
3% Fixed Deposit 30,000
4% Bank Loan 50,000
Sales 199,070
Purchase 73,500
Sales Returns 2,050
Purchases Returns 2,120
Discount Allowed 2,550
Discount Received 2,830
Account Receivables 37,700
Account Payables 48,650
Carriage Inwards 3,570
Interest Received 450
Commission Received 2,600
Salaries 16,100
Electricity Bills 5,400
Custom Duty on Purchase 3000
Insurances 450
Maintenance Expenses 3,300
Drawings 2,300
Cash in hand 6,800
Cash in Bank 25,200
Additional information:
1. Inventory as at 31 December 2021 18,180
a) Income Statement: VE Enterprise
Particulars Amount Amount
Revenues
Sales 199,700
(−): Sales Return (2050)
Total Revenue 197,020

Cost of Goods Sold

Beginning Inventory (Jan 1, 2021) 32,200
(+): Purchases (73,500 −1040) 72,460
(−): Purchase Returns (2,120)
(+): Custom Duty on Purchase 3000
(−): Carriage Inwards (3,570)
(−): Closing Inventory (18,180)
Cost of Goods Sold (83,790)
Gross Profit (197,020 −83,790) 113,230

Other Income
Commission Received (2,600−400) 2,200
Interest Received 450
Discount received 2,830

Decrease Provision for Doubtful Debt :

Total Income 5,480

Expenses
Salaries 16,100
(+): Accrued Salaries 140
Total Salaries (16,100 +140) 16,140
Electricity Bills 16,240
(−): Prepaid Electricity Bills (5,400)
Total Electricity Bills (5,400 −500) 4,900
Depreciation: Fixtures & Fittings (48,500 × 10%) 4,850
Depreciation: Motor Vehicles (90,000 −16,000) × 15% 11,100
Allowance for Doubtful Debts (37,700 – 700) × 5% 1,850
(−): Existing Allowance for Doubtful Debt (500)
Total Allowance for Doubtful Debt (1,850 − 500) 1,350
Bad Debts 700
Discount Allowed 2,550
Insurance 450
Maintenance Expenses 3,300
Total Expenses 47,190
Net Profit = Gross Profit (113,230) + Other Income (5,480) – 71,520
 Total Expenses (47,190)

b).
VE ENTERPRISE: Statement of Financial Position As 31, Jan 2021

Cost Accumulated NBV (Net Book

(RM) Depreciation (RM) Value)
NON−CURRENT ASSETS

Motor Vehicle 90,000 (16,100 – 11,100) 62,000

Fixtures & Fittings 48,500 (10,400 − 4,850) 33,250

NON−CURRENT ASSETS 96,150

CURRENT ASSETS

Closing Inventory 18,180

Account Receivables 37,700

Bad Debts (700)

Allowance for Doubtful Debts (1,850)

Cash In Hand 6,800

Cash at Bank 25,200

CURRENT ASSETS 85,330

TOTAL ASSETS 181,480

EQUITY

Capital 50,000

Net Profit 71,520

Drawings (2,300)

TOTAL EQUITY 196,080

 NON−CURRENT LIABILITIES

Bank Loan 4% × 50,000 50,000

TOTAL NON−CURRENT LIABILITIES 2,000

CURRENT LIABILITIES

Account Payables 48,650

TOTAL CURRENT LIABILITIES 48,650

TOTAL LIABILITIES & EQUITY 181,480

2. Depreciation for the year ended 31 December 2021 has yet to be provided as follows:
a) Fixtures & fittings: 10% using straight line method
(48,500 × 10%) = RM 4,850 “I’m Not 100% sure with the answer”

b) b. Motor vehicles:15% using reducing balance method.

15 % × 2 = 30%
Then, 30% × RM 11,100
Balance = RM 333 “Not sure With the Answer please help”

3. Electricity bills was paid in advanced by RM500. Meanwhile RM400 commission are not
received yet.
Total Electricity Bills (5,400 −500) = RM4,900
Commission (2,600 – 400) = RM2,200

4. One of the customers Amri Sport Enterprise was declare bankrupt and unable to pay the debt
amount RM700

5. The provision for doubtful debts is to be adjusted to 5% based on remaining account

receivables
Allowance for Doubtful Debts (37,700 – 700) × 5% = RM 1,850
6. Salaries are accrued by RM140 and Purchases include goods valued at RM1,040 that were
withdrawn by Azwin for her own personal use.

16,240 (Total Accrued Salaries)

Purchases (73,500 −1040) = 72,640 (Final Purchase Value)