CONFIDENTIAL 1 AC/DEC 2022/ACC116

UNIVERSITI TEKNOLOGI MARA

COMMON TEST 1

COURSE : INTRODUCTION TO COST ACCOUNTING

COURSE CODE : ACC116

EXAMINATION : DEC 2022

TIME : 2 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of TWO (2) parts.

PART A: Section 1: True or False Statements

Section 2: Multiple Choice Questions

PART B: Structured Questions

2. Answer all questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 6 printed pages

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PART A

SECTION 1

This section consists of FIVE (5) True or False Questions. For each question, state whether
the answer is TRUE or FALSE.

1. Direct material cost is the cost that changes as the level of output changes.

2. Among other details included in invoice are quantity, unit price, delivery date and
shipping address.

3. In manufacturing the leather shoes, materials cost is genuine leather, glue and wages
paid to a shoemaker.

4. Over issuance of material to production department is one of the reasons of stock

discrepancy.

5. There are few techniques in calculating the Economic Order Quantity (EOQ) such as
using the formula, tabulation method and built-in function technique.

(Total: 5 marks)

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SECTION 2

This section consists of TEN (10) Multiple Choice Questions. Choose the best answer for each
question.

1. Which of the following cost would be considered as direct material in a production of

cakes?

A. Sugar
B. Flour
C. Baker
D. Electricity
(1 mark)

2. A purchase requisition note is prepared by the _________.

A. buyer
B. account clerk
C. supplier
D. storekeepers
(1 mark)

3. Below are the effects from efficient material control system EXCEPT:

A. Availability of materials.
B. Avoid misappropriation of materials.
C. Risk of spoilage or obsolescence.
D. Minimum wastage of materials.
(1 mark)

4. Below are the assumptions of economic order quantity EXCEPT

A. Demand is constant.
B. Carrying cost is constant.
C. Ordering cost per order is constant.
D. Annual requirement of material based on seasonal factors.
(1 mark)

5. Choose the document which best described by the statement below:

• A document to record of both quantities and values (RM) of inventory

• The document is maintained by the costing department
• Transactions maybe summarized and posted periodically

A. Bin card
B. Store Ledger card
C. Material requisition note
D. Goods received Note
(1 mark)

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Question 6 – 10 are based on the situation below.

Scentilicious Bhd produces a product called Opa Scent. One of the raw materials needed to
produce this product is peppermint oil, which can be purchased from the market. The expected
monthly demand for Opa Scent is 50 bottles. The production of Opa Scent is between 600 to
800 bottles per week. The requirement of peppermint oil needed is 0.2 liter for each bottle of
Opa Scent. The lead time of purchase varies between 1 to 2 weeks. The company incurs
RM6.00 to place an order and RM0.60 per liter per annum for holding cost.

6. Calculate the annual demand for the peppermint oil.

A. 600 liter
B. 10 liter
C. 120 liter
D. 50 liter
(1 mark)

7. Which of the following is the EOQ for the peppermint oil (using formula method)?

A. 48.99 liter
B. 31.62 liter
C. 109.54 liter
D. 44.99 liter
(1 mark)

8. What is the reorder level (liter) for the peppermint oil?

A. 1,600 liter
B. 320 liter
C. 1,200 liter
D. 340 liter
(1 mark)

9. What is the maximum level of inventory of peppermint oil (liter)?

A. 1,109.54 liter
B. 1,009.44 liter
C. 268.99 liter
D. 248.99 liter
(1 mark)

10. What is the minimum level of inventory of peppermint oil (liter)?

A. 110 liter
B. 50 liter
C. 60 liter
D. 130 liter
(1 mark)
(Total: 10 marks)

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PART B

QUESTION 1

Squeezy Lemony Bhd produces 9,600 bottles of soda lemonade per year. One bottle of soda
lemonade uses 0.125 kg of lemon. Cost of ordering the lemon is RM55 per order and carriage
expense is RM20 per order. Insurance and breakage costs are RM1.50 and RM0.80 per kg
respectively.

Required:

Determine the Economic Order Quantity (EOQ) for Squeezy Lemony Bhd if the company has
options to order the lemon at 3, 4, 6 or 12 times a year.
(10 marks)
(Total: 10 marks)

QUESTION 2

Buddy Berjaya Grocer Sdn Bhd (BBGSB) produces frozen puff pastry sheet for local markets.
One of the ingredients used is special flour, which is imported from Turkey. BBGSB maintains
a perpetual inventory system and records the movement of inventory using the First-In-First-
Out (FIFO) method.

Their record discloses that 2,500 kilograms of the flour were in store at the beginning of the
current period in November 2022, which comprises of 1,200 kilograms priced at RM5 per
kilogram purchased in October 2022 and the balance, priced at RM4.80 per kilogram
purchased in September 2022. The following transactions took place in November 2022.

Date Kilogram (kg)

Nov 3 Issues 1,600 kg of flour to productions
7 Purchase 900 kg of flour at total value of RM4,950
10 Issues 800 kg of flour to productions
13 Purchase 3,200 kg of flour at total value of RM18,240
22 Issues 850 kg of flour to productions
24 300 kilograms of flour were returned to supplier which was purchased on 13
November 2022.
30 Physical stock count revealed a balance of 2,850 kilograms of flour.

Required:

a. Prepare a store ledger card for the flour for the month of April 2022.
(10 marks)

b. Determine the total net issues of flour (in kg) sent to productions.
(2 marks)

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c. Determine the net value of flour purchased from suppliers for the month of November
2022.
(1 marks)

d. State TWO (2) advantages of having an efficient storekeeping system.

(2 mark)
(Total: 15 marks)

END OF QUESTION PAPER

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