Question 1 (10 marks)

1. What is the management accounting? Explain the important of management accounting to

the businesses.

Management accounting which process involving measuring and reporting information

about, activity regarding performance within organizations, manages in planning and
performance usage, evaluation and also control.
The important of management accounting to the businesses is, often known as management
accounting, is a more internal procedure. The process of maintaining, generating reports
from, and analysing an organization's financial data is known as management accounting.

Based on my reading from internet, google and journal reading, the internal operations of
the organisation and management accounting assists managers in developing strategies,
course correcting, and they urges making well-informed decisions.

Question 2 (10 marks)

1. What is budget? Why budgetary planning is important for the manager in business.
Budget is a quantitative picture of the plan which involved mostly to the cost of accounting.
Hence, it is important often known as management accounting, is a more internal
procedure. The process of maintaining, generating reports from, and analysing an
organization's financial data is known as management accounting. Based on the study and
interpretation of the financial data connected to the internal operations of the organisation,
management accounting assists managers in developing strategies, course correcting, and
making well-informed decisions.

Question 3 (20 marks)

1. Gibson Rhythm Sdn. Bhd. (GRSB) is a manufacturer of sound system with production
capacity 1,000 to 2,000 units per month. The following partial completed manufacturing cost
schedule has been prepared for October 2022.

Numbers of Speakers Manufactured

Units 2,000 3,000 4,000
Total variable costs RM 90,000
 Total fixed costs RM 60,000
Total costs RM 180,000

Requirement:

a) Complete the above cost schedule by identifying each cost from I, ii, iii, iv, v, vi.

Variable cost per Unit = total variable cost / number of units

= 90,000

3000

Total = 30

Variable cost for 2000 units

= 2000 x 30

Total = 60,000

Variable cost for 4000 units

= 4000 x 30

Total = 120,000

b) Explain the cost behaviour for (i) variable cost.

Cost behaviour for variable cost =

Total variable costs = cost per unit x Total number of units

= 30 x (60,000)+(120,000)
= 30 x 180,000
=5,400,000
 Total fixed cost = cost of production – variable costs x units produced

= 540,000 - ((60,000 + 120,000) x 9000))

= -1,620,000,000

Total Cost = Fixed cost per period + variable rate per unit of activity x number of units of an
activity

= -1,620,000,000 + 180,000 x 9000

=0

c) Provide one (i) example of manufacturing cost and period cost which likely to be incurred by
GRSB and state whether it is a variable cost, fixed cost or mixed cost.

Example of manufacturing cost and period cost which likely incurred by GRSB

= Sum of all indirect costs which are incurred while manufacturing a product

Specification Value
Direct labor RM 3800
Direct material RM 40,000
Indirect Labor RM 5,000
Indirect material RM 1, 200
Other overhead RM 48,000
Question 4 (40 marks)

From the information given below, calculate the prime cost, production overhead costs and total
production costs per month.

Prime cost = direct materials cost + direct labor cost

= [(RM 3000) + (RM 10,000) + (RM 3,000) + (RM 1,000) + (RM 15,000) + (RM 10,000)
+ (RM 5,000)

= RM 47,000

Direct materials used = 0

2. Direct materials = $ 179,300

Direct labor = RM 200,000

Overhead = RM 324,700

Total manufacturing cost= RM 704,000

Add: Beginning WIP = (10,000) + (1,000) + (10,000) = 58,500

Less: Ending WIP = (23,500)

Cost of goods manufactured = 739,000

Unit cost of goods manufactured = RM 739,000/100,000 = RM 7.39

3. Direct labor = RM 370,000

Prime cost = RM 50,000

Conversion cost = RM370,000 + RM 50,000

= RM 420,000

Production overhead costs

= sum of all the indirect costs which are incurred while manufacturing a product (direct material &
direct labor costs)

(Based on the table from question)

Specification Value
Direct labor RM 25,000
 Direct material RM 3,000
Indirect Labor RM 5,000
Indirect material RM 15,000
Other overhead RM 10,000

Total production costs for month

= RM 58,000
Question 5 (20 marks)

The following cost summary for May 2022.

Sales RM320,000

Direct materials RM90,000

Direct labour RM50,000

Overhead RM80,000 (RM220,000)

Profit RM100,000

The unit selling price of the product was RM 32.00 per unit and variable overheads were 2.00 per
unit.

The following are the forecast for the month of June 2022:

a) The selling price will be increased by RM1.00 per unit.

b) Direct material prices will increase by 5%
c) Direct labour productivity will increase by 5%.
d) Fixed overhead expenditure will increase by RM 4,000.
Sales in May 2022 = RM 320,000
Selling price per unit = RM 32

No. of units sold = Sales / Selling Price

= RM 320, 000 / RM 32
= 10,000 units

Variable overhead per unit = RM2

Total variable Overhead

= Variable Overhead Per Unit x No. Of Units
= RM2 x 10,000
= RM 20,000

Fixed overhead
=Total overhead – Variable overhead
=RM 80,000 – RM 20,000
=RM 60,000