CONFIDENTIAL AC/DEC2019/MAF201

UNIVERSITI TEKNOLOGI MARA

TEST 2

COURSE : COST AND MANAGEMENT ACCOUNTING 1

COURSE CODE : MAF201

DATE : DEC 2019

TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of TWO questions.

2. Answer ALL questions.

3. Do not bring any material into the room unless permission given by the
invigilator.

NAME OF STUDENT : QUESTION Marks

MATRIX NO. : Q1 25
GROUP : Q2 25
NAME OF
:
LECTURER

Comments: Total 50

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

This test paper consists of 4 printed pages
 2

QUESTION 1

DLovely Enterprise is a business selling all types of fresh and artificial flowers. Currently the
business is focusing on arrangement of artificial orchids namely Satin Phalaenopsis. The selling
price of one arrangement is RM210. Below is the information regarding the costs incurred in
producing 9,000 units of orchid arrangements per year:

RM

Variable Costs: Direct Material 270,000

Direct Labour 135,000
Direct Expenses 45,000

Fixed Costs : Production Overhead 120,050

Administration Overhead 80,030
Selling & Distribution 50,000
Required:

i. Each question is to be treated independently

ii. Round up the figures for units and two decimal point for RM.

a) Calculate the current cost into variable cost per unit and total fixed cost for the year.
(4 marks)

b) Determine the following for the current year:

i. Break-even point in both units and value.
ii. Margin of safety in both units and value.
iii. Net profit for the company.
(5 marks)

c) Upon receiving grant from Small Medium Enterprise Corporation [SMIDEC] this year,
the marketing manager suggested a more aggressive promotional marketing to be
carried out to boost their sales. The following changes will take place:
 Increase the units sold to 15,000 of orchid arrangements per year.
 Additional advertising cost by RM49,920 per year.
Required:
Calculate the new break-even point (units), margin of safety (RM) and net profit (RM).
(5 marks)

d) For the coming year, DLovely Collection enterprise plans to stop producing the
arrangement for Satin Phalaenopsis and introduce three (3) new types of artificial
orchids (Phalaenopsis) arrangement. Below are the preliminary budget information
suggested by the management:

Premium Latex Mini

Phalaenopsis Phalaenopsis Phalaenopsis
Sales Mix 80% 15% 5%
Selling Price per unit RM250 RM220 RM150
Contribution Margin 70% 60% 55%
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 3

The introduction of new artificial orchids arrangements will increase the yearly total
fixed costs of the company to RM350,000. However, the company plans to maintain the
total sales units at 15,000 of orchid arrangements per year.

Required:
Advised whether the company should proceed with the plan to stop producing Satin
Phalaenopsis arrangements and replace it with three (3) new types of arrangements
with reference to net profit.

(7 marks)

e) List FOUR (4) limitations under CVP analysis.

(4 marks)
(Total: 25 marks)

QUESTION 2

Keroosi Sdn Bhd manufactures a luxury product namely CHAIR. It used two types of materials,
RESAK and MERBAU. The following projected data was prepared as a basis for the first two
quarters of 2020:
1. The selling price of CHAIR for the first quarter is RM620 per unit but this will increase to
RM650 per unit in the second quarter. Forecasted sales value for the second quarter is
RM780,000 which is RM2,520 higher than first quarter.
2. The stock of the product and materials are:

CHAIR RESAK MERBAU

31 December 2019 (in units) 8,000 3,000 1,100

For the year 2020:

i) The stock balances at the end of December 2019 for CHAIR is expected to
increase by 20% at the end of first quarter and continuously increase by 5% at
the end of second quarter.
ii) For the stock of material, RESAK is expected to reduce by 2% at the end of first
quarter and increase to 4,000 units at the end of second quarter. While stock of
MERBAU is expected to increase by 10% at the end of first quarter but will
remain unchanged at the end of second quarter.
3. Additional information for each unit of product CHAIR for the first quarter is as follows:

Price/unit CHAIR
Direct materials:
RESAK RM25 per unit 2 units
MERBAU RM12 per unit 4 units

Direct wages:
Skilled RM10 per hour 3 hours
Semi - skilled RM8 per hour 5 hours

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 4

i) Materials will be purchased from supplier in Pahang and it is expected that

materials price will increase by RM3 per unit for RESAK and RM2 per unit for
MERBAU in the second quarter. The materials usage in producing one unit of
CHAIR is expected to be same for the year 2020.
ii) Wages is expected to remain unchanged in the first two quarters of 2020.

4. The production overhead costs for the first quarter are expected to be as follows:

Variable overhead : RM3 per total direct labour hours

Fixed overhead : RM5,000

Required:

a) Prepare the following budgets for the first and second quarter of 2020:

i. Sales budget (in units and value)

ii. Production budget (in units)
iii. Direct materials usage and purchase budget (in units and value)
iv. Direct labour cost budget
v. Production cost budget (for the first quarter only)
(22 marks)

b) List THREE (3) advantages of budgeting.

(3 marks)
(Total: 25 marks)

END OF QUESTION PAPER

©Hak Cipta Universiti Teknologi MARA CONFIDENTIAL