CONFIDENTIAL 1 AC/FEB 2023/MAF151

UNIVERSITI TEKNOLOGI MARA

FINAL ASSESSMENT

COURSE : FUNDAMENTALS OF COST ACCOUNTING

COURSE CODE : MAF151
EXAMINATION : FEBRUARY 2023
TIME : 3 HOURS

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 invigilator.

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 DO SO

This examination paper consists of 9 printed pages
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QUESTION 1

A. Cost accounting is a form of managerial accounting that aims to capture total cost of
production by assessing the variable costs of each step of production as well as fixed
costs.

Required:

Define the followings and provide an example for each of the terms:

a. Variable cost
b. Fixed cost

(4 marks)

B. Wawa Manufacturing Bhd is an established company producing a variety of scarves.

The following cost is related to the production of the most popular scarf produced by
the company known as “Wawascarf” for the month of January 2023.

Costs RM
Satin fabric 45,000
Mulberry silk 75,000
Payments to designer 16,600
Salaries for Production Supervisors 32,300
Advertising and promotion 5,200
Depreciation on machine and equipment 12,500
Rental of building (30% for administration and 70% for production) 15,000

Required:

Prepare a cost statement for the product by clearly showing the prime cost and
production cost for the month of January 2023.
(4 marks)
(Total: 8 marks)

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QUESTION 2

A. Material control system is important in a manufacturing company to ensure that various

functions or departments within an organisation coordinate their activities to achieve
efficient materials planning, purchasing and usage.

a. Identify any TWO (2) documents used in the procurement process.

(2 marks)

b. State any TWO (2) features of effective materials control system.

(2 marks)

c. Overstocking is the result of not having a proper material control system.

State TWO (2) problems associated with overstocking.
(2 marks)

B. Knitta Sdn Bhd produces 1,700 units of knitted table cover every month. Each unit of the
knitted table cover requires 3.5 meters of polyester fabric. The purchase price of the
fabric is RM20 per meter. The stockholding cost per meter is 18% of the purchase price
and the company incurred RM60 cost of ordering per order. The production of knitted
table cover is between 200 to 400 units per week and it takes 2 to 4 weeks for the fabric
to be delivered to the company.

Required:

Calculate for the polyester fabric:

i. Economic Order Quantity using formula method

ii. Reorder level
iii. Maximum stock level
iv. Minimum stock level
(6 marks)

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C. Dayna Digital Sdn Bhd produces a variety of new technology gaming tools. One of the
components used is known as Micrzeronchip which is imported from Japan. The
company keeps its inventory based on FIFO (First-In-First-Out) method. Their inventory
record discloses that 2,500 units were in store at the beginning of the current period in
January 2023, which comprises of 1,000 units priced at RM20.00 purchased in May
2022 and 1,500 units priced at RM22.00 purchased in April 2022. The following
transactions took place in January 2023:

Date Transactions
Jan 2 Issued 1,800 units to the production department
5 Purchased 1,400 units at RM20 per unit
11 Issued 1,200 units to the production department
15 Purchased 2,500 units at RM19.50 per unit
17 Returned to supplier 100 units due to wrong specification which were
purchased on 15 June 2022
20 Issued 1,800 units to production department
25 Purchased 1,500 units at RM20 per unit
30 A physical stock count revealed 2,850 units of ‘Micrzeronchip’ in store

Required:

Prepare a store Ledger Card to record the above transactions in January 2023, using
FIFO method.
(6 marks)
(Total: 18 marks)

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QUESTION 3

JMS Trading is a business that processes and sells fish balls in Sabah. The business had just
started its operations in January 2023. Currently, the owner hires four workers. Two skilled
workers, Nana and Tata are paid based on hours worked. Yaya, a semi-skilled worker is paid
based on differential rate, while Zaim, a part-time worker is paid on a basis of straight piece
rate.

Below is the information provided for the first week of the month of January 2023.

Actual hours Unit

Workers Status Basic rate
worked produced
Nana Skilled worker RM20 per hour 51 290 kg
Tata Skilled worker RM22 per hour 47 302 kg
Yaya Semi-skilled kg Rate per kg 50 204 kg
worker 0 - 50 RM3.00
51 - 100 RM4.00
101 - 150 RM5.00
151 and above RM5.50
Zaim Part-time worker RM3.50 per kg 35 165 kg

Additional information:

1. The normal working hours is 40 hours in a week.

2. The business pays an overtime premium of 100% for the first five hours and 150%
for the remaining hours.
3. Part-time workers are guaranteed a minimum wage of RM350 per week.
4. The business implements an individual bonus scheme. The time allowed to produce one
kg of product is 15 minutes for the skilled workers and 30 minutes for a semi-skilled
worker. The bonus is calculated based on the time saved of 50% of the normal rate.
5. All skilled and semi-skilled workers are entitled for bonus, if any. The rate per hour for
semi-skilled is RM15. No bonus is awarded for part-time workers.

Required:

a. Compute the basic and overtime pay for each of the employees.
(8 marks)

b. Find the bonus paid to each worker by stating clearly the time allowed, time taken and
time saved.
(8 marks)

c. State FOUR (4) labour turnover preventive costs.

(4 marks)
(Total: 20 marks)

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QUESTION 4

A. Saudagar Lekor Bhd is a company that is involved in the production of various types
of “Lekor” products. The company has three production departments: Mixing, Cooking
and Packaging; and two service departments: Quality Control and Stores. Mixing and
Cooking departments used high quality machines, while the Packing department is
labour-oriented. The following information is available for the month of January 2023:

Quality
Total Mixing Cooking Packing Stores
Control
RM RM RM RM RM RM
Direct material 150,000 65,000 40,000 30,000 - 15,000
Indirect material 48,000 16,000 12,000 14,000 3,000 3,000
Direct labour 130,000 20,000 40,000 60,000 5,000 5,000
Indirect labour 64,000 15,600 16,800 19,200 8,400 4,000
Depreciation
68,000
of machines
Supervisor’s
56,000
salary
Insurance
50,000
of factory
Factory utilities 62,000
Power 74,000

Additional information:

Quality
Total Mixing Cooking Packing Stores
Control
Book value of
480,000 144,000 96,000 240,000 - -
machine (RM)
Machine hours 36,000 8,000 12,000 16,000 - -
Direct labour
26,000 7,200 6,400 6,400 - -
hours
Kilowatt hours 18,000 3,600 7,200 7,200 - -
Book value of
500,000 100,000 80,000 140,000 70,000 110,000
factory (RM)
Floor area
24,000 4,800 4,800 7,200 3,600 3,600
(square feet)
Number of
400 50 100 210 20 20
employees

The reapportionment of the two service departments are as follows:

Mixing Cooking Packing

Quality Control 50% 30% 20%
Stores 20% 10% 70%

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Required:
a. Prepare an overhead analysis sheet showing allocation, apportionment, and
reapportionment of overhead.
(Note: Round up the answers to the nearest RM)
(15 marks)
b. Compute the predetermined overhead absorption rates (OAR) for each
department. (Note: Round up the answers to two decimal places)
(3 marks)
c. Explain briefly FOUR (4) reasons for Pre-determined Overhead Absorption
Rate (OAR).
(4 marks)

B. Ocean Agrotech Sdn Bhd is a company that manufactures various sizes of water tanks.
Two tanks that are in high demand are PT660 and PT990. The company normally
manufactures 1,000 units of PT660 and 500 units of PT990. The direct material and
direct labour costs per unit are as follows:
PT660 PT990
Direct material (RM) 300 910
Direct labour (RM) 212 390
Other direct costs (RM) 110 105
Overhead absorption rate per unit (RM) 250 400
Currently, the company is adopting the traditional method of determining the overhead
cost of its product. One of the management teams has suggested to the company to
calculate the product manufacturing cost using the Activity Based Costing (ABC)
approach. The amount of manufacturing overhead cost is traceable to the two products
as follows:
Production Cost driver
Activity Cost
Cost Driver overhead cost demanded
Pool
(RM) PT660 PT990
Purchase order Number of orders 110,000 1,100 900
Machine set ups Number of set ups 60,000 400 600
Machining Machine hours 70,000 1,200 800
Quality Control Number of inspections 90,000 900 1,100
Required:
a. Calculate the cost driver rate for each activity using the ABC system.
(4 marks)
b. Calculate the total production cost per unit of PT660 under the ABC system
and the traditional costing system.
(4 marks)
c. Based on your answer in (b), should the company change to the ABC system?
(2 marks)
d. Discuss any THREE (3) limitations of ABC system.
(3 marks)
(Total: 35 marks)
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CONFIDENTIAL 8 AC/FEB 2023/MAF151

QUESTION 5

A. Robinson Sdn Bhd produces its product through two production departments,
Machining and Assembly. The overhead absorption rate for the Machining Department
and Assembly Department are based on machine hours and direct labour hours
respectively. The data relating to the costs incurred for the order are as follows:

Machining Assembly
Production overhead (RM) 378,250 322,190
Machine hours 67,980 50,630
Direct labour hours 45,762 56,321

During January 2023, Robinson Sdn Bhd received a special order for Job No. 33712
from a customer. The information pertaining to that order is as follows:

Direct materials
Machining department RM299
Assembly department RM121

Direct labour cost

Machining department RM152
Assembly department RM200

Machine hours
Machining department 45 hours
Assembly department 25 hours

Direct labour hours

Machining department 21 hours
Assembly department 38 hours

Hire of special machine RM450

Selling expenses 25% of prime cost

Total administration costs RM280

The management has decided to set a profit of 25% on selling price for the Job No.
33712.

Required:

a. Give TWO (2) features for each job and batch costing.
(4 marks)

b. Prepare a Job Cost Sheet for Job No. 33712 showing the prime cost,
production cost, total cost and selling price.
(6 marks)

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B. a. Different industries may use different cost units to measure different types of
services that they provided and it is not easy to choose the most suitable cost
unit.

Required:

State ONE (1) example of cost unit for the following services companies:

No. Types of services Cost unit

i. Cekal Tuition Centre
ii. Li Mui Beauty Saloon
iii. Star Hotel
iv. Shining Cas Wash
(4 marks)

b. Green Ferry Transportation is a business that provides ferry transportation

services to Pulau Tiga. The following information is available:

No. Cost Details

i. Administration cost RM1,500 per month
ii. Ferry captain salaries RM1,800 per month per ferry
iii. Depreciation RM500 per month per ferry
iv. Repairing and maintenance cost RM40 per trip per ferry
v. Fuel cost RM50 per trip per ferry
vi. Insurance cost RM600 per month per ferry

There are 5 units of ferries operating every month. The ferry fee for children
under 7 years old is RM4, while for adults it is RM8. Estimated trip per month
for each ferry is 30 trips.

Required:

Evaluate the monthly operating costs for Green Ferry Transportation services.
(5 marks)
(Total: 19 marks)

END OF QUESTION PAPER

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