CONFIDENTIAL AC/JAN2023/MAF251

UNIVERSITI TEKNOLOGI MARA

TEST 2

COURSE : COST AND MANAGEMENT ACCOUNTING

COURSE CODE : MAF251
EXAMINATION : JANUARY 2023
TIME : 1 HOUR 15 MINUTES

INSTRUCTIONS TO CANDIDATES

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

2. Answer ALL questions in English. Start each answer on new page.
3. Please use pen to write your answer.

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

This examination paper consists of 3 printed pages

1
QUESTION 1

BioLife Sdn Bhd manufactures and sells 3 flavours of prebiotic supplements. The
management accountant has forecasted the following sales and production data for the
January 2023 as follows:

1.
Flavours Orange Chocolate Vanila
Anticipated sales demand (bottles) 5,000 4,000 3,000
Selling price (RM/bottle) 120 140 80
Cost per bottles:
Direct material (RM/bottle) 45 50 25
Direct labour (RM/bottle) 30 35 15
Variable overhead (RM/bottle) 15 10 15

2. The amount of direct materials and direct labour available for the firm for the
period are as follows:
Direct material 21,000 meters at a price of RM25 per meter.
Direct labour 33,000 hours at a rate of RM10 per hour worked.

3. Total fixed cost for the period is expected to be RM150,000.

Required:

a. Assess whether direct material or direct labour will be the limiting factor for the
period.
(3 marks)

b. Determine the optimum sales and production mix for the period under the
constraint calculated in (a) above.
(12 marks)

c. Determine the maximum profit with the production mix calculated in (b) above.
(2 marks)

d. Choose THREE (3) examples of factors that could give constraint in production.
(3 marks)
(Total: 20 marks)

QUESTION 2

Timberland Sdn Bhd is a company that manufactures solid wood panel that being used
in production of various wood furniture. The following data is related to the production of
40,000 units of solid wood panel for the current year:
RM per unit
Raw materials 10.00
Direct labour 10.00
Factory overhead (40% fixed) 25.00
45.00

2
The company has anticipated that the production of solid wood panels increases to
45,000 units. If the company continue producing wood panel with the increment units,
the following cost will be affected:

1. Price of raw material increases by 5% due to high demand.

2. Direct labour cost per unit also increases to RM11 due to overtime paid.
3. Purchase a new machine that cost of RM128,000 due to increase capacity.
4. In order to increase production of solid wood panel, the company should sacrifice
the production of 1,200 units of drawer cabinet that incurred variable cost RM680
per unit and could be sold in the market at RM880 per unit.

The company considering buying solid wood panel from outside supplier. The data
related to this decision as follows:

1. The supplier will charge RM43 per unit of solid wood panel.
2. The facilities used for making solid wood panel could be rented out at RM60,000
per year.
3. Fixed production overhead could also be reduced by RM30,000 per year.
4. The company will bear the transportation cost RM60,000 of solid wood panel
from supplier premises.

Required:

a. Compute contribution margin loss from drawer cabinet if the company decided to
continue producing solid wood panel.
(3 marks)

b. Calculate the total cost of making and buying 45,000 units of solid wood panel.
(13 marks)

c. Explain the best decision to be adopted by the company based on the answer in
(b) above.
(2 marks)

d. Present THREE (3) qualitative factors that should be considered in a make or

buy decisions.
(3 marks)
(Total: 20 marks)

END OF QUESTION PAPER