CONFIDENTIAL 1 AC/MAY 2023/MAF201

UNIVERSITI TEKNOLOGI MARA

COMMON TEST 1

COURSE : COST AND MANAGEMENT ACCOUNTING 1

COURSE CODE : MAF201
EXAMINATION : MAY 2023
TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

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

2. Answer ALL in questions in English.

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

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

This examination paper consists of 4 printed pages

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 CONFIDENTIAL 2 AC/MAY 2023/MAF201

QUESTION 1

A. State whether each of the statement below is True (T) or False (F):

i. When a contractor has accepted a contract, a separate account is opened for

each contract, bringing together all the costs relating to a particular contract.

ii. All expenses incurred in fulfilling a contract such as material, wages, production
overhead are credited to a Contraction in Progress Account.

iii. Retention money is a sum of money representing an agreed portion of the price
of work completed being withheld by the contractee for a certain period of time.

iv. Progress billing is an invoice or billing sent to contractee by the contractor

based on the amount stated in the architect’s certificate.

(4 marks)

B. Garuda Construction Sdn Bhd has been engaged to construct a resort at Perhentian
Island. The contract commenced its operation on 1 July 2022 and is expected to be
completed on 31 December 2023. The estimated contract price that has been agreed
upon is RM5,000,000. The following details of the contract have been extracted from
the company’s book of account for the period ended 31 March 2023:

Particular RM
Material issued to site 1,500,000
Material returned to store 200,000
Plant and machinery at cost (purchased on 1 July 2022) 300,000
Material at site – 31 March 2023 50,000
Wages paid 370,000
Sub-contractor charges paid 255,000
Direct expenses paid 250,500

The company’s accounting period ends on 31 March every year. Depreciation on plant
and machinery is charged on monthly basis at a rate of 12% per annum using reducing
balance method. Overheads is absorbed at 25% of total material used during the
period. As at 31 March 2023, total wages and sub-contractors charges incurred in the
period are RM400,000 and RM230,000 respectively.

Value of work certified by the architect on 31 March 2023 is RM3,000,000. Due to

some unforeseen circumstances, the company needs to incur additional costs to
complete this contract and it is estimated to be RM417,500. The company also
provides a provision for warranty and rectification costs of RM200,000. Cash received
from the contractee is subjected to 20% retention money.

It is the company’s policy to recognise contract revenue based on input method.

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 CONFIDENTIAL 3 AC/MAY 2023/MAF201

Required:

a. Prepare the Construction in Progress Account for the period ended 31 March 2023.
(12 marks)

b. Prepare the Contractee Account.

(2 marks)

c. Determine the value of the contract asset or contract liability for Garuda
Construction Sdn Bhd.
(2 marks)
(Total: 20 marks)

QUESTION 2

A. Identify the most suitable answers.

1. “Segar” is a product of Segarniaga Bhd involving two processes. The processing

costa for Process 1 of “Segar” for March 2023 were as follows:

Raw material 140,000 kgs @ RM4/kg

Direct labour 6,380 hours @ RM5/hour
Direct expense 5,000 machine hours @ RM10/hour
Normal loss 5% of input. All process 1 losses is sold for RM0.50/kg.
Output 130,000 kgs

Determine cost per unit for Process 1

A. RM4.56
B. RM4.80
C. RM4.59
D. RM4.83
(2 marks)

2. Wowo Bhd manufactures a single product, which passes through two consecutive
processes, which are Cutting and Finishing. The following data was available for
Finishing process.

Units
Transfer from Cutting process 10,000
Additional materials 5,000
Opening work in progress 1,200
Closing work in progress 900

An expected loss of 10% from production unit occurs in Finishing process with no
scrap value. Determine the normal loss in unit for Finishing process.
A. 1,000 units
B. 1,530 units
C. 1,500 units
D. 1,710 units
(2 marks)
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 CONFIDENTIAL 4 AC/MAY 2023/MAF201

3. 12,000 kg of material were input to a process in a period. The normal loss is 10%
of input. There is no opening or closing work-in-progress. Output in the period was
10,920 kg. What was the abnormal gain/loss in the period?

A. Abnormal loss of 120 kgs

B. Abnormal gain of 120 kgs
C. Abnormal gain of 1,080 kgs
D. Abnormal loss of 1,080 kgs
(2 marks)

B. Mai Jaya Sdn Bhd produces a single product, which passes through two consecutive
processes, namely Process A and Process B. The output from Process A is transferred
to Process B before it becomes finished goods. There is no additional material added
in Process B.

The data below related to the two processes for the month of March 2023.

Process A

The process is started with 60,000 kgs of input materials at a value of RM300,000.
Direct wages cost for the month was RM54,000. Production overhead costs are
absorbed based on 50% of direct wages. Normal loss of Process A is 10% of material
input and can be sold for a scrap at RM0.50 per kg. 55,000 kgs of output will be
transferred to Process B.

Process B
RM
Labour 33,780
Overheads 45,120
Defective units 3,500 kgs
Opening work in progress 5,000 kgs 3,000
Closing work in progress 3,000 kgs

Degree of completion Opening Work In Progress Closing Work In Progress

Labour 50% 60%
Overheads 60% 80%

The normal loss is 5% of production. All defective units can be sold at RM1.00 per kg.

Required:

a. Prepare Process A account.

(5 marks)

b. Prepare Process B account with relevant statements.

(15 marks)

c. Prepare normal loss, abnormal loss and/or abnormal gain accounts.

(4 marks)
(Total: 30 marks)
END OF QUESTION PAPER

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