CONFIDENTIAL 1 AC/JUL 2023/MAF201

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE : COST AND MANAGEMENT ACCOUNTING 1

COURSE CODE : MAF201
EXAMINATION : JULY 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 7 printed pages
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QUESTION 1

Canteek Design Sdn Bhd is awarded with a special construction project on designing and
building luxury apartments for One Sulaman Sdn Bhd. The contract price is worth
RM5,200,000 and the commencement of the construction work is on 1 December 2022 with
estimation of completion date on 31 March 2024. The company’s financial year ends on 30
June every year. The following information are available from company’s account for the
period ended 30 June 2023.

RM
Material purchased from supplier 900,000
Material transferred from another site 300,000
Material transferred to store 120,000
Material returned to supplier 70,000
Material unused on site as of 30 June 2023 40,000
Direct wages paid 500,000
Direct expenses paid 100,000
Plant and machinery at carrying value as of 30 November 2022 649,000
Head office charges 25,000
Cash received from client 1,920,000

Additional information:

1. Direct wages and direct expenses incurred for the construction are RM449,350 and
RM140,000 respectively.
2. The plant and machinery purchased on 1 October 2022 with cost of RM660,000 and
depreciated on monthly basis at 10% per annum on cost.
3. The overhead charged based on 12% on material used.
4. Estimated additional cost to complete the project is RM1,150,000 and estimated
warranty and rectification is RM975,750.
5. The progress payment by client is subjected to 20% retention money.
6. The company’s policy is to recognise the contract revenue using input method (cost
basis).

Required:

a. Prepare the following:

i. Construction in progress account for the period ended 30 June 2023.

ii. Contractee account.
(12 marks)

b. Define the following terms with the example of company’s name above:

i. Contractor
ii. Contractee
(3 marks)
(Total: 15 marks)

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QUESTION 2

Richie Metal Technology manufactures their mixer pan using heating/cooling technology.
The manufacturing process of mixer pan starts with the mixing of material process and is
followed by the heating then cooling processes. The final products emerge from the heating
process. The following information relates to the Mixing Process and Heating Process for the
month of June 2023.

Mixing Process Heating Process

Direct material 75,000 kgs at RM7.05 per kg Input from Mixing Process
Direct labour 15,000 hours at RM27.50/hour RM493,275
Production overhead RM7.75 per direct labour hour RM396,180
Actual output 65,500 kgs 66,600 kgs

The details on work in progress related to Heating Process are provided below:

Work in Progress Opening Work in Progress Closing Work in Progress

Quantity 2,500 kgs 1,200 kgs
Previous process cost Fully completed @ RM67,000 Fully completed
Direct labour 70% completion @ RM43,000 60% completion
Production overhead 50% completion @ RM25,000 40% completion

The company uses the first-in-first-out (FIFO) method for valuation of their working in
progress. It is estimated that the expected loss is 10% of input from Mixing Process with a
scrap value of RM1.50 per kg. It is also estimated that 7% of the production of Heating
Process to be a normal loss with a scrap value of RM2.50 per kg.

Required:

a. Prepare Mixing Process Account for the month of June 2023.

(6 marks)

b. Prepare Heating Process Account for the month of June 2023 with all the relevant
statements.
(15 marks)

c. State TWO (2) differences between joint products and by products.

(4 marks)
(Total: 25 marks)

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QUESTION 3

Mira Maju Bakery makes and sells a single product, ginger flavoured cookies known as
Gingersnaps. The budgeted selling price of the product is RM85 per box and budgeted costs
at normal production of 25,000 boxes per annum are as follows:

RM
Direct material – Brown sugar 75,000
– Flour 50,000
Direct labour 225,000
Production overhead 225,000
Variable selling overhead 50,000
Administrative overhead 50,000

Included in the production overhead cost per box is the fixed production overhead of RM4.00
per box. The fixed production overhead cost per box is based on normal annual production
level of 25,000 boxes. These costs are expected to be incurred at a constant rate throughout
the year.

Fixed selling overhead amounted to RM15,000 per quarter. All administrative overhead is
considered as fixed cost.

The company’s activity levels during the second and third quarter of the year are expected to
be:
Second Quarter Third Quarter
Sales (boxes) 6,000 6,500
Production (boxes) 7,000 6,000

There is no opening stock for the second quarter.

Required:

a. Prepare the Statement of Profit or Loss for the third quarter using:

i. The marginal costing approach

ii. The absorption costing approach
(13 marks)

b. Prepare a statement to reconcile the profit derived from the two approached in part (a)
above.
(2 marks)

c. Explain TWO (2) benefits of marginal costing approach compared to absorption

costing approach.
(5 marks)
(Total: 20 marks)

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QUESTION 4

Raman Burger Sdn Bhd is a business selling burger patties for the local market. It produces
beef patties and the data related to the sales and production of 50,000 boxes of the beef
patties are as shown below:

RM RM
Sales 1,450,000
Production Costs:
Direct material 200,000
Direct labour 150,000
Variable production overhead 100,000
Fixed production overhead 72,000 522,000

Non-Production Costs:
Variable selling and distribution overhead 100,000
Fixed selling and distribution overhead 40,000
Fixed administration overhead 8,600 148,600
Net Profit 779,400

Required:

(Each question is to be treated independently.)

a. Identify the total variable cost per box.

(2 marks)

b. Using the above information, calculate the following:

i. The break-even point (in boxes and RM)

ii. The margin of safety (in boxes and RM)
iii. Units to be sold by the company if the desired net profit is to be 6% higher from
the current net profit
(6 marks)

c. The company estimates that the direct labour cost per box will increase by 10% and
fixed selling and distribution overhead will increase to RM50,000.

Required:

Predict the selling price that needs to be set for beef patties if the company wishes to
maintain the current net profit and the current sales volume.
(4 marks)

d. The company has been planning to launch lamb patties next year in addition to the
current product. Each box of lamb patties will be sold for RM20 each with a
contribution sales ratio of 60%. It is expected that the introduction of the new product
will incur additional fixed cost of RM7,400 to the company.

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The sales volume for lamb patties is 25,000 boxes while the sales volume for beef
patties will remain the same.

Required:

Advise Raman Burger Sdn Bhd whether to proceed or not with the production of lamb
patties by referring to the break-even point in boxes.
(6 marks)

e. State the importance of break-even point determination when considering the

production of a new product.
(2 marks)
(Total: 20 marks)

QUESTION 5

a. State FOUR (4) objectives of cash budget.

(4 marks)

b. Fantastic Sdn Bhd is in the process of preparing the budget for 2024. The following
information has been complied:

i. Sales and purchases information:

June July August September

Sales unit 5,000 6,000 7,000 8,000
Material (kg) 5,000 5,500 6,000 6,500

ii. Selling price is RM25 per unit. A discount of 5% is given on all cash sales and
also for the customers who pay in the month of sales. The analysis of sales are
as follows:

• 10% of sales are cash sales.

• 20% of credit sales will be settled at the end of the month of sales.
• The remaining credit sales will be settled in the following month of sales.

iii. Purchases of material will be made on credit and payment will be made one
month after purchase. The material cost is RM5 per kg.

iv. Five (5) workers have been employed and each of them will be paid RM2,500
per month on the last day of each month.

v. Rental revenue of RM3,000 will be received at the end of each month.

vi. Fixed overhead costs per month are expected to be RM15,000 which includes
depreciation of RM5,000. The overhead costs are to be paid within the month
incurred.

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vii. The company has decided to replace an old office furniture which was bought 8
years ago. The new furniture will be bought in August and is expected to cost
RM45,000. The supplier has agreed to allow the company to pay for them in
three (3) equal monthly instalments starting in August. The old furniture will be
disposed in July for RM5,000.

viii. The opening cash balance of Fantastic Sdn Bhd on 1st July 2024 is expected to
be RM55,000.

Required:

Prepare cash budget for the third quarter of 2024 for Fantastic Sdn Bhd.
(16 marks)
(Total: 20 marks)

END OF QUESTION PAPER

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