CONFIDENTIAL 1 AC/JUL 2022/MAF151

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE : FUNDAMENTALS OF COST ACCOUNTING

COURSE CODE : MAF151
EXAMINATION : JULY 2022
TIME : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) questions.

2. Answer ALL questions in English.

3. Students must make sure that all questions are answered before submission.

4. Please submit your HANDWRITTEN answers in ONE (1) pdf file

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

This examination paper consists of 8 printed pages
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CONFIDENTIAL 2 AC/JUL 2022/MAF151

QUESTION 1

A. Describe the following and give an example for each:

i. Production overheads and non-production overheads

ii. Fixed cost and variable cost
(4 marks)

B. Sun Suria Bhd is a company producing a variety of flavoured milks. One of its products
is Banana Milk. The information below is related to the production of Banana Milk for
the second quarter of 2022.

COST RM
Fresh milk 8,000
Supervisor salary 3,600
Banana flavour 7,000
Rental of office 3,600
Direct labour wages 15,000
Depreciation of plant and equipment 4,500
Salesman commission 9,500
Indirect labour wages 8,000

Required:

Find the following costs by listing the details of the item:

i. Total material cost

ii. Total conversion cost
(4 marks)
(Total: 8 marks)

QUESTION 2

A. Material control system is the system that aims to ensure the required quantity of
material of the required quality is provided at the required time with the minimum cost.
The system is also used for tracking the stock levels in order to avoid stock discrepancy
or surplus.

Required:

a. State TWO (2) objectives of material control system.

(2 marks)

b. Define the following:

i. Re-order level
ii. Minimum stock level
iii. Maximum stock level
iv. Economic Order Quantity (EOQ)
(4 marks)

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B. Kopi Kita Café is a business owned by Cik Aaira, serving up high - quality cup of
various types of coffee, known as espresso, latte and cappuccino to its customer. Cik
Aaira, who is an accounting graduate from UiTM is concerned about having an efficient
inventory system to maximize profit. She is planning to use Economic Order Quantity
(EOQ) model for the current year to order roasted coffee beans from its supplier. The
normal usage of the roasted coffee beans is 100 kilograms per month. The price paid
for the material is RM100 per kilogram. The cost to place an order is RM60. The
carrying cost of the roasted coffee bean is 40% of its inventory value.

Required:

Find the Economic Order Quantity (EOQ) using tabulation method for order sizes of
200, 240, 300 and 400 kg of roasted coffee beans.
(6 marks)

C. Rasa Sedap Sdn Bhd trades in a single product known as “Segarsoybean” and keeps
a perpetual inventory system. The business has always valued its stock on the First-
In First-Out (FIFO) basis since the commencement of the business.

Their records disclosed that there was 375 kilograms of stock at the end of June 2022
with a total value of RM550 which comprises of 125 units purchased on 27 June 2022
at a price of RM1.40 per kilogram. The balance was purchased on 20 May 2022. The
information on purchases and issuance of the stock for the month of July 2022 is as
follows:

Date Transactions Quantity (kg) and price per kg

3 Purchase 500 kg @ RM2
5 Sold 275 kg @ RM3
9 Sold 75 kg @ RM3.50
18 Purchase 200 kg @ RM3
22 Return from customer 15 kg (sold on 9th July)
26 Sold 300 kg @ RM4
29 Return to supplier 60 kg (purchased on 18th July)

Stocktaking as at 31st July 2022 showed that there was 320 kg of “Segarsoybean” in
the store. The differences were due to stock loss.

Required:

Prepare a store Ledger Card for the month of July 2022 using First-In First- Out (FIFO)
method.
(6 marks)
(Total: 18 marks)

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QUESTION 3

Production Department of Tok Tik Bhd employs three workers. Lam is a skilled worker, Mim
is a semi-skilled worker and Nun is an unskilled worker. The factory operates five days week.
Normal working hours is 40 hours per week. Skilled and semi-skilled workers are paid based
on the hourly rate. Unskilled worker is paid based on output produced with a guaranteed
minimum wage of RM300 per week. Overtime premium is 40% of basic rate and applicable to
all workers except for unskilled worker. Besides that, workers are also entitled for individual
bonus of 60% on time saved. Below is the information for the second week of July 2022:

Employee Lam Mim Nun

Hours worked (hour) 58 50 48
Rate per hour (RM) 15 12 10
Output (unit) 1,100 720 700
Rate per unit (RM) 0.60 0.50 0.40

Management asked Lam to work overtime in order to complete an urgent order from a regular
customer. Skilled worker is required to complete one unit of product within 3.6 minutes, whilst
4 minutes and 4.5 minutes is allowed for semi-skilled and unskilled worker respectively.

Required:

a. Find the followings for each worker for the second week of July 2022:

i. Basic pay
ii. Overtime pay (if any)
iii. Bonus pay (if any)
iv. Gross pay
(8 marks)

b. Classify the wages of Lam and Mim into direct and indirect cost.
(8 marks)

c. List TWO (2) causes of labour turnover and suggest a solution to overcome each of
the causes.
(4 marks)
(Total: 20 marks)

QUESTION 4

A. Khazanah Alam Herbs Sdn Bhd is manufacturing company operating with two
production departments; Machining and Assembly and two (2) service departments;
Canteen and Store. Machining department is highly dependent on the use of machine,
while Assembly department relies on its labour force. The following budgeted cost was
extracted for the month of June 2022:

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Total Machining Assembly Canteen Store

RM RM RM RM RM
Direct 65,000 50,000 15,000
materials
Direct 30,000 12,000 18,000
expenses
Indirect 13,500 5,000 6,000 2,000 500
materials
Indirect 24,000 5,000 15,000 1,500 2,500
labour
Lighting 8,000
Power 6,000
expenses
Depreciation 3,600
on machines

Other available information:

Machining Assembly Canteen Store

RM RM RM RM
Value of machines (RM) 40,000 12,000 6,000 4,500
Horse power of machines 3,500 2,000 600 500
Machine hours 2,000 1,000
Direct labour hours 1,000 3,000
Number of employees 50 100 5
Light points 200 100 70 50
Number of store requisition 80 100 50

Required:

a. Prepare Overhead Analysis Sheet showing allocation, apportionment and re-

apportionment 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. Give ONE (1) suitable basis of apportionment for each of the following
expenses:

i. Supervisor’s salary
ii. Factory fire insurance
iii. Rent and rates of factory
iv. Insurance of machinery
(4 marks)

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B. Lofty Fashion Bhd specialises in the production of face mask called Lor Earloop and
Lor Headloop. Currently, the company is using traditional costing system where the
overhead absorption rate is charged at RM10 per direct labour hour. However, the top
management of the company is planning to implement an activity based costing (ABC)
system to ensure the accuracy of the product cost. The information relating to the
production of both products is as follows:

Product Lor Earloop Lor Headloop

Direct material per box RM7 RM8
Direct labour hour per box 0.5 hour 1.5 hours

Additional information:

1. Production overhead information is provided below:

Activity cost pool Overheads (RM) Cost Driver

Purchasing 27,000 Number of orders
Processing 21,600 Number of units produced
Quality Testing 3,240 Number of tests
Packaging 11,160 Number of boxes

2. The company has provided the following data pertaining to the production
activities for each product:

Lor Earloop Lor Headloop

Number of orders 25,000 20,000
Number of units produced 300,000 240,000
Number of tests 900 720

3. Selling price for Lor Earloop and Lor Headloop is RM19 and RM24 respectively.
Each box of both products consists of 30 units of face mask.

4. The direct labour rate for both products is RM5 per hour.

Required:

a. Compute the cost driver rate for each activity using the activity based costing
(ABC) system.
(4 marks)

b. Under the activity based costing method, calculate the product cost per box for
Lor Earloop.
(4 marks)

c. Evaluate whether the company should implement ABC system or not after
comparing the product cost under both traditional and ABC method.
(3 marks)

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d. Distinguish TWO (2) main differences between traditional costing system and
Activity based costing (ABC) system.
(2 marks)
(Total: 35 marks)

QUESTION 5

A. a. Under job costing approach, job cost card is used as the basic document.
Describe FOUR (4) functions of job cost card.
(4 marks)

b. Go Beyond Enterprise specializes in printing jute bag. The jute bag will be
purchased in bulk from its suppliers. Then the printing job will be performed
based on customer request. Currently, the business has received an order
through online from Puan Ayu to print 10 units of jute bag which will be given
as a gift to her daughter’s kindergarten teachers. The jute bag will be printed
with the teacher’s name on it. The following is the information to produce a unit
of printed jute bag:

Job Number 012

Direct Material:
Jute bag RM13
Ink for printing RM3

Direct labour:
Printing Department 0.5 hour at RM4
Finishing Department 0.25 hour at RM5

Overhead:
Production Absorbed at RM3 per direct labour hour for
each of the two departments
Shipping cost RM6

Other information:

1. The administrative overhead is charged based on 5% of the production

cost.
2. The management has set a 30% profit markup on total cost

Required:

Prepare a job cost sheet for JOB 012, clearly showing its prime cost, total cost,
profit and selling price.
(6 marks)

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B. a. Based on the following service business listed below, state ONE (1) example
of cost unit for each:

Service Business Cost Unit

i. Hotel
ii. Educational
iii. Transportation
iv. Hospital
(4 marks)

b. Tadika Cahaya Pelangi Sdn Bhd provides classes for young children, usually
four to six years old, that prepares them for first grade and that develops basic
skills and social behaviour. It operates 5 days per week. The business has 46
children, whereby 30 of them received full day day-care and the remaining are
taking up half day day-care. Given below is the information regarding the cost
involved for the month of June 2022:

Cost RM
Rental of building RM1,200 per month
Wi-Fi internet subscription RM89 per month
Meals RM1,000 per month
Learning materials RM350 per month
Number of teachers 4
Monthly salary of teacher RM1,500 per teacher
Monthly full day charges RM280 per student
Monthly half day charges RM180 per student

Required:

Evaluate the total profit gained by Tadika Cahaya Pelangi Sdn Bhd for the
month of June 2022.
(5 marks)
(Total: 19 marks)

END OF QUESTION PAPER

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