CONFIDENTIAL 1 AC/JUL 2023/MAF151

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE : FUNDAMENTALS OF COST ACCOUNTING

COURSE CODE : MAF151
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 10 printed pages
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CONFIDENTIAL 2 AC/JUL 2023/MAF151

QUESTION 1

A. Define the following terms. State an example for each cost:

a. Period cost
(2 marks)

b. Product Cost
(2 marks)

B. Murni Sejati Sdn Bhd is a food company that specializes in baked products. The
information below is related to the production of chocolate for the month of June 2023.

COST RM
Flours, eggs and butter 1,625,000
Depreciation of baking equipment 273,500
Production workers’ salary 860,800
Production supervisors’ salary 262,000
Salesman commission 29,500
Rental of office space 80,700
Cost of delivery of direct material to factory 42,300
Paper packaging of finished goods 60,500

Required:

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

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QUESTION 2

A. “In line with Ford’s philosophy, just-in-time (JIT) stressed quality and the continuous
improvement of an assembly line to eliminate the waste of time, inventory, motion, and
cost.”
Bandoophanit, T., & Pumprasert, S. (2022)

Required:

a. State TWO (2) objectives of just-in-time (JIT).

(2 marks)

b. List FOUR (4) benefits of just-in-time (JIT).

(4 marks)

B. Haroom Henna Sdn Bhd is a manufacturing company that manufactures henna

products for women's nails and hair. One of its best and leading products is Herbal
Henna Hair Colour. Per box of Herbal Henna Hair Colour requires 0.5 kg of organic
henna powder. The company plans to implement economic order quantity for the
current year to order organic henna powder from an abroad supplier. Monthly sales of
Herbal Henna Hair Colour is between 600 to 750 boxes. The following is the
information related to organic henna powder:

Delivery period 1 - 3 months

Documentation costs RM29.00 per order
Insurance and any additional costs RM19.00 per order
Purchase price RM60.00 per kg
Storage costs 5% of the purchase price

Required:

Find the following:

a. Re-order level of organic henna powder.

(1 mark)

b. Economic Order Quantity (using formula) of organic henna powder.

(3 marks)

c. The maximum stock level of organic henna powder.

(2 marks)

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C. Schoollaboo Sdn Bhd is a manufacturer of durable and spacious school bags. The
company used canvas made of cotton purchased from a reliable and consistent
supplier to produce premium school bags. The following transactions are related to the
purchases and issuance of the canvas for May 2023.

Units CPU
Date Transaction
(meter) (RM/meter)
1 Balance from last month 800 28.50
2 Purchased 1,500 29.00
7 Issued to the production department 1,200
9 Production department returned surplus material 150
to store valued at latest issued price.
13 Purchased 900 29.50
18 Issued to the production department 1,600
21 Purchased 1,300 30.00
23 Store department returned scratched material 200
from the latest purchased to the supplier.
28 Issued to the production department 1,100
31 Physical stock count discovered that there is no
stock discrepancy.

Required:

Prepare a Store Ledger Card for May 2023 using the First-In First-Out (FIFO) method.
(6 marks)
(Total: 18 marks)

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QUESTION 3

Northern Motor Parts Sdn Bhd is located in Gurun, Kedah produces exhaust parts for
motorcycles. The company employs two groups of workers; skilled workers and semi-skilled
workers.

The skilled worker is paid based on an hourly rate of RM20 per hour. Overtime is paid at a
premium rate of 50% for the first 10 hours and 100% for the hours in excess of the 10 hours.
The company implements an individual bonus scheme where the bonus rate is 70% of the
hourly rate. The standard time allowed for each unit produced is 9 minutes.

The semi-skilled workers are paid based on the output at a single rate of RM2.00 per unit for
every good unit produced. They are also guaranteed a minimum wage of RM500 per week
but are not entitled to a bonus. The following information related to the three workers of the
business for the first week of June 2023:

Total Hours Total Output

Workers worked (units)
Ali (Skilled) 55 430
Samad (Semi-skilled) 49 350
Ladu (Semi-skilled) 40 255

The total defect units for the week for Samad and Ladu are 5 and 15 units respectively. The
normal working hours per week for the company is 40 hours.

Required:

a. Find the gross wages for each worker for the first week of June 2023.
(8 marks)

b. Northern Motor Parts Sdn Bhd is proposing to change the method of remuneration for
the semi-skilled worker from straight piece rate to differential piecework (good unit
produced only). The scheme is as follows:

Output (units) RM per unit

1 - 100 2.00
101 - 200 2.20
201 - 300 2.40
Above 300 2.60

Compute the total wage for each semi-skilled worker under the proposed scheme.
(8 marks)

c. State FOUR (4) possible reasons for the initiative proposed by Northern Motors Parts
Sdn Bhd in switching the remuneration method of the semi-skilled worker to differential
piecework.
(4 marks)
(Total: 20 marks)

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QUESTION 4

A. CPG Furniture Sdn Bhd manufactures custom-made sliding wardrobes. The wardrobe
manufacturing has to go through two production cost centres: Machining and
Assembly. Machining department uses machine hours, while Assembly department
uses direct labour hours to absorb production overhead. The company also has two
service cost centres, namely Purchasing and Store. The summary of the budgeted
costs for all departments in June 2023 is as follows:

Production Department Service Department

Total
Budgeted costs Machining Assembly Purchasing Store
RM
RM RM RM RM
Direct materials 250,550
Direct labour cost 45,580
Indirect materials 124,025 30,400 30,400 30,815 32,410
Indirect labour 58,000 15,500 15,500 14,450 12,550
Factory supervisor 65,000
salaries
Insurance on 21,000
machines
Power 40,500
Rental for factory 15,000
building

Additional information:

Machining Assembly Purchasing Store

Machine value (RM) 200,000 220,000 30,000 50,000
Power consumption (kilowatt) 500 250 150 100
Floor area (sq. feet) 4,500 3,000 1,000 1,500
Number of material requisition
400 450 10 -
notes
Number of purchase orders 150 100 - 10
Machine hours 7,000 4,000 2,000 1,000
Number of employees 60 20 10 10
Direct labour hours 12,000 10,000 4,000 3,000

Required:

a. Prepare an overhead analysis sheet showing allocation, apportionment and re-

apportionment of overhead.
(Note: Round up your answer to the nearest RM)
(15 marks)

b. Compute the predetermined overhead absorption rates (OAR) for Machining

Department and Assembly Department.
(Note: Round up your answer to two decimal places)
(3 marks)

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c. Cost allotment is the distribution of overhead costs to cost centres or the cost
units involving FOUR (4) steps. Classify the correct steps of charging overhead
costs in the following statements.

No. Statement Step

The overhead cost of supervisor salaries is
i. apportioned to respective departments using the
number of employees.
The overhead cost of the store department is re-
ii. distributed to production cost centres by using
material requisition notes as the suitable basis.
The total overtime wages of workers of a machining
iii. department should be charged to that specific
department.
The allotment of overheads to cost units is based on
iv.
the predetermined basis for each cost centre.

(4 marks)

B. Baby Boo Sdn Bhd manufactures baby diapers in various sizes. Currently, the
company allocates their overhead cost to products using traditional method. The
overhead is charged at RM5 per machine hour. The details regarding its two primary
products are provided below:

Product Boo Tape Boo Pants

Number of units 43,000 40,300
Cost per unit:
Direct material RM18 RM15
Direct labour RM10 RM11
Machine hours 3 1.5

The company’s financial controller introduced the advantages of Activity Based

Costing (ABC) to the management, and it was agreed that the new system will take
place in the following year.

Under the ABC system, the following information is given:

Annual Total Cost Drivers

Activity Cost Driver Overhead Cost
Boo Tape Boo Pants
(RM)
Purchasing Number of
24,000 300 180
materials purchase orders
Setting up
Set up hours 180,000 2,400 1,350
machines
Production Number of
720,000 500 400
scheduling production runs
Quality Number of
60,000 670 830
inspection inspections

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Required:

a. Compute the activity-based overhead rate (ABOR) for each of the activities.
(4 marks)

b. Calculate the product cost per unit for Boo Pants using ABC system.
(4 marks)

c. Evaluate whether the company should implement ABC system after comparing
the product cost of Boo Pants, using both traditional and ABC methods.
(3 marks)

d. Identify the drawbacks of the ABC method.

(2 marks)
(Total: 35 marks)

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QUESTION 5

A. a. According to CIMA, job costing is "that type of specific order costing that
applies where work is performed to meet the unique requirements of clients,
and each order is of comparably short duration."

Required:

Give FOUR (4) disadvantages of job costing.

(4 marks)

b. Langkawi Luxury Yachts Sdn Bhd is a manufacturing company producing

luxury sailing yachts based on the customer's specific requirements. Below is
the information for the latest order for a modern design lightweight yacht Job
No LY08.

Direct Material
Fiberglass RM8,000
Aluminum RM5,000

Direct Labour
Assembly department 75 hours @ RM12 per hour
Finishing department 40 hours @ RM10 per hour

Hire of Special Machine RM2,000

Production Overhead
Assembly department RM2.00 per machine hour
Finishing department RM2.50 per direct labour hour

Non-Production Overhead
Selling and Distribution RM2,000
General Expenses RM1,000

Machine hours
Assembly department 60 hours
Finishing department 32 hours

The company's policy is to charge profit at 20% of the selling price.

Required:

Find the selling price per unit of the lightweight yachts using the Job Cost Sheet
for Job No LY08.
(6 marks)

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B. Service costing is an accounting method used to establish the cost of services

rendered. There are two types of service industry; tangible and intangible services.

a. State FOUR (4) examples of type of business in service industry.

(4 marks)

b. Dunia Flora is a waste management service provider, which collects household

wastes in Ipoh and disposes of them. The company collects from 250 houses
using 2 lorries. The company charges its client based on weight. The total
waste collected for the month of June 2023 were 45,000 kg.

Expenses related to a lorry for the month of June 2023 were as follows:

Fuel RM850
Maintenance RM250
Annual depreciation RM4,200

Other operating expenses for the month were:

Salaries RM7,500
Rental of building RM1,300
Administrative cost RM500
Disposal fee RM100 per 5,000 kg

Required:

Calculate the following:

i. Total operating cost for the month of June 2023.

(4 marks)

ii. The cost per kilogram of waste for the month.

(1 mark)
(Total: 19 marks)

END OF QUESTION PAPER

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