CONFIDENTIAL ACIDEC 2013/ACC516 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE : MANAGEMENT ACCOUNTING COURSE CODE : ACC516 EXAMINATION : DECEMBER 2013 TIME 3 HOURS INSTRUCTIONS TO CANDIDATES This question paper consists of four (4) questions. ‘Answer ALL questions in the Answer Booklet. Start each answer on a new page. Do not bring any material into the examination room unless permission is given by the invigilator. Please check to make sure that this examination pack consists of i) _ the Question Paper ii) an Answer Booklet ~ provided by the Faculty DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 5 printed pages © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 2 ACIDEC 2013/ACC516 QUESTION 1 Mal Patisseries Sdn Bhd produces and sells homemade blueberry cookies that are packed in a jar. Each jar comprises of 50 pieces of blueberry cookies. The following data is available for the current month. RM Selling price per jar 25.00 Variable costs per jar: Direct materials 6.00 Direct labour 3.00 Production overhead 2.00 Selling overhead 1.50 Monthly fixed costs 8,125 Currently, the company produces and sells 40,000 cookies per month. Required: a. i. Determine the break-even point in number of jars and value for the current month, (2 marks) ji, Calculate the margin of safety in number of jars and value for the current month. (2 marks) b. For next month, Mal Patisseries Sdn Bhd expects the direct materials and labour cost to increase by 5% and 25% respectively, while the monthly fixed costs to decrease by RM110. Calculate the minimum jars the company should produce and sell during next month in order to cover the changes in costs. (4 marks) During a board meeting, the manager has proposed two strategies to improve its profitability for the forthcoming year. Strategy 4 ‘The company will spend additional RM875 on advertising, increase selling price to M27 per jar and produce/sell 45,000 pieces of cookies. Strateay 2 The company will spend RM12,000 on a new oven that has an expected useful life of 4 years with nil residual value. The production of cookies will increase by 25%. Selling price per jar will increase by 10%. Other cost data remain the same. ‘Advise Mal Patisseries Sdn Bhd as to which strategy should be implemented for the forthcoming year in order to maximize profit. (Ignore question b) (8 marks) d. The Cost-Profit-Volume analysis is a useful management tool, However, it has limitations. State TWO (2) limitations of Cost-Profit-Volume analysis. (2 marks) (Total: 18 marks) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 3 ACIDEC 2013/ACC516 QUESTION 2 MBM Sdn Bhd manufactures two types of travelling luggage, namely, B-Lite and C-Lite. Both products consume two types of raw materials, leather and polyester. The production manager of the company has provided the following data which have been approved by the executives in the budget committee, to assists in the preparation of the company's master budget for the coming year. BeLite C-Lite Expected sales for the coming year (units) _ 12,000 18,000 Selling price per unit RM200.00 RM130.00 Planned opening stock (units) 1,500 2,000 Planned closing stock (units) 2,500 1,500 Each unit of B-Lite consumes 3 meters of leather and 2 meters of polyester, while each unit of C-Lite consumes 2 meters of leather and 2 meters of polyester. The additional information relating to the two raw materials are as follow: Leather Polyester Planned opening stock (meters) 3,000 2,000 Planned closing stock (meters) 7,000 3,000 Cost per meter (RM) 4.50 2.00 The company pays all direct labour at a rate of RMS5.00 per hour and it is estimated that 4 hours of labour time is needed to make B-Lite and 3 hours to make C-Lite. The information relating to the overhead cost for the company are provided below: Overheads RM Indirect materials 75,000 Indirect labour 125,000 ‘Supervision 30,000 Depreciation of plant and machinery 15,000 Factory maintenance 5,000 Required: a. Prepare the following functional budgets for the coming year. Sales budget (in units and value) Production budget Materials usage budget Material purchases budget Direct labour cost budget Production cost budget (22 marks) b. Budget serves a number of useful purposes for a business enterprise. State any THREE (3) of these purposes. (3 marks) (Total: 25 marks) (© Hak Cipta Universiti Teknologi MARA, CONFIDENTIALCONFIDENTIAL, QUESTION 3 ACIDEC 2013/ACC516 Rius Sdn Bhd a manufacturer of plastic ware has recently appointed you as an assistant management accountant. One of your responsibilitie to prepare a monthly report that includes a comparison analysis of the company's budgeted costs with its actual costs. The following information relates to the standard product cost and actual production for the month ended 30 November 2013. Budgeted & Standard Cost | Actual Data Data Sales & Production | 20,000 units 27,000 units Selling Price RM125 per unit 10% higher than budgeted Direct Material 10 kg per unit x RM4.50 perkg | 220,000 kg @ RM4.30 per kg Direct Labour [3 hrs per unit x RM7 perhour | 61,500 hrs @ RM7.20 per hour Variable Overheads _| 3 hrs per unit x RM4 perhour | RM178,200 [Fixed Overheads | 3 hrs per unit x RM2 per hour | RM110,000 The variable and fixed overheads are absorbed based on an hourly basis. The company expects to produce and sell 20,000 units for the month of November 2013. Required: a. Calculate the standard production cost per unit of the plastic ware. (4 marks) b. Calculate the following variances for the production of plastic ware: i. Direct material price Direct material usage Direct labour rate Direct labour efficiency Variable overhead expenditure Variable overhead efficiency Fixed overhead expenditure Fixed overhead volume Sales price Sales volume c. State TWO (2) purposes of standard costing. (© Hak Cipta Universiti Teknologi MARA (22 marks) (2 marks) (Total: 28 marks) CONFIDENTIAL,CONFIDENTIAL, 5 ACIDEC 2013/ACC516 QUESTION 4 A. Avanti Smart Sdn Bhd manufactures and sells three types of mountain bikes for the local market. The budgeted cost per bike and related information are as follows: Forte Montari Vapour Selling price per unit RM1,800.00 RM1,400.00 RM1,600.00 Direct material per unit RM600.00 RM525.00 RM575.00 Direct labour per unit 6 hours 4 hours 5 hours Budgeted sales 1,500 units 2,000 units 2,500 units Variable overhead is absorbed based on RM21 per direct labour hours. Skilled labour are paid at a rate of RM35 per hour. Fixed overhead of the company is RM1,525,000. The production capacity available is 25,000 labour hours. Required: a. Establish whether direct labour will be a limiting factor for Avanti Smart Sdn Bhd, (2 marks) b. Calculate the production mix that can maximize the company's profit and determine the profit. (12 marks) c. Assume that the company decides to i profitable product, determine: rease sales by 15% for the most i, The new product mix. (2 marks) ji, ‘The new profit for the company, (3 marks) d. Do you agree with the company’s decision in (c) above and give reasons to your answer. (1 mark) B. Define the following costs concepts and indicate its relevancy in decision making Support your answers with relevant example, i. Avoidable costs ii, Opportunity costs ii, Sunk costs (6 marks) C. List THREE (3) qualitative factors that management should consider before making decision to make or to buy the components. (3 marks) (Total: 29 marks) END OF QUESTION PAPER (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL