PAT0025 ACCOUNTING II 3 FEBRUARY 2005

SECTION A: MULTIPLE CHOICE QUESTIONS (10 MARKS)

1. Financial accounting is concerned primarily with

A. external reporting to investors, government authorities, etc.
B. cost planning and cost controls.
C. profitability analysis.
D. providing information for strategic and tactical decisions.

2. __________ is deciding on organizational goals, predicting results under various

alternative ways of achieving those goals, and then deciding how to attain the
designed goals.
A. Management accounting
B. Financial accounting
C. Planning
D. Control

3. Anything for which a separate measurement of costs is desired is a

A. cost element.
B. cost object.
C. fixed cost item.
D. variable cost object.

4. A cost that changes abruptly at intervals of activity because the resources and the costs
come in indivisible chunks is called a(n):
A. indivisible cost.
B. step cost.
C. semi-variable cost.
D. variable cost.

5. The ________ portion of a mixed cost varies proportionately with activity within the
relevant range.
A. indivisible
B. fixed
C. variable
D. step

6. Which of the following items is typically an example of an indirect cost?

A. courier charges for shipment delivery.
B. manufacturing plant electricity.
C. direct manufacturing labour.
D. wood used for furniture manufacture.

Continued……

AJ, HJ, LSA, ZJ 1/6

PAT0025 ACCOUNTING II 3 FEBRUARY 2005

7. Which of the following is a fixed cost in an automobile manufacturing plant?

A. administrative salaries
B. machine electricity for each assembly line
C. sales commission
D. windows for each car produced

8. Which of the following departments is not a support department for a boat

manufacturing company?
A. personnel
B. moulding and assembly
C. data processing
D. accounting

Use the information below to answer Questions 9 and 10:-

The Alpha Corporation manufactures flashlights and nightlights. Management is

attempting to set the budget for the coming year. Two divisions (flash lights and
nightlights) of the company utilize one plant location. The following data have been
prepared for review:-

Fixed operation costs RM 900,000

Available capacity 3,000 hours

Budgeted long-term usage:

Flashlight Division 2,000 hours
Nightlight Division 500 hours

Budgeted variable cost per hour in the

2,000-hour to 2,500-hour relevant range RM1,200 per hour

9. What is the total cost for the cost pool, assuming budgeted usage is the allocation
base, and budgeted rates are used, and a single rate method is used?
A. RM 900,000
B. RM 3,000,000
C. RM 3,900,000
D. RM 4,500,000

10. What is the cost per hour of use for the Flashlight and the Nightlight Division if
budgeted usage is the allocation base and a single-rate method is used?
A. RM 360
B. RM 1,200
C. RM 1,560
D. RM 1,650

Continued……

AJ, HJ, LSA, ZJ 2/6

PAT0025 ACCOUNTING II 3 FEBRUARY 2005

SECTION B: TRUE OR FALSE QUESTIONS (10 MARKS)

1. Managerial accounting is primarily concerned with internal reporting of divisional

performance.

2. Managers are best served by the management accounting information provided being
both relevant and timely.

3. Direct costs of a cost object are costs that are related to the particular cost object but
cannot be traced to it in an economically feasible (cost-effective) way.

4. Future costs are relevant in decision making when they differ between alternatives.

5. A variable cost is a cost that remains unchanged in total for a given time period
despite of wide changes in the related level of total activity or volume.

6. Costs may simultaneously be direct and variable.

7. Prime costs are all manufacturing costs other than direct material costs.

Use the information below to answer Questions 8-10.

Below is an extract of costs information for Department P in 2004.

Estimated manufacturing overhead = RM 200,000
Overhead costs incurred = RM 160,000
Estimated machine hours = 100,000 hours
Actual machine hours = 105,000 hours
Manufacturing overhead costs are allocated on the basis of machine hours

8. The predetermined overhead rate for Department P in 2004 is RM 2 per machine

hour.

9. Manufacturing overhead costs applied to products that passed through Department P is

RM200,000.

10. Based on the information given, there is an under-absorption of overhead amounting

to RM40,000.

Continued……

AJ, HJ, LSA, ZJ 3/6

PAT0025 ACCOUNTING II 3 FEBRUARY 2005

SECTION C: STRUCTURED QUESTION (20 MARKS)

Part A
Lily was in the process of completing the quarterly planning for the purchasing
department when a major computer malfunction lost most of her data. She managed to
recover the following data for direct material A.

Annual demand 1000 units

Total manufacturing costs per unit RM 40
Direct materials ordering costs per order RM 25
Carrying costs per unit per year 25% of manufacturing costs
Consumption of materials:
Maximum 3,000 units
Normal 2,000 units
Minimum 1,000 units
Reorder period 4-6 days
a) Use the Economic Order Quantity (EOQ) Model to determine the optimal order
size.
(3 marks)
b) Calculate
i) Reorder level. (2
marks)
ii) Minimum stock level. (3
marks)
iii) Maximum stock level assuming that direct material A is always
ordered at the optimal order quantity.
(4 marks)

Part B
a) Salam Sdn. Bhd. had the following transactions for raw material ABC during
November.

Novembe 1 Opening stock 3000 units @RM 6 per unit

r
3 Bought 2000 units @RM 8 per unit
4 Used 2500 units
27 Used 100 units

Use FIFO method to cost the issue and the value of closing stock for raw material
ABC. Prepare the stores ledger card according to the format given below.

Date Bought Sold Balance

Quantity Price Value Quantity Price Value Quantity Price Value
(RM) (RM) (RM) (RM) (RM) (RM)
(4 marks)

AJ, HJ, LSA, ZJ 4/6

PAT0025 ACCOUNTING II 3 FEBRUARY 2005

b) Discuss the effects of using FIFO and LIFO on reported profit and closing stocks of
businesses during a period of rising prices. (4 marks)

(TOTAL 20 MARKS)
Continued……

AJ, HJ, LSA, ZJ 5/6

PAT0025 ACCOUNTING II 3 FEBRUARY 2005

MCQ T/F Q
1. 1.
2. 2.
3. 3.
4. 4.
5. 5.
6. 6.
7. 7.
8. 8.
9. 9.
10 10.
.

END OF PAGE.

AJ, HJ, LSA, ZJ 6/6