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QUESTION 1 (25 MARKS)

A company makes two products namely A and B. Details of the products are as follows:

	A	B
	RM	RM
Sales	60	40
Less: Total variable costs	36	20
Contribution per unit	24	20

Product A takes 6 hours to complete while product B needs only 4 hours. Both products are using the similar type of labour which happens to be in short supply. The existing demand for A is 600 units whereas B is 400 units.

The available hour of direct labour in hand is limited to 2,800 hours only. Fixed production overhead and other fixed costs are RM3,500 and RM2,000 respectively.

Required:

Calculate the contribution to profits for the optimal component mix.

(25 marks)

QUESTION 2 (25 MARKS)

Alia manufactures sport shoes under the brand name AA Shoes. She takes orders from various sporting associations according to customized designs and sizes. For the future, Alia predicts sales will increase by 20% from a base of 100,000 units in the current year. The variable costs for the current year are as follows:

	RM
Materials	300,000
Direct labour	100,000
Variable manufacturing overheads	500,000

The fixed costs are as follows:

	RM
Depreciation	10,000
Rentals	20,000
Supervision salaries	35,000

Required:

1. Based on the information above, prepare a flexible budget statement to show various levels for the next five years.

(20 marks)

2. Explain briefly TWO (2) types of budgeting.

(5 marks)

QUESTION 3 (30 MARKS)

1. Explain briefly the changing role of management accounting prior 1950s until the beginning of the twenty first century.

(15 marks)

2. An extract of a standard cost card shows the following details of product M:

	RM per unit
Variable overheads: 5 machine hours at RM10 per machine hour	50
Fixed overheads	30

The actual production of Product M for May amounted to 6,500 units and the budgeted production planned for was 7,000 units. The machines actually worked for 35,000 machine hours.

The actual overheads incurred were:

Variable overheads	RM270,000
Fixed overheads	RM190,000

Required:

Calculate the following:

1. Variable overheads expenditure variance

2. Variable overheads efficiency variance

3. Fixed overheads expenditure variance

4. Fixed overheads efficiency variance

(4 marks)

(4 marks)

(3 marks)

(4 marks)

QUESTION 4 (20 MARKS)

1. Explain briefly FIVE (5) assumptions of cost volume profit analysis.

(10 marks)

2. The following information relates to Dahlia who runs a boutique in a busy shopping mall in Kuala Lumpur since 2017. She has three sections of clothing, namely baju kurung, casual blouse and batik pieces. Her daughter, Sara who recently graduated with an accounting degree, prepared the income statement and showed that the batik pieces department is running a loss of RM14,000. Dahlia is now considering dropping the batik pieces section.

The following information relates to the first 12 months of operations.

	Baju kurung	Casual blouse	Batik pieces
Sales	120,000	75,000	97,000
Total costs	86,000	47,000	111,000
Net profit / (loss)	34,000	28,000	(14,000)

Total fixed costs amounted to RM30,000, which is apportioned equally to the sections.

Required:

Advise Dahlia on whether the batik pieces section should be dropped or not. (Show all workings).

(10 marks)