BKAM2013 MANAGEMENT ACCOUNTING 1

QUESTION 1 (Topic: Activiti-Based Costing)

Topi Enterprise is noted for an exceptionally impressive line of one-size fits-all mean's hats. Topi has established the following selling and distribution support activity-based cost pools and their corresponding activity drivers for the year 2019:

Activity Cost Cost driver

Marketing RM160,000 RM1,450,000 of sales

Customer service 70,000 10,000 customers

Order execution 5,000 200 orders

Warehousing 15,000 125 product lines

REQUIRED:

a. Determine the activity-cost-driver rate for each of the four selling and distribution

activities.

b. Under what circumstances is it appropriate to use each of the activity-cost-drivers?

c. Describe at least one possible negative behavioral consequence for each of the four

activity-cost drivers.

QUESTION 2 (Topic: Cost Accumulation System)

Data concerning Selasih Enterprise's operations in 2020 appear below:

Selling price RM12.00

Unit in beginning inventory 0

Unit produced 70,000

Unit sold 60,000

Variable costs per unit:

Direct materials RM 2.00

Direct labor RM 1.00

Variable manufacturing overhead RM 1.00

Variable selling and administrative RM 1.50

Fixed costs:

Fixed manufacturing overhead RM140,000

Fixed selling and administrative RM150,000

REQUIRED:

a. Prepare an income statement for the year using absorption costing.

b. Prepare a contribution format income statement for the year using variable costing.

c. Prepare a report reconciling the difference in net operating income between

absorption and variable costing for the year.