QUESTION 1 (25 MARKS)

A). LAZ Sdn Bhd manufactures a component called LZ at its factory. The manufacturingcosts

per unit of LZ are as follows:

	RM
Direct materials	50
Direct labour	10
Variable manufacturing overheads	15
Fixed manufacturing overheads	25

An external supplier offers to supply the same component at a price of RM90 per unit. Transportation costs from the supplier will be RM200 and this will be borne by LAZ Sdn Bhd. Currently LAZ Sdn Bhd produces 800 units a month.

Required:

Situation 1

Assume the space of the company's factory that currently used to manufacture the components does not have other use. Should the company make, or buy the components from an external supplier?

(11 marks)

Situation 2

How would the decision be if assuming that the space of factory that used to manufacture the current component LZ can be rented to another party at RM5,000 per month?

(6marks)

B) ExplainFOUR(4)classificationofcoststhatarenormallyconsideredinadecision-making.

(8marks)

QUESTION 2 (25 MARKS)

PerkasaHealthSdnBhdmanufacturesanddistributesaproduct,'iSlim'.Theproducthasbeen distributed to all supermarkets and healthcare shops inMalaysia.

Below is the summarised flexible budget for the year 2021.

No. of sachets	Materials	Wages	Overheads
140,000	560,000	1,800,000	2,320,000
160,000	640,000	2,000,000	2,480,000
180,000	720,000	2,200,000	2,640,000

In year 2021, Perkasa Health Sdn Bhd produced 170,000 sachets of 'iSlim'. Given below are the actual costs incurred.

	RM
Materials	1,455,000
Wages	8,665,000
Overheads	2,610,000

In a recent budget announcement made by government, the price of petroleum oil increased by RM0.25 per litre. Thus, the management of Perkasa Health Sdn Bhd expects its operating expensestoalsoincrease.However,theseincrementshavenotbeentakenintoconsideration when preparing the above budget. It is expected that the price will increase by 10%, 5% and 3% for material, wages and fixed overheadsrespectively.

Required:

1. Prepare a budgetary control report for the above expenses for2021.

2. Describe THREE (3)advantages of activity-basedbudgeting.

(20marks)

(5marks)

QUESTION 3 (20 MARKS)

Amir Fikri Enterprise produces a product called AF. The company has set the following standard for producing one unit of AF:

Direct Material:	Quantity per unit 3 kg	RM per kg 3.50
Direct labour:	Hours per unit 3.5 hrs	RM per hour 4.00
Variable overhead:	RM5.00 per hour
Selling price	RM85.00 per unit

BudgetedfixedcostsperyearareestimatedtobeRM540,000.Estimatedproductionandsales are 8,000 units and 7,500 units per month respectively. Variable overhead is absorbed based on direct labour hour and fixed overhead is absorbed based on number of unitsproduced.

Actualproductionandsalesare7,500unitsforthemonthofDecember2021andthefollowing costs areincurred:

Direct material:	(Purchased 24,000 kg, Usage 23,000 kg)	Total RM78,000
Direct labour:	(25,500 hours)	RM99,450
Overheads:	Variable Fixed	RM145,000 RM60,000

Required:

1. Identify one reason for each of the followingvariances.

i) Material price(adverse)

ii) Material usage(adverse)

iii) Labour efficiency(adverse)

(3 marks)

.2 Calculate the following variances for the company for the month of December2021:

i) Direct material pricevariance

ii) Direct material usagevariance

iii) Direct labour ratevariance

iv) Direct labour efficiency variance

v) Variable overhead expenditure variance

vi) Variable overhead efficiencyvariance

vii) Fixed overhead expenditurevariance

viii) Fixed overhead volumevariance

ix) Sales volume variance

(17 marks)

QUESTION 4 (30 MARKS)

Puffler Bhd manufactures a single product called 'PUFF' since 2015. The manager of Puffler Bhd is keen to know the performance of 'PUFF'. He is given the following information for the year 2020 that is based on 50,000 units of production and sales.

• Selling price for 'PUFF' isRM50.
• Direct costs are RM20.40 perunit.
• Manufacturing overhead for the year 2010 is RM350,000. (The variable cost is RM100,000)
• Selling overhead is RM220,000. This includes sales commission of 5% on sales value.
• General overhead is RM250,000. (The variable cost isRM80,000)

For the year 2021, direct cost is expected to decrease by RM1.50, production and sales units will increase by 20%.

Required:

Calculate the followings for the year 2021 and show all your workings.

i) The break-even point (in units and RMvalue).

ii) The margin of safety (inunits).

iii) Profit or loss if the sales volume is 49,375units.

iv) Number of units that need to be sold if the required profit isRM520,000.

(30 marks)