QUESTION 3

Blue Company manufactures and sells a single product. The following are the cost and selling structure: Selling Price (per unit)$60 Less: Direct materials (per unit)$11 Direct labour (per unit).$18 Variable overhead (per unit)..$7 Labour overhead (per unit).$6 Profit (per unit).$18 The fixed overhead is based on normal capacity of 1,000 units per month. Assume that the same amount is spent each month on fixed overheads. Budgeted sales for the next month are 1,100 units. Required: (i) calculate the break-even point in sales units and sales dollars per month. (4 marks) (ii) calculate the margin of safety in units for next month. (2 marks) (iii) calculate the budgeted profit for next month. (2 marks) (iv) calculate the sales units and sales dollars required to achieve a profit of $12,000 in a month. (4 marks) (iv) explain three (3) key assumptions in carrying out break-even point or cost-volume-profit analysis. (3 marks) TOTAL 15 MARK

QUESTION 4

Yellow Company uses a job-order costing system and applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year, manufacturing overhead costs and direct labor-hours were estimated at RM80,000 and 16,000 hours respectively, for the year. In June, Job #215 was completed. Materials costs on the job totaled RM1,500 and labor costs totaled RM2,400 at RM6 per hour. At the end of the year, it was determined that the company worked 15,000 direct labor-hours for the year, and incurred RM78,000 in actual manufacturing overhead costs. Required: (i) determine the predetermined overhead rate for the year. (1 mark) (ii) determine the amount of overhead charged to jobs during the year. (1 mark) (iii) determine the amount of underapplied or overapplied overhead for the year. (3 marks) (iv) assuming that 100 units were completed, determine the total cost that would appear on the job cost sheet for Job #215. (4 marks) TOTAL 15 MARK

(c) Green Company, a manufacturing company, had a cost of goods manufactured of RM408,000 for the month June. The company purchased raw materials costing RM292,000. The beginning balance in the raw materials account was RM104,000 and the ending balance was RM156,000. The beginning balance in the finished goods account was RM168,000 and the ending balance was RM184,000. Required: (i) calculate the cost of raw materials used in production during June. (2 marks) (ii) calculate cost of goods sold for June. (2 marks) (ii) calculate the operating profit or loss for June if the company sold 51,000 units of products at a price of $12 per unit. (1 mark) TOTAL 15 MARK

Question 1 (a) The following are actions associated with a firms accounting information system: No Action 1. Preparing financial reports that comply with generally accepted accounting principles. 2. Preparing a report that details profit by products. 3. Preparing a budget for direct materials purchases. 4. Voluntary reporting environmental costs to potential and existing investors. 5. Reporting on the trends in product defect rates to the plant manager. 6. Determining the cost of producing a new product. 7. Preparing a report that compares the actual costs of quality with the expected costs of quality. 8. Depreciating an asset used in manufacturing using its historical cost. 9. Determining how to consolidate the financial reports of two subsidiaries. 10. Assessing the cost of making versus buying a component of a product. Required: classify each of the actions as belonging to either managerial accounting or financial accounting. (Your answer should be stated as follows: Example: 12 Managerial or 13 Financial) (5 marks) (b) Management accounting can be used to enhance the values for customers. Choose a management accounting technique or method, describe the chosen method and explain how the values can be improved using the chosen technique or method. (5 marks) (c) Is management accounting relevant for not-for-profit organisations such as charitable bodies? Discuss. (5 marks) TOTAL 15 MARK

Question 2 (a) A number of manufacturing costs are listed below: No Cost Description 1. Insurance on manufacturing equipment. 2. Steel plates used in making a car. 3. Wages of assembly workers. 4. Wages of plant security personnel. 5. Grease used in engines of a car. 6. Rubber used in making tires. 7. Depreciation costs of a plant. 8. Cost of electricity to operate machines. 9. Wages of plant manager. 10. Quality inspection costs. Required: for each item above, indicate whether the cost is MAINLY direct or indirect with respect to the products. (Your answer should be stated as follows: Example: 12 Direct or 13 Indirect) (5 marks) (b) Explain why costs should be classified as controllable and uncontrollable in particular for managers. Use relevant examples. (5 marks