SectionB Question 2 and 3

June Sem, 2020 End Semester Examination ACCT 1423 Management Accounting II Section A Multiple Choice Questions Answer ALL questions. Question 1 What is an ideal standard? A A standard which includes no allowance for losses, waste and inefficiencies. It represents the level of performance which is attainable under perfect operating conditions. B A standard which includes some allowance for losses, waste and inefficiencies. It represents the level of performance which is attainable under efficient operating conditions. C A standard which is based on currently attainable operating conditions. D A standard which is kept unchanged, to show the trend in costs. Question 2 Extracts from L Sdn Bhd's records for October are as follows: Budget Actual Production 9,840 units 9,600 units Direct labour cost RM39,360 RM43,200 What is the total direct labour cost variance? A RM960 (F) B RM3,840 (A) C RM4,800 (F) D RM4,800 (A) Question 3 A company has calculated a RM10,000 adverse direct material variance by subtracting its flexed budget direct material cost from its actual direct material cost for the period. Which TWO of the following could have caused the variance? (i) An increase in direct material prices (ii) Units produced being greater than budgeted (iii) Units sold being greater than budgeted (iv) An increase in raw material usage per unit A B C D (i) and (ii) (ii) and (iii) (iii) and (iv) (i) and (iv) Page 1 of 10 June Sem, 2020 End Semester Examination ACCT 1423 Management Accounting II Question 4 A company uses marginal costing. The following variances occurred in the last period when the actual net profit was RM40,000. Materials RM900 adverse Labour RM1,000 favourable Overheads RM700 adverse Sales price RM500 favourable Sales volume contribution RM900 favourable What was the budgeted net profit for the last period? A RM41,500 B RM39,200 C RM40,800 D RM38,500 Question 5 A benefit sacrificed by taking one course of action instead of the most profitable alternative course of action is known as which of the following? A Opportunity cost B Incremental cost C Irrelevant cost D Sunk cost Question 6 A company is considering the use of Material P in a special order. A sufficient quantity of the material, which is used regularly by the company in its normal business, is available from inventory. What is the relevant cost per kg of Material P in the evaluation of the special order? A Cost of the last purchase B Nil C Replacement cost D Saleable value Question 7 A company has capital employed of RM200,000. It has a cost of capital of 12% per year. Its residual income is RM36,000. What is the company's return on investment? A 28% B 30% C 33% D 38% Page 2 of 10 June Sem, 2020 End Semester Examination ACCT 1423 Management Accounting II Question 8 Division A manufactures electrical components and sells them to Division B. The variable cost of these components is RM20 per unit and the fixed production overhead is estimated at RM3 per unit. The components produced by Division A can be sold in the external market at RM25 each. What should be the transfer price if the company uses negotiated transfer price policy that will yield a mark up of 20 per cent on its product cost of Division A? A RM23.20 B RM24.00 C RM25.50 D RM27.60 Question 9 Which TWO of the following are benefits of budgeting? (i) It establishes a system of control (ii) It is a starting point for strategic planning (iii) It fulfils legal reporting obligations (iv) It helps coordinate the activities of different departments A B C D (i) and (ii) (ii) and (iii) (iii) and (iv) (i) and (iv) Question 10 A company manufactures and sells one product which requires 8 kg of raw materials in its manufacture. The budgeted data relating to the next period are as follows: Units Sales 19,000 Opening inventory of finished goods 4,000 Closing inventory of finished goods 3,000 kg Opening inventory of raw materials 50,000 Closing inventory of raw materials 53,000 What is the budgeted raw material purchases for next period? A 141,000kg B 147,000kg C 157,000kg D 163,000kg Page 3 of 10 June Sem, 2020 End Semester Examination ACCT 1423 Management Accounting II Question 11 Coral Sdn Bhd operates a standard costing system and performs a detailed variance analysis of both products on a monthly basis. The budgeted total sales volume for TVs was 1,180 units, consisting of an equal mix of plasma screen TVs and LCD screen TVs. Actual sales volume was 750 plasma TVs and 650 LCD TVs. Standard sales prices are RM350 per unit for the plasma TVs and RM300 per unit for the LCD TVs. The actual sales prices achieved during November were RM330 per unit for plasma TV and RM290 per unit for LCD TVs. The standard contributions for plasma TVs and LCD TVs are RM190 and RM180 per unit respectively. Calculate the sales price variance of plasma screen TVs and LCD TVs for the month of November. A Plasma TVs: 6,500 A; LCD TVs: RM10,000F B Plasma TVs: 6,500 F; LCD TVs: RM10,000A C Plasma TVs: 15,000 A; LCD TVs: RM6,500A D Plasma TVs: 15,000 F; LCD TVs: RM6,500F Question 12 A company's annual sales budget includes 1,500 units of a product at a selling price of RM400. Each unit has a budgeted contribution to sales ratio of 30%. Actual sales were 1,630 units at selling price of RM390. The actual contribution to sales ratio was 28%. The sales volume contribution variance to the nearest RM1 is: A RM16,300 F B RM15,600 F C RM16,200 F D RM17,600 F Question 13 __________ is a measure of the effect on expected profit of a different selling price to standard selling price. It is calculated as the difference between what the sales revenue should have been for the actual quantity sold, and what it was. A Sales price variance B Sales volume profit variance C Material price variance D Material usage variance Question 14 Using an interest rate of 10% per year the net present value (NPV) of a project has been correctly calculated as RM50. If the interest rate is increased by 1% the NPV of the project falls by RM20. What is the internal rate of return (IRR) of the project? A 11.7% B 20.0% C 7.5% D 12.5% Page 4 of 10 June Sem, 2020 End Semester Examination ACCT 1423 Management Accounting II Question 15 Cab Sdn Bhd is considering introducing a new computerised taxi tracking system. Cab Sdn Bhd 's cost of capital is 10% per annum. The internal rate of return (IRR) is 14% The return on average capital employed (ROCE) is 20% The payback period is four years. Which of the following is TRUE? A The project is not worthwhile because the IRR is less than the ROCE B The project is worthwhile because the IRR is greater than the cost of capital C The project is not worthwhile because the payback is less than five years D The project is worthwhile because the IRR is a positive value Question 16 XYZ Sdn Bhd is evaluating a possible investment project. RM Initial cash outflow 400 Incremental cash flows Year 1 100 Year 2 120 Year 3 140 Year 4 120 Year 5 100 Calculate the payback period for the project. A 4 years 3 months B 4 years 8 months C 3 years 8 months D 3 years 4 months Question 17 A company is evaluating a new product proposal that will last 6 years. The initial outlay is RM2 million. The proposed product selling price is RM220 per unit and the variable costs are RM55 per unit and sales are planned to be 2,750 units each year. The incremental cash fixed costs for the product will be RM3,750 per annum. The cost of capital is 10% where its cumulative discount (annuity) factor for six years at 10% is 4.355. Calculate the Net Present Value of this project. A RM40,250 B -RM40,250 C RM190,600 D -RM190,600 Page 5 of 10 June Sem, 2020 End Semester Examination ACCT 1423 Management Accounting II Question 18 The details of an investment project are as follows: Cost of asset bought at the start of the project RM80,000 Annual cash inflow RM25,000 Cost of capital 5% each year Life of the project 8 years Year Discount factor at 5% 1 0.952 2 0.907 3 0.864 4 0.823 5 0.784 6 0.746 7 0.711 8 0.677 The present value of the cash flows that occur in the second year of the project is: A RM23,800 B RM22,675 C RM21,000 D RM20,575 Question 19 An educating authority is considering the implementation of a CCTV (closed circuit television) security system in one of its schools. Details of the proposed project are as follows: Life of project 5 years Initial cost RM75,000 Annual savings: Labour costs RM20,000 Other costs RM 5,000 Cost of capital 15% per annum Cumulative discount (annuity) factor for five years: 15%: 3.352 20%: 2.991 Calculate the internal rate of return for this project. A 20.1% B 19.1% C 19.9% D 18.9% Page 6 of 10 June Sem, 2020 End Semester Examination ACCT 1423 Management Accounting II Question 20 The details of an investment project are: Life of the project 10 years Cost of asset bought at the start of the project RM100,000 Annual cash inflow RM 20,000 Cost of capital 8% each year Cumulative discount (annuity) factor for ten years at 8% is 6.709. What is the payback of the cash flows that occur? A 3 years 9 months B 4 years 3 months C 5 years D 6 years 8 months [40 Marks] Page 7 of 10 June Sem, 2020 End Semester Examination ACCT 1423 Management Accounting II Section B Answer ALL questions Question 1 a) Chocotheme Sdn Bhd, a small manufacturer of chocolate products, provided the following information or the four months ending 31 August 2020. Production units Sales units May 50 35 June 60 45 July 75 80 August 80 90 The standard data per unit is forecast to be as follows: RM Selling price 20 Direct material 6 Direct labour 4 Variable overheads 3 Fixed overheads are forecast to be RM175 per month. Additional information: i) Raw materials are purchased one month before production. Raw material suppliers are paid two months after purchase. At 30 April 2020 trade payables were RM450. These consisted of the credit purchases for March 2020 of RM150 and April 2020 of RM300. ii) Credit sales are forecast to be 80% of total sales. Credit customers pay three months after sale. At 30 April 2020 trade receivables were RM1,450. These consisted of the credit sales for February 2020 of RM450, March 2020 of RM550 and April 2020 of RM450. iii) Direct labour costs and variable overheads are paid in the month they are incurred. iv) Fixed overheads are payable one month in arrears. v) On 30 April 2020: other payables for fixed overheads were RM150 cash and bank balances were RM750 vi) On 21 May 2020 the company plans to purchase new moulding equipment for RM3,000. 10% of the purchase price will be paid on purchase and the balance in July 2020. vii) On 1 June 2020 the company plans to issue 1 000 ordinary shares of RM1 each at a price of RM1.50 each. Required: Prepare a cash budget, in columnar format, for Chocotheme for each month from May 2020 to July 2020. (13 marks) Page 8 of 10 June Sem, 2020 b) End Semester Examination ACCT 1423 Management Accounting II The Blackbox Sdn Bhd, which manufactures a single product, has prepared the following budgeted and actual costs for period 8. Budget Actual Production/Sales in units 3,600 3,800 RM RM Sales revenue 81,000 84,000 Direct materials 14,400 14,900 Direct labour 10,800 11,800 Production overheads 19,000 19,700 Administration overheads 10,000 10,100 Profit 26,800 27,500 The following additional information is available: i) The production overheads are absorbed on a per unit basis, based on a maximum capacity of 4,000 units with a total cost of RM20,000. ii) The budgeted administration overheads include a fixed cost of RM4,600. iii) Actual quantity of material used was as expected for the actual output. iv) Actual labour hours were as expected for the actual output. Required: Prepare a budgetary control statement showing the flexed budget, actual result and variances produced. (9 marks) [22 Marks] Question 2 a) Clucas Diomande Sdn Bhd manufactures and sells four products. The company is currently preparing its production schedule for the next period. The details of the four products are as follows: Product P Product Q Product R Product S Per unit RM RM RM RM Selling price 240 400 360 259 Direct material 60 100 92 65 Direct labour (RM10 per hour) 50 100 80 60 Variable overheads 40 80 60 50 Total fixed overheads are expected to be RM284,000 for the next period. Product P Product Q Product R Sales demand (units) 1,150 1,800 2,500 Product S 3,160 The sales figures include the following units, which the company must supply to customers in the next period. Product P 250 units Product Q 350 units Product S 400 units The availability of direct labour will be limited to 33,150 hours for the next period. Required: Determine the order of priority for production, develop the production schedule, and calculate the resulting profit that your production plan will yield. (17 marks) Page 9 of 10 June Sem, 2020 (b) End Semester Examination ACCT 1423 Management Accounting II Jack Personal Devices makes and sells hand-held computers. Each computer regularly sells for RM200. The following cost data per computer are based on a full capacity of 12,000 computers produced each period: Direct materials. RM75; Direct labour, RM55; Factory Overhead (75% variable, 25% fixed), RM48. A special order has been received by Jack for a sale of 2,500 computers to an overseas customer. The offered price in this special order is RM178 each. Jack is now selling 7,200 computers through regular distributors each period. Required: Advise Jack on whether he should accept this special order. Question 3 Hernandez Bhd uses absorption costing, production costs for the three products it period are as follows: Product Production (units) Direct materials (RM) Direct labour (RM) Direct labour hours per unit Direct materials per unit (kg) Machine hours per unit (5 marks) [22 Marks] based on a labour hour rate, to establish the manufactures. The budgeted details for the next Exe 3,000 144,000 134,400 4 5 2 Whye 2,500 96,000 112,000 4 4 4 Zed 2,000 57,600 67,200 3 3 3 Exe, Whye and Zed all use the same direct material purchased at the same price. Direct labour is paid at the same hourly rate for working on Exe, Whye and Zed. Production overheads for the period are RM408,800 and are absorbed on a direct labour hour basis. The company is now considering using activity based costing (ABC) to calculate the production costs of each product. The following overhead information is available for the period: Activity Cost (RM) Cost driver Inspection 120,000 Number of production runs Machining 112,200 Number of machine hours Packaging 49,500 Number of orders Material handling 127,100 Quantity of material used Product Number of production runs in the period Number of orders in the period Exe 150 150 Whye 200 175 Zed 250 225 Required: a) Calculate the production overhead costs (to two decimal places) for one unit of each product using absorption costing. (5 marks) b) Calculate the total production overhead cost (to two decimal places) for one unit of each product using activity based costing. (11 marks) [16 Marks] END OF QUESTION PAPER Page 10 of 10