MAF201 DEC 2018 SS - ANSWER SCHEME PDF

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UNIVERSITI TEKNOLOGI MARAFINAL EXAMINATIONANSWER SCHEMECOURSE : COST AND MANAGEMENT ACCOUNTING 1COURSE CODE : MAFEXAMINATION : DECEMBER 2018SUGGESTED SOLUTIONSolution 1 (a)(i)WORKINGS:W1 – Plant – Carrying value 1Depreciation = 720,000 – 20,000 = 87, 8Carrying value 1 = 720,000 ​√​ – (87,500 x 1 ½) ...

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AC/DEC 2018/MAF201

UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION ANSWER SCHEME

COURSE

:

COST AND MANAGEMENT ACCOUNTING 1

COURSE CODE

:

MAF201

EXAMINATION

:

DECEMBER 2018

© Hak Cipta Universiti Teknologi MARA

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AC/DEC 2018/MAF201

SUGGESTED SOLUTION Solution 1 (a)(i) PUTRA MAJU CONSTRUCTION IN PROCESS A/C FOR THE PERIOD ENDED 31 OCT 2018 Material issued to site fr. H/O Material bought from supplier Plant – Carrying value 1 (W1) Overhead (W3) Site wages - paid Site wages - accrued c/d Salaries Direct expenses - paid Direct expenses - accrued c/d Sub-contractor - paid

4,320,000 896,000 588,750 252,725 480,000 60,000 90,000 187,500 12,000 143,000

√ √

Material transfer to another site Material on site c/d Plant – Carrying value 2 (W2) Sub-contractor - prepaid c/d COWDTD c/d √

√ √ √ √ √ √

7,029,975 COWDTD b/d Recognized contract profit

6,325,350 3,874,650

7,029,975 Contract Revenue (W4)

10,200,000

√

10,200,000 Material on site b/d Plant b/d Sub-contractor - prepaid b/d

64,000 97,500 523,125 20,000 6,325,350

10,200,000

97,500 523,125 20,000

Site wages - acc b/d Direct expenses - accrued b/d

60,000 12,000

WORKINGS: W1 – Plant – Carrying value 1 Depreciation =

720,000 – 20,000 8

Carrying value 1

=

=

87,500

720,000 √   – (87,500 x 1 ½) √ =

588,750

W2 – Plant – Carrying value 2 Carrying value 2

=

588,750 – (87,500 x 9/12) √ =

523,125

W3 – Overhead Overhead

=

[(4,320,000 + 896,000) – (64,000 + 97,500)] √   x 5%√

© Hak Cipta Universiti Teknologi MARA

= 252,725 CONFIDENTIAL

√ √ √

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AC/DEC 2018/MAF201

W4 – Contract Revenue Estimated Contract Cost

= 6,325,350 + 3,000,000 √   = 9,325,350

% of completion

= 6,325,350/9,325,350 x 100% = 68% √

Contract Revenue

= 68% x 15,000,000 √   = 10,200,000

Solution 1 (a)(ii) CONTRACTEE A/C Progress Billing (Value of work certified)

6,000,000

√

Cash

5,400,000

√

Bal c/d

600,000 6,000,000

√

6,000,000

(24 √ x ½ = 12 marks) Solution 1 (b) b.

Retention money - A sum of money representing an agreed proportion of a price for work completed being withheld by the contractee for an agreed period of time. √ Retention money is important as security against failure by contractor to fulfil his obligations under the terms of the contract √√ OR

Retention money is used to safeguard against the risk of loss or faulty workmanship.√√ (3√ x 1 = 3 marks) (Total: 15 marks) Solution 2(a) Process A Account Direct Material Direct labour Overhead Abnormal Gain

10,000

6.95

69,500√ FG 45,000√ N/Loss

(20% x 45,000) 350√

9,850√ 500√

13.00√of

128,050

0

0

9,000√√ 13.00√of

10,350

© Hak Cipta Universiti Teknologi MARA

4,550 128,050

10,350

128,050

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CPU

4

=

 123,500 √ 10,000√ - 500√

AC/DEC 2018/MAF201

= 13.00 (12√ x ½ = 6 marks)

Solution 2(b) Process B Account OWIP b/d

2,500

Process A Add. Material Direct labour Overhead

9,850

13.00

15,760

30,000√

FG

24,460

128,050

N/Loss

1,370

151,500√

Abn Loss

480√

7,008√of

78,630√

CWIP

1,800√

20,880√of

28,110

403,906

(20% x78630)

15,726√

28,110

403,906

375,333 0.50

685√



STATEMENT OF EQUIVALENT UNITS, CPU AND EVALUATION (FIFO) INPUT

UNITS

UNITS

INPUT MAT

ADDED MAT

LABOR

OVERHEAD

TOTAL

2,500

- √

- √

1,500√

1,500√

9,850

OWIP to be completed CPDP

21,960√

21,960

21,960

21,960

21,960

15,760

Normal loss

1,370

1,370

1,370

1,370

1,370

480

480

480

480

480

1,800

1,800

1,440√

900√

900√

28,110

25,610

25,250

26,210

26,210

128,050√of

151,500√

78,630√

15,726√

128,050

151,500

78,630

26,210

RM5√of

6√of

3√of

0.60√of

14.60

-

-

4,500

900

5,400

OWIP

2,500

Proc. A Add. Mat.

OUTPUT

Abnormal loss CWIP 28,110

Cost incurred during the period

CPU

Evaluation:

OWIP to be completed CPDP

320,616

Normal loss

20,002

Abnormal loss

7,008

CWIP

© Hak Cipta Universiti Teknologi MARA

9,000

8,640

2,700

540

20,880

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AC/DEC 2018/MAF201

OWIP b/d + OWIP to be completed + CPDP + NL absorbed + 5,400√of  + 320,616√of + (20,002√of – 685√) = 375,333

FG = 30,000√

(30√ x ½ = 15 marks) Solution 2(c) Joint Product 1. Two or more products arise simultaneously in the production. √ 2. Each having high saleable value. √

By-Product Arises incidentally in the production of the main product √ Small sales value as compared to the main product √ (4√ x 1 = 4 marks)

Solution 2(d) Two causes of abnormal loss: 1. 2. 3. 4. 5. 6.

Carelessness Rough handling of material Lack of proper knowledge/expertise Low quality of raw materials Machine breakdown Accident in factory area Any two causes/reasonable answers (2√ x 1 = 2 marks) (27 marks)

Solution 3 (a) (i) 

PROFIT STATEMENT FOR THE MONTH OF SEPTEMBER 2018. (MARGINAL COSTING) RM Sales (23,500 x 55.00)

1,292,500√

Less: COGS Opening Stock (1,500 x 25.00)

37,500√

+ Production (24,000 x 25.00)

600,000√

Cost of goods available for sale - Closing stock (2,000 x 25.00)

637,500 50,000√

Gross margin

587,500 705,000

Less: Variable selling overhead (23,500√ x 2.00√)

47,000

Contribution√

658,000

Less: Fixed costs Factory overhead © Hak Cipta Universiti Teknologi MARA

250,000 CONFIDENTIAL

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AC/DEC 2018/MAF201

Selling & distribution overhead

90,000

Administrative overhead

140,000

480,000√

Net profit

178,000

Solution 3 (a) (ii) PROFIT STATEMENT FOR THE MONTH OF SEPTEMBER 2018. (ABSORPTION COSTING) RM Sales (23,500 x 55.00)

1,292,500

Less: COGS Opening Stock (1,500 x 35.00)

52,500√of

+ Production (24,000 x 35.00)

840,000√of

Cost of goods available for sale - Closing stock (2,000 x 35.00)

892,500 70,000√of

Gross profit√

822,500 470,000

Less: Non-manufacturing costs: Variable selling overhead

47,000√

Selling & distribution overhead

90,000

Administrative overhead

140,000

277,000

Unadjusted net profit

193,000

Under absorbed production overhead

10,000√√

Adjusted net profit

183,000

WORKINGS: Direct material Direct labour Variable factory overhead Fixed factory overhead

Overhead incurred Overhead absorbed Under absorbed

RM 12.00√ 8.00√ 5.00√ --------25.00 =====

RM 12.00 8.00 5.00 10.00√√ -------35.00 =====

250,000

(24,000 x 10.00)

240,000 10,000

(20√ x ½ = 10 marks) © Hak Cipta Universiti Teknologi MARA

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AC/DEC 2018/MAF201

Solution 3 (b) Reconciliation statement: Profit as per Marginal Costing Add: Difference in closing stock Less: Difference in opening stock

178,000√ of 20,000 √ (15,000)√ ----------183,000√of ======

Profit as per Absorption Costing

(4√ x ½ = 2 marks)

Solution 3 (c) The difference in profit between the two statements is due to the changes in stocks√. The difference production cost per unit between both methods will result a different valuation of opening and closing stocks that will affect the cost of sales thus affect the profit reported. Under marginal costing fixed production overhead cost per unit is not considered as product cost. √ (2√ x 1 = 2 marks) Total: 14 marks) SOLUTION 4(a) (i)

(ii)

Variable costs per unit: Direct materials Direct labour Direct expenses Production overhead Selling expenses

6.00√ 5.50√ 2.50√ 1.10√ 1.20√ 16.30 =====

Fixed costs: Production overhead Administrative overhead Selling overhead

100,500 √ 85,000 √ 36,000 √ 221,500 ======= (8√ x ½ = 4 marks)

Solution 4(b) (i)

Break-even point

=

© Hak Cipta Universiti Teknologi MARA



221,500√ of = 25,460 units√ 25.00√ – 16.30√of

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AC/DEC 2018/MAF201

(ii)

Margin of safety

=

(45,000√ – 25,460√of) x RM25√ = RM488,500√

(iii)

Units to be sold

=

221,500 √of + 210,000√ 8.70√of

= 49,598 units√ (12√ x ½ = 6 marks)

Solution 4(c) Fixed Cost: Production overhead (100,500 √   x 1.15 √  ) Selling overhead (36,000√ +  30,000√ ) Administrative overhead

Products Ceramic Pot Ceramic Pan Ceramic Steamer

SP

VC

25.00 30.00 50.00

16.30 18.00 42.00

115,575 66,000 85,000√ 266,575√ ======= Contr/ unit 8.70√ 12.00√ 8.00√

Sales mix 0.50√ 0.25√ 0.25√

WACM 4.35 3.00 2.00 9.35√

New Break-even point (multi product) = 266,575√of =  28,511 units√ 9.35√of Old Break-even point (single product) = 25,460 units OF √ Based on the break-even point calculated above, the company should NOT ✔ proceed with the new plan because it will increase ✔ the break-even point by 3,051 unit ✔ (28,511 – 25,460) (20√ x ½ = 10 marks) Solution 4(d) (i)

Contribution margin refers to sales revenue minus total variable costs√. It is the amount available to cover fixed costs to be able to generate profits. √

(ii)

Margin of safety is the maximum amount of sales a company can lose√ before it actually starts to lose money or stops making a profit. √ (4√ x 1 = 4 marks) (Total: 24 marks)

Solution 5 (a) Two purposes of preparing cash budget: © Hak Cipta Universiti Teknologi MARA

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1. 2. 3.

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AC/DEC 2018/MAF201

To ensure that cash are sufficient to cope adequately with the budget activities If there is deficiency in cash, mgt. will apply for financing. If there is cash surplus, mgt. can plan for profitable investment. (Any 2 x 2 marks = 4 marks)

Solution 5 (b) (i) Production Budget

Set A

Set B

No of units to be sold

1,500√

1,800√

Less: Opening stock

250√

300√

1,250

1,500

Add: Closing stock

275√

330√

Budgeted units to be produce

1525

1,830

(ii) Direct Material Budget (Qty & Value) Teakwood

Plywood

Set A (1,525 units)

(40 metres)

61,000√

(20 metres)

30,500√

Set B ( 1,830 units)

(30 metres)

54,900√

(15 metres)

27,450√

Direct materials to be used in production

115,900

57,950

Less: Opening stock

15,000√

3,000√

100,900

54,950

Add: Closing stock

14,250√

2,850√

Total budgeted material (meters)

115,150

57,800

50.00√

20.00√

5,757,500

1,156,000

RM/meter Total budgeted material cost (RM) (iii) Direct Labour Budget (Hours & Value) Cutting

© Hak Cipta Universiti Teknologi MARA

Assembling

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AC/DEC 2018/MAF201

Set A (1,525 units)

(4 hours)

6,100√

(7 hours)

10,675√

Set B ( 1,830 units)

(3 hours)

5,490√

(6 hours)

10,980√

Total budgeted direct labour hours

Total budgeted direct labour cost (RM)

11,590

21,655

40.00√

30.00√

463,600

649,650

(iv) Production Cost Budget Set A

Set B

Material: Teakwood

(61,000 x 50.00)

3,050,000√

(54,900 x 50.00)

2,745,000√

Plywood

(30,500 x 20.00)

610,000√

(27,450 x 20.00)

549,000√

3,660,000

3,294,000

Direct labour: Cutting department

(61,000 x 40.00)

244,000√

(5,490 x 40.00)

219,600√

Assembling department

(10,675 x 30.00)

320,250√

(10,980 x 30.00)

329,400√

564,250

549,000

Overheads (20% of total direct labour costs)

112,860√

109,800√

Total budgeted production cost

4,337,100

3,952,800

(32√ x ½ = 16 marks) (Total: 20 marks)

END OF SUGGESTED SOLUTION

© Hak Cipta Universiti Teknologi MARA

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