MAF551 COMMON TEST PDF

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AC/DEC 2021/MAF551

UNIVERSITI TEKNOLOGI MARA COMMON TEST 1

COURSE

:

MANAGEMENT ACCOUNTING AND CONTROL

COURSE CODE

:

MAF 551

DATE

:

4 DECEMBER 2021

TIME

:

8 PM – 10 PM (2 HOURS)

INSTRUCTIONS TO CANDIDATES: 1.

This paper consists of 3 questions.

2.

Answer ALL questions. Start each question on a new page.

3.

Do not bring any material into the examination room unless permission is given by the invigilator.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

1

AC/DEC 2021/MAF551

QUESTION 1 Megah Sdn Bhd, a company manufactures two kind of toys product named G1 and G2. The following are some of the information that have been compiled for the preparation of its operational budget for 2020: G1

G2

Selling Price

85

75

Unit

300

450

Material will be purchased from Smart Bhd who will supply M1 and M2 at RM10.50 per meter and RM8.50 per meter respectively. The company uses 7 meter of M1 and 3 meter of M2 for each unit of G1. To produce G2, a lower grade of toy, the requirement of material for M1 and M2 decrease by 20% of G1. Worker that produces G1 will be paid at RM6.50 and G2 at RM5 per hour and it is estimated that 2.5 hours of direct workers will be required at the assembling department and 1.5 hours at Fixing department for product G1. G2 will require 3.5 hours at assembling department and an hour at Fixing department. On 1 January 2020, stock of M1 and M2 are estimated at 1300 meter and 1,100 meter respectively. It is expected that this level will reduce by 15% during the year. The opening stock of G1 and G2 are estimated to be 130 and 350 unit respectively. The company plans to increase stock of G2 to 450 units at the end of the year, but will maintain G1 stock at current level. The variable production overhead costs are expected to be absorbed at RM3 per direct labour hour and fixed production overhead of RM34,000 is absorbed based on budgeted production units. Required: a. Prepare the following budgets for Megah Sdn Bhd for year 2020: i) Production Budget (in units) ii) Direct Material (Usage and Purchase) Budget iii) Direct Labour Budget iv) Production Cost Budget (Total: 16 marks) QUESTION 2 Mad Pest Sdn Bhd manufactures antiseptic fluid which is used in chemical industries. The product passes through three (3) operations. The following information has been extracted from the standard cost card for one unit of product: Direct materials: A: 2 kg @ RM0.50 per kg B: 1.5 kg @ RM1.00 per kg Direct labour: Operation 1: 3 hours @ RM3.00 per hour Operation 2: 2 hours @ RM4.00 per hour Operation 3: 1 hour @ RM4.00 per hour 2

AC/DEC 2021/MAF551

Budgeted production for the month of November are 9,000 units. During the month, the price of direct materials A and B is expected to increase by RM0.30 per kg and RM0.20 per kg respectively. In addition, it is also expected that usage of both types of materials will increase by 20%. The actual results for the month of November, where actual production was 8,500 units, were as follows: Direct materials: A: 21,250 kg at RM21,250 B: 8,500 kg at RM8,500 Direct labour: Operation 1: 4 hours @ RM2.00 per hour Operation 2: 3 hours @ RM3.00 per hour Operation 3: 2 hour @ RM5.00 per hour Required: a.

Calculate the following variances:i. Material mix variance ii. Material yield variance iii. Labour Efficiency variance – Operation 1 iv. Material price planning variances v. Material price operating variance (8 marks)

b.

The traditional standard costing system has been criticized for being relatively less useful in the new manufacturing environment. List four (4) main criticisms of the traditional standard costing system. (4 marks) (Total: 12 marks)

QUESTION 3 Kylux Sdn Bhd (KSB) manufactures a few components to be assembled in the conversion of campervans. The company only sells its products to RV Champ Corp, the leading campervan converter in Malaysia. These components, RV1, RV2 and RV3 are produced in KSB’s factory in Nilai, Negeri Sembilan to fulfill the requirement of RV Champ to convert 2,500 units of campervan per annum. Currently, KSB is working at its full capacity trying to fulfill the order from RV Champ. In order to convert a unit of its campervan, RV Champ would require four (4) units of component RV1, six (6) units of RV2, and three (3) units of component RV3. The following table provides related information pertaining to the three components produced by KSB for the current year, 2021. RV1

RV2

RV3

460,000

555,000

150,000

2.5

1.5

0.5

3

2

1

Direct material cost/unit (RM)

9.00

7.20

5.00

Total production overhead cost/unit (RM)

8.00

7.00

4.50

Total administrative and selling cost/unit (RM)

7.50

5.00

2.40

Sales revenue (RM) Direct labour hour/unit Machine hour/unit

3

AC/DEC 2021/MAF551

Additional information: 1.

Direct labours are paid a flat rate of RM4.00 per hour worked.

2.

Variable overhead cost is absorbed at the rate of RM1.00 per machine hour.

3.

Salesmen are paid at the rate of 5% of the selling price for each unit sold.

For the year 2022, RV Champ has forecasted that its demand will increase by 10% due to the surging interest of the Malaysians in the campervan which has become a new trend in this pandemic. Therefore, its demand for all the three components of RV1, RV2 and RV3 will also increase in the same proportion. Although KSB is happy with the increasing demand, but its production manager, Mr Faris, is having a hard time trying to accommodate the order due to the limited machine hour. Since it is already running at full capacity, the machine hours available are just enough to be utilized by the current production. The engineer suggests that the best that they could do is to upgrade and re-schedule the use of their machine which can only extend the machine hours by another 500 hours. This upgrading will cost KSB the fixed amount of RM35,000. Direct labours are willing to work at the same rate. RV Champ, however, is willing to accept whatever combination of component supplied by KSB. All other costs are not expected to change in 2022. Required: For the year 2022, you are required to determine the following: (Please round up all your figures) a) The shortage of machine hours; (5 marks) b) The most optimum production plan, after taking all factors into consideration and the possible net income. (12 marks) c) Currently, companies are moving towards outsourcing, which is purchasing some components of their finished goods externally rather than producing them internally. Briefly discuss two (2) potential drawbacks of outsourcing. (5 marks) (Total: 22 marks) (GRAND TOTAL: 50 MARKS)

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