MULTIMEDIA COLLEGE JALAN GURNEY KIRI KUALA LUMPUR

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1 STUDENT IDENTIFICATION NO MULTIMEDIA COLLEGE JALAN GURNEY KIRI KUALA LUMPUR SECOND, FOURTH SEMESTER FINAL EXAMINATION, 2014/2015 SESSION FIN2033 INTRODUCTION TO MANAGERIAL ACCOUNTING DMGW-E-F-2/13, DMGS-E-F-2/13, DMGQ-E-F-2/13, DMGA-E-F-2/13, DMGT-E-F-2/14, DMGT-E-F-2/13 11 FEBRUARY PM 4.00 PM (2 HOURS) INSTRUCTIONS TO STUDENT 1. This Examination paper has NINE (9) printed pages. 2. This question paper consists of FOUR (4) sections. Section A : Answer ALL questions. Section B : Answer ALL questions. Section C : Answer ALL questions. Section D : Answer TWO (2) questions ONLY. 3. Please write all your answers in the Answer Booklet provided.

2 SECTION A : MULTIPLE CHOICE QUESTIONS (10 MARKS) INSTRUCTION : ANSWER ALL QUESTIONS. 1. Which of the following statements is NOT an objective of Management Accounting? A. Providing information for decision-making and planning B. Maximizing profits and minimizing costs C. Motivating managers towards company s goal D. Assisting in directing and controlling operations 2. Which of the following functions is BEST described as choosing among available alternatives? A. Decision-making B. Planning C. Directing operational activities D. Controlling 3. Feedback is critical during which phase of the management process? A. Decision Making B. Planning C. Directing operation activities D. Controlling 4. Management Accounting. A. focus on reporting past activities B. must comply with GAAP C. focuses primarily on the need of personnel within an organization D. provides information to the external parties of organization 5. Which of the following types of information are used in Management Accounting? A. Financial information B. Non- Financial information C. Information focus on long term D. All of the above WSY/HI/SA/TFS/LB Page 2 of 9

3 6. For calculating the cost of each unit of furniture produced, all these cost will be included, EXCEPT: A. Salary of chief financial B. Cost of wood C. Cost of screw D. Cost of lubricant 7. Which are the following items is NOT considered as Manufactured Overhead? A. Salaries supervises for the factory B. Repair and maintenance of machinery in the factory C. Salary of security officers D. Direct material used for production 8. Cost Accounting Information is useful for. A. making business decisions B. reducing and controlling cost C. setting selling prices D. all of the above 9. The Total Cost of a product will include the following : A. Prime Cost only. B. Prime Costs plus Direct Production Overhead plus Indirect Production Overhead. C. Prime Costs plus Conversion Costs. D. Prime Cost plus Non-Production Overhead. 10. Usually a business may quote a certain percentage of profit in deriving the selling price. One of the methods used by the business is. A. LIFO B. Markup on cost C. FIFO D. Job order costing WSY/HI/SA/TFS/LB Page 3 of 9

4 SECTION B : TRUE OR FALSE QUESTIONS (10 MARKS) INSTRUCTION : ANSWER ALL QUESTIONS 1. In Process Costing a separate work in process account is maintained for each production department. 2. Production Cost Report are used to show cost charged to department and cost accounted for. 3. Physical units are actual units to be accounted for during a period. 4. Equivalent units for production are the average number of units produced in a given period. 5. Activity-Based Costing or ABC enables Overhead Costs to be traced back to the labour hours that drive the cost. 6. Identifying major activities and then allocating it to classes of costs will create cost pools. 7. Fixed Costs increases due to addition of physical plant will affect the break-even point. 8. The relevant range of activity refers to the geographical areas where the company plans to operate. 9. The amount of profit that a business can earn depends on the amount of investment and plans for the future. 10. The budgeting function will facilitate and coordinate various divisional tasks together, so that each division will recognize and understand other divisions expected performance. WSY/HI/SA/TFS/LB Page 4 of 9

5 SECTION C : SHORT QUESTIONS (30 MARKS) INSTRUCTION : ANSWER ALL QUESTIONS. Question 1 Classify the action below as either Financial Accounting or Management Accounting. No. Action Classification 1 Preparing an Income Statement that complies with GAAP. 2 Preparing a monthly cash budget Preparing a report that details profits by customer. Research to determine how to report an insured facility destroyed by flood. Reporting on the trends in defect rates to the plant managers. 6 Determining the costs of dropping a product. 7 8 Determining the costs of producing a new product Determining the cost of Bad debt for the Balance Sheet. 9 Assessing post-purchase cost. 10 Reporting the value of marketable securities. (10 Marks) WSY/HI/SA/TFS/LB Page 5 of 9

6 Question 2 a) What are the characteristics of Management Accounting Information? b) Explain briefly the concept of Activity-Based Costing (ABC). c) List THREE (3) limitations of budgeting. (5 Marks) (2 Marks) (3 Marks) Question 3 London Sdn Bhd has recorded their production report in the table below. Month Number of Books Total Costs (Unit) (RM) January 20, ,000 February 25, ,000 Mac 18, ,000 April 12, ,000 Required: a) Use High-Low method to find the Variable Cost and Fixed Cost. b) What is the Total Cost if the number of books produced is 16,000 units? (10 Marks) WSY/HI/SA/TFS/LB Page 6 of 9

7 SECTION D : LONG QUESTIONS (50 MARKS) INSTRUCTION : ANSWER TWO (2) QUESTIONS ONLY. Question 1 During July, Zahirah Enterprise worked on three Jobs. Data relating to these three job are as follows: Job 1 Job 2 Job 3 Units produced in each Job Units sold Material requisitioned RM 560 RM740 RM1,600 Direct labor hours Direct labor cost RM3,120 RM3,600 RM6,000 Manufacturing overhead was applied on the basis of direct labor hour at the rate of RM7 per direct labour hour. During July, Job 2 and Job 3 were completed and transferable to Finished Goods inventory. Job 2 was sold by the end of the month. Job 1 was the only unfinished job at the end of the month. Required: a) Calculate the cost per unit of Job 2 and Job 3. b) Compute the ending balance in the work-in process inventory account. c) Prepare the journal entries reflecting the completion of Job 2 and Job 3 and the sale of Job 2. The selling price is 140% of the cost. (25 Marks) WSY/HI/SA/TFS/LB Page 7 of 9

8 Question 2 Hanafi is the cost supervisor at the production department for a bakery chain store called KASIH Bakery in Banting. This bakery produces three type of product namely curry puffs, cream puffs and sweet puffs. The following information relates to the bakery operations for the year ending 31 December The total production costs are given below: Cost pools RM Machining 8,000 Set-up costs 5,500 Packaging 4,200 Inspection 2,800 Output (units) Machine Direct materials Direct labour Curry puffs hrs 750 kg 150 hrs Cream puffs hrs 100 kg 60 hrs Sweet puffs hrs 50 kg 40 hrs The direct labour rate is RM1.50 per hour and the direct material cost RM1.20 per kg. The production managers together with the cost supervisor have arrived at the following cost driver basis: Cost pools : Cost driver Machining : Machine hours Set-up cost : Direct materials kg Packaging : Number of units produced Inspection : Number of units produced Required: a) Using ABC approach, calculate the production cost per unit b) Using traditional costing approach, compare the cost per unit for each of the product (25 Marks) WSY/HI/SA/TFS/LB Page 8 of 9

9 Question 3 Jaya Furniture plans to supply tables and chairs to all pre-schools in Kuantan, Pahang. In order to be competitive, Jaya sets the price at RM80 for each set of table and chair. Jaya s Costing Officer estimated the following cost for the production of the tables and chairs: Cost components Labour Production Units (maximum) Maintenance of the factory Utility cost Material cost Quantity 4 staff with a salary of RM2,000 each per month 1000 tables and chairs per month RM1,000 RM800 per month RM45 per table/ chair Required: a) Calculate the Break-Even point in units and ringgit Malaysia. b) What is the Margin of Safety at the estimated sales volume? c) Compute the Material Cost if the break-even point is 350 units. d) If Jaya wants to earn a monthly profit of RM3,500 how many sets of table and chair must be supplied to the schools? e) One school has shown interest in buying 600 sets at RM70. Another school offers to buy 700 sets at RM60 to be delivered in the same month. Jaya cannot accept both because his production capacity constrain. Which one of these two offers should Jaya accept? (25 Marks) End of Page. WSY/HI/SA/TFS/LB Page 9 of 9