SECTION A: Structured Questions (40 marks)
This section consists of TWO (2) questions. Answer ALL questions.
Question 1
Three joint products are produced by a chemical process. There are two consecutive processes. Output from the first process is transferred to next process, from which three joint products, N35, B24 and L27 are produced and sold.
Process 1
Material 50,000 kg at RM8 per kg Direct labour
Overheads
Normal loss 10% of input Scrap value of loss Output
RM400,000 RM250,000 RM180,000
RM4 per kg 46,000kg
Process 2
Direct labour Overheads Output
RM276,000 RM276,000
N35 18,000 kg
B24 16,000 kg
L27 12,000 kg
There were no opening and closing stocks in either process. The selling prices of the output from Process 1 were as follows:
N35 RM48 per kg
B24 RM36 per kg
L27 RM24 per kg
Required:
a) Prepare an account for Process 1 . [10 marks]
b) Calculate the total of joint cost. [2.5 marks]
c) Calculate the profit attributable to each of the joint products by apportioning the total costs from Process 2:
On the basis of weight of output. [7.5 marks]
[Total: 20 marks]
Question 2
Amni run a soft toys shop in Kampar, Perak. Below are the transactions for the month of May 2020.
May 1
Beginning Inventory
50 units @ RM15.00 each
4
Purchases
140 units @ RM15.50 each
11
Purchases
70 units @ RM16 each
26
Sales
190 units @ RM19.00
31
Required:
Sales
30 units @ RM19.50
a) Calculate the value of ending inventory and the cost of goods sold using perpetual:
i. First In First Out (FIFO) [5 marks]
ii. Last In First Out (LIFO) [4.5 marks]
iii. Average Method (AVCO) [4.5 marks]
b) Draw up the statement of profit and loss and other comprehensive income for the year showing the gross profits that have been reported using FIFO, LIFO and AVCO. [6
marks]
[Total: 20 marks]
SECTION B: Structured Questions (60 marks)
This section consists of THREE (3) questions.
Answer A LL questions.
Question 1
Product Beta is produced by passing through two processes: 1 and 2. The following information relates to Process 1 for the month of April 2020. At the start of the period, there were 600 units of opening work in process with a cost to date of RM4,500.
The degree of completion and the costs to date are as follows:
Degree of completion
Costs
Materials
100%
RM2,350
Labour
40%
800
Overheads
70%
1,350
During the month of April, the following costs were incurred:
2,000 units of direct materials
RM14,800
Direct labour
RM7,385
Production overhead
RM7,896
At the end of April, it was found that there were 500 units of closing work in process with the following degree of completion:
Degree of completion
Materials
70%
Labour
50%
Overheads
40%
There was no loss in the process.
The company operates using the first in first out method of charging opening stock to production.
Required:
a) Prepare the Process 1 Account. [4 marks]
b) Prepare the statement of equivalent production units and calculate the total equivalent production units in total and by elements of cost. [7 marks]
c) Prepare the statement of cost and calculate the cost per equivalent units in total and by elements of cost. [3.5
marks]
d) Prepare the statement of valuation and calculate the cost to be transferred to process in total and by elements of cost. [5.5 marks] [Total: 20 marks]
Question 2
A. Indah Anggun Company has provided the following information regarding its product Alpha for Period 1.
Units produced
250,000
Units sold (RM40 per unit)
200,000
Budgeted units
250,000
V ariable cost per unit:
RM
Direct materials
10
Direct labour
7
Variable production overheads
5
Variable selling and administrative overheads
3
There were no opening stocks at the start of the period 1. It is also noted that the actual and budgeted production overheads are the same.
Required:
a) Prepare the operating statements based on marginal costing principles.
[4.5 marks]
B. Manufacturing support cost for Bijak Sdn. Bhd. in September 2020 is as follows:
Cost pool
Normal cost (RM)
Electricity consumed
20,000
Material handling
45,000
Machine assembly
40,000
Quality inspection
20,000
Total
125,000
Company’s cost accounting system assigns support cost to product based on machine hours. Estimated total machine hour for September 2020 is 25,000. The Managing Director has requested the accountant to implement an Activity Based Costing (ABC) system because this system is believed to estimate product cost more accurately. The accountant has collected the following data:
Cost pool
Cost driver
Existing capacity
Cost (RM)
Electricity consumed
Kilowatt hours
10,000 kilowatt
20,000
Material handling
Material movement
2,500 movement
45,000
Machine setup
Number of setups
500 sets finished
40,000
Quality inspection
Number of inspections
1,000 inspections
20,000
The company received an order to supply 500 units of a product called M10. The estimated cost and other information that relate with the production of 500 units of M10 are as follows.
Raw material cost
RM10,000
Direct labour cost
RM9,000
Machine hour
900 machine hours
Direct labour hour
1,000 direct labour hours
Electricity consumption
1,000 kilowatt hours
Material handling
20 movement
Machine set up
3 set ups
Quality inspection
10 inspections
Required:
a. Define Activity Based Costing (ABC). [3.5 marks]
b. Calculate the cost per unit for product M10 by using the following methods:
I. Traditional Costing [2
marks]
II. Activity Based Costing [2
marks]
[Total: 12 marks]
Question 3
Bright Lighting Sdn Bhd, an engineering company, has five cost centres: Three production departments, machine shop, welding shop and assembly shop and two service departments, maintenance and power house.
The following are the allocated costs:
Machine Shop
(RM)
Welding Shop
(RM)
Assembly Shop (RM)
Maintenance (RM)
Power house
(RM)
Indirect wages
400
800
300
250
250
Indirect
material
800
1,200
500
300
200
Repairs and
maintenance
3,000
2,500
1,500
2,000
1,000
A pportionment costs
RM
Rent
10,000
Power
2,000
Lighting
5,000
Depreciation on equipment
10,000
Insurance on equipment
1,000
The following basis of apportionment is available.
Direct labour cost
(RM)
Machine hours
Floor area sq.ft
Direct labour hours
Effective horse power
Number of employees
Equipment value (RM)
Machine
shop
21,000
7,000
200
8,000
40
20
30,000
Welding
shop
19,000
6,000
400
11,500
30
10
20,000
Assembly
shop
10,000
5,000
300
10,500
20
30
20,000
Maintenance
–
–
50
–
5
20
15,000
Powerhouse
–
–
50
–
5
20
15,000
50,000
18,000
1,000
30,000
100
100
100,000
It is decided that the cost of the service cost centre should be apportioned as follows:
Machine
Shop
Welding
Shop
Assembly
Shop
Maintenance
Powerhouse
Maintenance
(%)
20
50
30
–
–
Powerhouse
(%)
20
60
20
–
–
Required:
a. Prepare an analysis of the overheads using the basis provided above. [25 marks]
b. Using the direct method, apportion the service cost centre among the production cost centres [3 marks]
[Total: 28 marks]
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