1
SULIT
NOV/2008/SMK3523
FINAL EXAMINATION
SEMESTER 1, ACADEMIC SESSION 200812009
DATE : 19 NOVEMBER 2008
DURATION: 3 HOtTRS
MANAGERIAL ACCOUNTING
INSTRUCTIONS TO CANDIDATES:
1.
Answer FOUR (4) questions only.
2.
Al1 answers must be written in English.
3.
Al1 answers must be clearly written and readable.
4.
Al1 answers must be written in the Answer Booklet provided.
5.
Candidates are not allowed to bring any notes into the examination hall.
6.
Candidates are not allowed to take question papers out of the examination hall.
7.
Please complete your particulars in the Borang H and the Answer Booklet.
DO NOT OPEN THIS QUESTION BOOKLET UNTIL YOU ARE TOLD TO DO SO
This question booklet has FIVE (5) printed pages excluding this cover page
HAKCIPTA TERPELJHARA
StTLIT
SULIT
1. E2B Products Sdn Bhd produces a broad line of sports equipment and uses a standard
cost system for control purposes. Last year, the company produced 8,000 soccer balls.
The standard costs associated with this soccer ball along witli the actual costs incurred
last year, are given below (per soccer ball):
1 Costs
1
Direct materials:
Standard: 3.7 meters at RM5.00 per meter
1
Actual: 4.0 meters at RM4.80 per meter
Direct labour:
Standard: 0.9 hour at RM7.50 per hour
Actual: 0.8 hour at RM8.00 per hour
Variable
Standard: 0.9 hour at RM2.50 per hour
Actual: 0.8 hour at RM2.75 per hour
Standard
Cost
1
Actual
Cost
1
RM 18.50
1
RM2.25
~
RM2.20
The CEO was excited when he saw that actual costs exceeded standard costs by only
RM0.30 per ball. He stated, "1 was afraid that our unit costs might get out of hand when
we gave out those raises last year in order to stimulate output. But it's obvious our costs
are well under control."
There was no inventory of materials on hand to start the year. During the year, 32,000
meters of material were purchased and used in production.
Required:
a) Compute the following variances for December:
i. The material price and quantity variances.
ii. The labour rate and efficiency variances.
iii. The variable overhead spending and efficiency variances.
b) Was the CEO correct in his statement that "our costs are well under control"?
Explain.
c) State possible causes of each variance that you have computed.
[25 Marks]
1
HAKCIPTA TERPELMARA
SULIT
SULIT
2. Elisa Company produces stuffed toy animals; one of these is "Teddy Bear". Each teddy
bear takes 0.20 yard of fabric, and eight ounces of polyfiberfill. Material costs EUví3.50
per yard, and polyfiberfill is EUví0.05 per ounce. Elisa has budgeted production of teddy
bears for the next four months as follows:
Months
October
November
December
January
Units
42,000
90,000
50,000
40,000
Inventory policy requires that sufficient fabric be in ending monthly inventory to satisfy
20 percent of the following month's production needs and sufficient polyfiberfill be in
inventory to satisfy 40 percent of the following month's production needs. Inventory of
fabric and polyfiberfill at the beginning of October equals exactly the amount needed to
satisfy the inventory policy.
Each teddy bear produced requires (on average) 0.1 direct labour hour. The average cost
of direct labour is RM15 per hour.
Required:
a) Prepare a direct materials purchases budget of fabric for the last quarter of the year
showing purchases in units and in Malaysian Ringgit for each month and for the
quarter in total.
b) Prepare a direct materials purchases budget of polyfiberfill for the last quarter of the
year showing purchases in units and in Malaysian Ringgit for each month and for the
quarter in total.
c) Prepare a direct labour budget of material for the last quarter of the year showing the
hours needed and the direct labour cost for each month and for the quarter in total.
[25 Marks]
2
HAKCIPTA TERPELIHARA
SULIT
.-%
SULIT
3. The following information pertains to Bianca Inc., for last year:
1
Beginning inventory, units
Units produced
Units sold
Variable costs per unit:
Direct material
Direct labour
Variable overhead
Variable selling expenses
Fixed costs per year:
Fixed overhead
Fixed selling and administrative expenses
1
RM236,OOO
1
There are no work-in-process inventories. Normal activity is 60,000 units. Expected and
actual overhead costs are the sarne.
Required:
a) How many units are in ending inventory?
b) Without preparing an income statement, indicate what the difference will be between
variable-costing income and absorption-costing income. Show the necessary
computation.
c) Assume the selling price per unit is RM32. Prepare an income statement using:
i. Variable costing
ii. Absorption costing
[25 Marks]
3
HAKCIPTA TERPELMARA
SULIT
SULIT
NOV/2008/SMK3523
4. Ali, Muthu and Chong Associates is a consulting firm that specialises in information
systems for educational establishments. The firm has two offices - one in Klang Valley
and the other in Nilai. The firm classifies the direct costs of consulting job as variable
costs.
A segmented contribution format income statement for the company's most recent year is
given below:
Sales
Variable expenses
Contribution margin
Traceable fixed expenses
Other segment margin
Common fixed expenses not
traceable to offices
Net operating income
Office
Total Company
Klang Valley
Nilai
RM450,OOO 100% RM150,OOO 100% RM300,OOO 100%
225,000 50%
45,000 30%
180,000 60%
225,000 50%
105,000 70%
120,000 40%
126,000 28%
78,000 52%
48,000
16%
99,000 22% RM27,OOO
18% RM72,OOO 24%
63,000
RM36,OOO
14%
8%
Required:
a) By how much would the company's net operating income increase if Nilai increased
its sales by RM75,OOO per year? Assume no change in cost behavior patterns.
b) Refer to the original data. Assume that sales in Klang Valley increase by RM50,OOO
next year and that sales in Nilai remain unchanged. Assume no change in fixed costs.
i. Prepare a new segmented income statement for the company using the format
shown previously. Show both arnounts and percentages.
ii. Observe from the income statement you have prepared that the contribution
margin ratio for Klang Valley has remained unchanged at 70% (the same as in
the previous data) but that the segment margin ratio has changed. How do you
explain the change in the segment margin ratio?
[25 Marks]
4
HAKCIPTA TERPELMARA
SULIT
SULIT
NOVl2008lSMK3523
5. Auto Mechanics Berhad, manufactures a variety of engines for use in heavy vehicle. The
company has always produced al1 of the necessary parts for its engines, including al1 of
the pistons.
An outside supplier has offered to se11 one type of piston to Auto Mechanics Berhad for a
cost of M 3 5 0 per unit. To evaluate this offer, Auto Mechanics has gathered the
following information relating to its own cost of producing the piston intemally:
Per Unit
1
Direct materials
RM 140
Direct labour
1O0
Variable manufacturing overhead
30
*60
Fixed manufacturing overhead, traceable
Fixed manufacturing overhead, allocated
90
1,350,000
Total cost
*One-third supervisory salaries, two-third depreciation of special equipment (no resale
value).
1
1
'
1
15,000 Units
per Year
RM2,100,000
1,500,000
450,000
1
Required:
a) Assuming that the company has no alternative use for the facilities that are now being
used to produce the pistons, should the outside supplier's offer be accepted? Show al1
computations.
b) Suppose that if the pistons were purchased, Auto Mechanics Berhad could use the
freed capacity to launch a new product. The segment margin of the new product
would be RM1,500,000 per year. Should Auto Mechanics accept the offer to buy the
pistons for M 3 5 0 per unit? Show al1 computations.
c) Briefly discuss two (2) qualitative factors Auto Mechanics Berhad should consider in
determining whether they should make or buy the pistons?
[25 Marks]
5
HAKCE'TA TERPELIHARA
SULIT
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