SUNWAY UNIVERSITY BUSINESS SCHOOL
SAMPLE FINAL EXAMINATION FOR DAC2033 COST ACCOUNTING
– DIPLOMA IN BUSINESS ADMINSITRATION
Sunway University Business School
Sample DAC2033 Final Examination
SECTION A
Answer ALL questions.
This section is worth a total of 50 marks.
1.
a) Explain the following terms. Give an example and sketch out a simple graph to
illustrate the nature of relationships between costs and activity level for each term.
i)
Fixed costs
(3 marks)
ii)
Step-fixed costs
(3 marks)
iii)
Variable costs
(3 marks)
b) Briefly explain what is a breakeven chart with the aid of a diagram.
(6 marks)
(15 marks )
c) Belle Company accumulates the following data concerning the sales of
thumbdrives that sell for $20 each. For the coming year, management expects
fixed costs to total $220,000 and variable costs to be $9 per unit.
i.
Compute break-even point in units using the mathematical equation.
(2½ marks)
ii. Compute break-even point in dollars using the contribution margin (CM) ratio.
(3½ marks)
iii. Compute the margin of safety percentage assuming actual sales are $500,000.
(1½ marks)
iv. Compute the sales required in dollars to earn net income of $165,000.
(2½ marks)
(10 marks)
[Total 25 Marks]
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Sunway University Business School
Sample DAC2033 Final Examination
2. The Green Engineering Company produces specialized machine parts according to
customer specifications. At January 1, 20X1, the following jobs were in process:
Job #20
$ 4,000
2,000
1,000
$7,000
Direct materials
Direct Labor
Factory overhead
TOTALS
Job #28
$ 8,000
4,000
2,000
$14,000
Job #48
$3,300
2,200
1,100
$6,600
Additional costs to complete:
Direct materials:$20,000 , allocated as follows:
Job # 20, 40%;
Job # 28, 40%;
Job # 48, 20%.
Direct labour: $4,000 per job
Factory overhead:20% of direct labour
Unit selling prices:
Job#20, $2.20;
Job #28, $2.50;
Job#48, $1.80
Assuming the total unit cost for each job is $2.00,
(a) calculate the number of units completed on each job
(20 ½ marks)
(b) compute the profit or loss in each job
(4 ½ Marks)
[Total 25 Marks]
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Sunway University Business School
Sample DAC2033 Final Examination
SECTION B
Answer any TWO out of FOUR questions.
This section is worth a total of 50 marks.
3.
a) State four differences between Financial Accounting and Cost Accounting.
(5 marks)
b) Photovalley Factory in Port Dickson is considering making its own home solar panels,
which it currently purchases from Australia for $20.50 per unit. This purchase price
does not include the ordering, receiving and inspection costs, which Photovalley
estimates to be $2 per unit. Photovalley feels that it can manufacture the 6,500
required units at a lower cost than it pays by purchasing externally.
The relevant costs for both the producing and buying alternatives are as follows:
Incremental Analysis for Photovalley Industries’ Home
units)
Per unit
($)
Direct Materials
6.25
Direct Labour
10.00
Variable Factory Overhead
5.00
Purchase price
20.50
Ordering, receiving and inspection costs
2.00
Total relevant costs
Solar Panels (6500
Cost to
make ($)
40,625
65,000
32,500
Cost to
buy ($)
133,250
13,000
$138,125 $146,250
Assuming Photovalley Factory will remain idle if they do not manufacture the panels,
Photovalley would increase income by$8,125 per year ($146,250 - $138,125) by
making the component instead of purchasing it. If however, Photovalley could use the
idle capacity to manufacture a new product line, solar sensor lights, instead of
producing the solar panels, the contribution margin of the solar sensor lights must be
considered as an opportunity cost of the ‘make’ decision. The estimated revenue and
cost data for the new product is as below:
per unit ($)
Total
($)
Sales revenue (4800 units)
31.25
150,000
Manufacturing costs
Direct materials
10.00
$48,000
Direct Labour
12.25
58,800
Variable overhead
5.00
24,000
Total
$27.25
130,800
Incremental profit
$4.00
$19,200
Required:
Show all calculations, and then, make recommendations, supporting your answer to
whether Photovalley should buy or make the solar panel and decide on whether
Photovalley should go for the new product line, and produce the solar sensor lights?
(10 marks )
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Sunway University Business School
Sample DAC2033 Final Examination
c) The Whitcomb Industrial Corporation manufactures one main product and one byproduct. During one period of production, the following data were compiled:
Main
By-product
product ($)
X ($)
Sales
300,000
11,800
Processing costs before separation
120,000
Processing costs after separation
3600
Marketing and administrative expenses
20,000
2,200
Units sold
30,000
1,000
There are no beginning or ending inventories. The corporation allows a 20% gross profit
for Product X.
Required:
Calculate net income using the Net Realisable Value Method.
(10 Marks)
[Total 25 marks]
4. a) The Terry Towels Manufacturing Company has estimated its sales budget at 500,000
units for the quarter ending March 31, 2014. Anticipated sales for January, February and
March are 37.5%, 25% and 37.5% of the total, respectively. The desired finished goods
inventories are:
Month
Units
January 1
90,000
January 31
87,500
February 28
93,000
March 31
95,000
Required:
Prepare the production budget for the first quarter of 2014.
( 10 marks )
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Sunway University Business School
Sample DAC2033 Final Examination
b) Jumbo Juice Factory has estimated its 2014 production requirements to be a follows:
Month
Units
April
1,500
May
2,000
June
2,500
July
2,800
The company wants a direct materials ending inventory of 35% of the next
month’s production.
The price per unit is $20 and it takes one unit of direct materials to produce one of
finished goods.
Prepare a direct materials purchase budget for the second quarter of 2014.
(15 marks )
[ Total 25 marks ]
5.
a) The Marsha Steward Corporation’s budget department gathered the following data
for the third quarter, 2014:
July
August
September
1,000
1,500
1,450
$40
$40
$40
1,300
2,000
1,800
Purchase cost per unit
$20
$20
$20
Production requirement (units)
800
1,300
1,100
Projected sales (units)
Selling price per unit
Direct materials purchase requirements (units)
Direct labour hours
2 per complete unit
Direct labour rate
$12 per direct labour hour
Fixed factory overhead
$500 per month including $200
depreciation
Variable factory overhead
$1.50 per direct labour hour
Selling and administrative expenses
5% of sales
Net income before taxes
July
$6,000
August
10,000
September
8,000
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Sunway University Business School
Sample DAC2033 Final Examination
All sales and purchases are for cash, and all expenses are paid in the month incurred.
Assume that the beginning cash balance on July 1, 2014, is at $65,000 and the tax rate
is 40%.
Required : Prepare a cash budget for the third quarter, 2014.
(23 marks)
b) List out one (1) limitation of a budget and one (1) behavioural challenge created by
budgets in a business setting.
(2 marks)
[Total 25 marks]
6.
Hollywood Furniture Inc. manufactures all types of office furniture. The company has
one giant plant and office complex in California, and employs a full-time cost
accounting department to control and analyze production costs. At the end of the year,
the cost accounting department showed the following data:
The factory overhead rate is based on a normal capacity of 8,000 hours. Total
budgeted factory overhead expenses were $11,560, consisting of variable expenses,
$4,960 and fixed expenses, $6,600.
The standard cost card showed:
Direct materials
$5.00 per unit
Direct Labour
4.00 per hour
Actual Data
Materials:
Purchased
10,000 units @ $4.94
Requisitioned
7,100 units
Standard quantity allowed
7,000 units
Direct Labour:
Actual hours worked
3,760 hours
Standard hours allowed
3,180 hours
Actual rate paid
$4.20 per hour
Factory overhead (Actual):
$10,994
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Sunway University Business School
Sample DAC2033 Final Examination
a) Compute the variances for the following:
i.Direct materials price variance
(4 marks)
ii.Direct materials efficiency variance (DMEV)
(4 marks)
iii.Direct labour price variance (DLPV)
(3 marks)
iv.Direct labour efficiency variance(DLEV)
(4 marks)
v. Overhead rates
(3 marks)
b) Explain the difference between sunk cost and differential cost. Provide an example
of each.
(7 marks)
[Total 25 marks]
END OF PAPER
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