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]